2015 Prospectus Berau

IMPORTANT: You must read the following disclaimer before continuing.
The following disclaimer

applies to the attached offering circular (the offering circular). You are advised to read this disclaimer carefully
before accessing, reading or making any other use of the attached offering circular. In accessing the attached
offering circular, you agree to be bound by the following terms and conditions, including any modifications to
them from time to time, each time you receive any information from Berau Capital Resources Pte. Ltd. (the
issuer) as a result of such access.
Confirmation of Your Representation: You have accessed the attached offering circular on the basis that
you have confirmed your representation to Credit Suisse (Singapore) Limited and Deutsche Bank AG, Singapore
Branch (the initial purchasers) that (1) (i) you are not resident in the United States and, to the extent you
purchase the securities described in the attached offering circular, you will be doing so in an offshore transaction
pursuant to Regulation S under the U.S. Securities Act of 1933, as amended (the U.S. Securities Act), or (ii)
you are acting on behalf of, or you are, a qualified institutional buyer, as defined in Rule 144A under the U.S.
Securities Act, and (2) that you consent to delivery of the attached offering circular and any amendments or
supplements thereto by electronic transmission.
The attached offering circular has been made available to you in electronic form. You are reminded that
documents transmitted via this medium may be altered or changed during the process of transmission and
consequently none of the issuer, the guarantors (as defined in the attached offering circular), the initial purchasers
or any of their respective affiliates, directors, officers, employees, representatives and agents, nor any other
person controlling the issuer, any guarantor, the initial purchasers or any of their respective affiliates accepts any
liability or responsibility with respect to any discrepancies between the offering circular distributed to you in
electronic format and the hard copy version. The issuer will provide a hard copy version of the offering circular
to you upon request.
Restrictions: The attached offering circular is being furnished in connection with an offering exempt from
registration under the U.S. Securities Act solely for the purpose of enabling prospective investors an opportunity
to consider the purchase of the securities described therein.
The notes and the guarantees (each as defined in the attached offering circular) have not been, and
will not be, registered under the U.S. Securities Act, or the securities laws of any other jurisdiction, and
may not be offered or sold within the United States unless registered under the U.S. Securities Act or
offered or sold pursuant to an exemption from such registration.
You are not authorized to and you may not forward or deliver the attached offering circular,
electronically or otherwise, to any other person or reproduce such offering circular in any manner
whatsoever. Any forwarding, distribution or reproduction of this document and the attached offering
circular in whole or in part is unauthorized. Failure to comply with this directive may result in a violation
of the U.S. Securities Act or the applicable laws of other jurisdictions.
The materials relating to this offering of the notes and guarantees do not constitute, and may not be used in
connection with, an offer or solicitation in any jurisdiction where offers or solicitations are not permitted by law.
If a jurisdiction requires that this offering be made by a licensed broker or dealer, and any initial purchaser or an
affiliate of the initial purchasers is a licensed broker or dealer in that jurisdiction, this offering shall be deemed to
be made by such initial purchaser or such affiliate on behalf of the issuer and the guarantors in such jurisdiction.
You are reminded that you have accessed the attached offering circular on the basis that you are a person
into whose possession this offering circular may be lawfully delivered in accordance with the laws of the
jurisdiction in which you are located and you may not nor are you authorized to deliver this offering circular,
electronically or otherwise, to any other person. If you have gained access to this transmission contrary to the
foregoing restrictions, you will be unable to purchase any of the notes and guarantees described therein.
If you receive this offering circular by e-mail, you should not reply by e-mail to this announcement, and you
may not purchase any of the notes and guarantees by doing so. Any reply e-mail communications, including
those you generate by using the Reply function on your e-mail software, will be ignored or rejected. If you
receive this offering circular by e-mail, your use of this e-mail is at your own risk and it is your responsibility to
take precautions to ensure that it is free from viruses and other items of a destructive nature.
Berau Capital Resources Pte. Ltd.

(incorporated as a private company limited by shares in Singapore)
US$100,000,000
12.5% Guaranteed Senior Secured Notes due 2015
Unconditionally and irrevocably guaranteed by
PT Berau Coal Energy Tbk

(incorporated with limited liability in Indonesia)
The notes will mature on July 8, 2015. Interest will accrue from July 8, 2010 and be payable semi-annually in arrears on
January 8 and July 8 of each year, commencing on January 8, 2011. The notes will be unconditionally and irrevocably guaranteed
by the issuers parent company, PT Berau Coal Energy Tbk, and certain of PT Berau Coal Energy Tbks subsidiaries, including its
main operating subsidiary, PT Berau Coal.
The notes offered hereby will be issued as additional notes under the indenture pursuant to which, on July 8, 2010, the issuer
issued US$350,000,000 principal amount of its 12.5% Guaranteed Senior Secured Notes due 2015 (the existing notes). The
notes offered hereby will be treated as a single series with the existing notes under the indenture and will have the same terms as
the existing notes. Holders of the notes offered hereby and the existing notes will vote as one class under the indenture.
The issuer may redeem up to 35% of the notes using the proceeds of certain equity offerings of the issuer or the parent
guarantor completed before July 8, 2013. The issuer may redeem some or all of the notes at any time on or after July 8, 2013. The
redemption prices are set forth in this offering circular. The issuer may redeem some or all of the notes prior to July 8, 2013, at a
price equal to 100% of the principal amount of the notes plus a make-whole premium. If the issuer or the parent guarantor
experiences specific kinds of changes in control, the issuer must offer to purchase the notes at a price equal to 101% of their
principal amount plus unpaid and accrued interest. The issuer may redeem all but not less than all of the notes at the principal
amount plus accrued interest upon certain changes in tax law.
The notes are general obligations of the issuer, secured by the collateral described in this offering circular, and will otherwise
rank pari passu in right of payment with all other unsecured, unsubordinated indebtedness of the issuer. The guarantees are general
obligations of the guarantors, secured by the collateral described in this offering circular, and will otherwise rank pari passu in right
of payment with all other unsecured, unsubordinated indebtedness of the guarantors.
The notes are rated B2 by Moodys Investors Service, Inc. and B+ by Standard & Poors Ratings Group. A security rating
is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction, or withdrawal at any time by
the assigning rating agency.
Investing in the notes involves risks. See Risk Factors on page 22.
Price: 103.5%
plus accrued interest from July 8, 2010.
We have received approval-in-principle for the listing of the notes on the Singapore Exchange Securities Trading Limited (the
SGX-ST). The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions or reports
contained in this offering circular. Admission of the notes to the Official List of the SGX-ST is not to be taken as an indication of
the merits of the issuer, the guarantors or the notes.
Delivery of the notes in book-entry form will be made on or about July 29, 2010.
The notes and the guarantees have not been registered under the U.S. Securities Act of 1933 or the securities laws of any
other jurisdiction. The notes and the guarantees may not be offered or sold within the United States or to U.S. persons, except to
qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A and to certain persons in offshore
transactions in reliance on Regulation S. You are hereby notified that sellers of the notes and the guarantees may be relying on the
exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A.
Sole Global Coordinator
Credit Suisse
Joint Lead Managers and Joint Bookrunners
Credit Suisse
Deutsche Bank
The date of this confidential offering circular is July 26, 2010.
Pontianak
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LEGEND
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PT BERAU COAL
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INDONESIA
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MALAYSIA
Bandar Seri Begawan
BRUNEI DARUSSALAM
Carpentaria
INDONESIA
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25
KILOMETRE
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TABLE OF CONTENTS
Page
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . .
EXCHANGE RATES AND EXCHANGE
CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . .
SELECTED FINANCIAL INFORMATION AND
OTHER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COAL INDUSTRY OVERVIEW . . . . . . . . . . . . . . . .
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF MATERIAL AGREEMENTS . . . .
DESCRIPTION OF OTHER MATERIAL
INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . .
Page
1
22
61
RELATED PARTY TRANSACTIONS . . . . . . . . . . . .

THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
REGULATION OF THE INDONESIAN COAL
MINING INDUSTRY. . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF THE NOTES . . . . . . . . . . . . . . . .
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . .
TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . .
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . .
INDEPENDENT MINE CONSULTANT . . . . . . . . . . .
SUMMARY OF CERTAIN PRINCIPAL
DIFFERENCES BETWEEN INDONESIAN
GAAP AND U.S. GAAP . . . . . . . . . . . . . . . . . .
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . .
APPENDIX A-STATEMENT OF OPEN-CUT COAL
RESOURCES AND RESERVES . . . . . . . . . . . . . .
62
63
64
72
99
105
132
141
142
148
150
151
152
163
227
237
242
244
244
244
245
258
F-1
A-1
NOTICE TO INVESTORS
You should rely only on the information in this offering circular or to which we have referred you.
We have not authorized anyone to provide you with different information. This offering circular may only
be used where it is legal to sell these securities. The information in this offering circular may be accurate
only on the date of this offering circular.
We are relying on an exemption from registration under the U.S. Securities Act and Section 274 and/or
Section 275 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA) for offers and sales of
securities that do not involve a public offering. By purchasing the notes, you will be deemed to have made the
acknowledgments, representations, warranties and agreements described in Transfer Restrictions. You will be
required to bear the financial risks of your investment which may be for an indefinite period of time.
This offering circular has been submitted confidentially to a limited number of institutional investors so that
they can consider a purchase of the notes. We have not authorized its use for any other purpose. This offering
circular may not be copied or reproduced in whole or in part. It may be distributed and its contents disclosed only
to the prospective investors to whom it is provided. By accepting delivery of this offering circular, you agree to
these restrictions.
Credit Suisse (Singapore) Limited (Credit Suisse) and Deutsche Bank AG, Singapore Branch (Deutsche
Bank and together with Credit Suisse, the initial purchasers) have not verified, and make no representation or
warranty, express or implied, as to the accuracy or completeness of, the information in this offering circular. In
making an investment decision, you must rely on your own examination of us and the terms of the offering,
including the merits and risks involved. By accepting delivery of this offering circular, you acknowledge that you
have not relied on the initial purchasers or any of their affiliates in connection with your investigation of the
accuracy of the information in this offering circular or your investment decision.
i
Neither we nor the initial purchasers is making any representation to any purchaser of the notes regarding
the legality of an investment in the notes by such purchaser under any legal investment or similar laws or
regulations. You should not consider any information in this offering circular to be legal, business, financial or
tax advice. You should consult your own attorney, business advisor and tax advisor for legal, business, financial
and tax advice regarding an investment in the notes.
The distribution and possession of this offering circular and the purchase, offer and sale of the notes in
certain jurisdictions may be restricted by law. Each purchaser of the notes must comply with all applicable laws
in each jurisdiction in which it purchases, offers or sells the notes or possesses this offering circular and neither
we nor the initial purchasers shall have any responsibility therefor. See Plan of Distribution.
The notes have not been approved or disapproved by the U.S. Securities and Exchange Commission (the
SEC), the Monetary Authority of Singapore (MAS), the SGX-ST or any state or foreign securities
commission or regulatory authority. The foregoing authorities have not confirmed the accuracy or determined the
adequacy of this offering circular. Any representation to the contrary is a criminal offense in the United States.
In connection with this offering, certain persons participating in the offering may engage in
transactions that stabilize, maintain or otherwise affect the price of the notes. Specifically, the initial
purchasers may bid for and purchase notes in the open market to stabilize the price of the notes. The
initial purchasers may also over allot the offering, creating a syndicate short position. In addition, the
initial purchasers may bid for and may stabilize or maintain the market price of the notes above market
levels that might otherwise prevail. The initial purchasers are not required to engage in these activities,
and may end these activities at any time. These activities will be undertaken solely for the account of the
initial purchasers, and not for and on behalf of the issuer.
NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES ANNOTATED (RSA 421-B) WITH THE STATE OF NEW HAMPSHIRE NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT
ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS
AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF
STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATION OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF
THIS PARAGRAPH.
CERTAIN DEFINED TERMS AND CONVENTIONS

We have prepared this offering circular using a number of conventions, which you should consider when
reading information contained herein.
All references to Berau Coal Energy are references to PT Berau Coal Energy Tbk. All references to
Armadian are to PT Armadian Tritunggal, our direct subsidiary in which we have an interest of 99.99%. All
references to Berau Coal are to PT Berau Coal, our indirect subsidiary in which we have an effective interest of
90%. All references to the Group are references to Berau Coal Energy and its subsidiaries taken as a whole.
ii
All references to we, us or our are references to Berau Coal Energy or the Berau Coal Energy Group as a
whole, depending on the context. All references to the issuer are references to Berau Capital Resources Pte.
Ltd., our wholly-owned subsidiary.
Unless otherwise indicated or otherwise required by the context, all references to Rupiah or Rp. are to
Indonesian Rupiah. All references to U.S. dollars or US$ are to United States dollars.
All references to ton are to a metric ton. A metric ton is a unit of mass equal to 1,000 kilograms, or
approximately 2,204.6 pounds. A hectare is a unit of area equal to 10,000 square meters, or approximately
2.471 acres.
All references to calorific values are to calorific values on a gross as received basis, unless otherwise stated.
Certain other terms are defined in the Glossary contained elsewhere in this offering circular.
Unless otherwise indicated, all amounts in relation to the Group are presented on a consolidated basis.
Rounding adjustments have been made in calculating some of the data included in this offering circular. As
a result, the totals in some tables may not be exact arithmetic aggregations of the figures that precede them.
PRESENTATION OF FINANCIAL INFORMATION

Berau Coal Energys financial statements are prepared in Rupiah and Berau Coals financial statements are
prepared in U.S. dollars. Solely for the convenience of the reader, unless otherwise indicated, Rupiah amounts as
of December 31, 2009 have been translated to U.S. dollars based on the middle exchange rate announced by
Bank Indonesia as of December 31, 2009, which was Rp. 9,400 = US$1.00. Rupiah amounts as of March 31,
2010 have been translated to U.S. dollars based on the middle exchange announced by Bank Indonesia as of
March 31, 2010, which was Rp. 9,115 = US$1.00. On July 22, 2010, Bank Indonesias middle exchange rate was
Rp. 9,069 = US$1.00. We make no representation that the Rupiah or U.S. dollar amounts in this offering circular
could have been or could be converted into U.S. dollars or Rupiah, as the case may be, at any particular rate or at
all. See Exchange Rates and Exchange Controls.
The financial statements of Berau Coal Energy and Berau Coal are prepared in accordance with generally
accepted accounting principles in Indonesia (Indonesian GAAP), which differ in significant respects from
generally accepted accounting principles in the United States (U.S. GAAP). For a summary of certain
differences between Indonesian GAAP and U.S. GAAP, see Summary of Certain Principal Differences Between
Indonesian GAAP and U.S. GAAP.
Our financial statements as of and for the year ended December 31, 2007 have been restated. The figures as
of and for the year ended December 31, 2007 included in this offering circular are the restated figures. See Note
41 to our financial statements as of and for the year ended December 31, 2007, 2008 and 2009 included
elsewhere in this offering circular.
INDUSTRY AND MARKET DATA

This offering circular includes market share and industry data and forecasts that we have obtained from
industry publications and surveys, reports of governmental agencies and internal company surveys. Industry
publications and surveys and forecasts generally state that the information contained therein has been obtained
from sources we believe to be reliable, but there can be no assurance as to the accuracy or completeness of
included information. While we have taken reasonable actions to ensure that the information is extracted
accurately and in its proper context, none of us or the initial purchasers have independently verified any of the
data from third party sources or ascertained the underlying economic assumptions they relied upon. References to
thermal coal refer to bituminous thermal coal, not sub-bituminous thermal coal, unless specified.
iii
RESOURCES AND RESERVES STATEMENTS

Berau Coal reports its coal resources and reserves in accordance with the Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves (2004 edition) (the 2004 JORC Code), published
by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy and the
Australasian Institute of Geoscientists and Minerals Council of Australia (the JORC).
Under the 2004 JORC Code, the term coal resource refers to a concentration or occurrence of coal of
intrinsic economic interest in or on the earths crust in such form, quality and quantity that there are reasonable
prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and
continuity of a coal resource are known, estimated or interpreted from specific geological evidence and
knowledge. Coal resources are subdivided, in order of increasing geological confidence, into inferred,
indicated and measured categories.
The term coal reserve is defined in the 2004 JORC Code as the economically mineable part of a measured
and/or indicated coal resource. It includes diluting materials and allowances for losses which may occur when the
coal is mined. Appropriate assessments have been carried out, and include consideration of and modification by
realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental
factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Coal
reserves are subdivided in order of increasing confidence into probable coal reserves and proved coal
reserves. The choice of the appropriate category of reserve is determined primarily by the relevant level of
confidence in the coal resource and after considering any uncertainties in the modifying factors. Pursuant to the
2004 JORC Code, allocation of the appropriate category must be made by the competent person or competent
persons preparing the reserves statements.
The term marketable coal reserves, representing beneficiated or otherwise enhanced coal product where
modifications due to mining, dilution and processing have been considered, may, pursuant to the 2004 JORC
Code, be used in public reports for companies in conjunction with, but not instead of, reports of coal reserves.
The basis of the predicted yield to achieve marketable coal reserves should be stated.
Coal Resource and Reserve Statement
Information in this offering circular relating to Berau Coals proved and probable reserves was derived from the
Statement of Open-Cut Coal Resources and Reserves of The Berau Coal Deposits as of December 31, 2009 (the
Reserve Statement) attached as Appendix A to this offering circular. The Reserve Statement has been prepared by
PT. Runge Indonesia (PTRI) and issued under the Minarco-MineConsult (MMC) name. MMC is an associated
entity of PTRI and is an independent mine consultant. See Independent Mine Consultant. The Appendices to the
Reserve Statement have not been included in this offering circular and are available upon request at Berau Coals
registered office at Menara Karya 11th Floor, Jl. HR. Rasuna Said Block X-5 Kav. 1-2, Jakarta 12950, Indonesia.
Estimates of coal resources, reserves, recoveries and operating costs are largely dependent on the
interpretation of geological data obtained from drill holes and other sampling techniques, and feasibility studies
which derive estimates of operating costs based on anticipated tonnage, expected recovery rates, equipment
operating costs and other factors. No assurance can be given that the resources and reserves presented in this
offering circular will be recovered at the quality or yield presented. In addition, investors should not assume that
the resource estimates are capable of being directly reclassified as reserves under the 2004 JORC Code. Investors
should also note that coal resources are reported inclusive of coal reserves (that is, coal reserves are not
additional to coal resources). The inclusion of resource estimates should not be regarded as a representation that
these amounts can be economically exploited, particularly inferred resources, and you are cautioned not to place
undue reliance on those estimates.
iv
Assumptions Underlying Berau Coals Coal Reserve Estimates

Berau Coal estimates its coal reserves using various assumptions regarding its mining costs and the price of
coal. For more information regarding the cost and revenue factors used to estimate Berau Coals coal reserves
presented in this offering circular, see the Reserve Statement under the heading Cost and Revenue Factors.
Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources
There are differences between reporting regimes for reserve estimates in the United States and in Australia.
A key difference between the reporting regimes in Australia under the 2004 JORC Code and in the United States
under the requirements as adopted by the SEC in its Industry Guide 7Description of Property by Issuers
Engaged or to be Engaged in Significant Mining Operations (Industry Guide 7) is the absence in the United
States of any provision for the reporting of estimates other than proved (measured) or probable (indicated)
reserves. There is, therefore, no equivalent for resources under the SECs Industry Guide 7.
The SEC has applied the following reporting definitions to reserves under Industry Guide 7:
A reserve is that part of a mineral deposit which could be economically and legally extracted or
produced at the time of the reserve determination. Reserves are customarily stated in terms of ore when
dealing with metalliferous minerals; when other materials such as coal, oil, shale, tar, sands, limestone,
etc. are involved, an appropriate term such as recoverable coal may be substituted.
Proven (measured) reserves are reserves for which:
(a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade
and/or quality are computed from the results of detailed sampling; and
(b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character
is so well defined that size, shape, depth and mineral content of reserves are well-established.
Probable (indicated) reserves are reserves for which quantity and grade and/or quality are computed
from information similar to that used for proven (measured) reserves, but the sites for inspection,
sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of
assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity
between points of observation.
This offering circular uses the terms measured, indicated and inferred resources. United States
investors are advised that while some investors recognize such terms, the SEC does not recognize them. Inferred
resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and
legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher
category. Under SEC rules, estimates of inferred mineral resources may not form the basis of feasibility or other
economic studies. You should not assume that all or any part of measured or indicated resources will ever
be converted into reserves. You are also cautioned not to assume that all or any part of an inferred
resource exists or is economically or legally mineable.
AVAILABLE INFORMATION
To permit compliance with Rule 144A in connection with resales of the notes, we will furnish, upon request
of a holder of the notes and a prospective purchaser designated by a holder, the information required to be
delivered under Rule 144A(d)(4) if at the time of such request we are neither a reporting company under
Section 13 or Section 15(d) of the U.S. Securities Exchange Act of 1934 (the U.S. Exchange Act) nor exempt
from reporting pursuant to Rule 12g3-2(b) under the U.S. Exchange Act. So long as any of the notes remain
outstanding, we will provide the trustee our annual and quarterly financial statements for forwarding to the
holders of the notes.
v
ENFORCEABILITY OF FOREIGN JUDGMENTS

The issuer is incorporated in Singapore, Berau Coal Energy, Berau Coal and Armadian are incorporated in
Indonesia and the other guarantors are incorporated in other jurisdictions outside the United States. All of the
commissioners, directors and executive officers, as applicable, of the issuer and the guarantors and certain
experts named in this offering circular reside outside the United States. Substantially all of the assets of the
issuer, the guarantors and these other persons are located outside the United States. As a result, it may be difficult
for investors to effect service of process upon such persons within the United States, or to enforce against us or
these persons in courts, judgments obtained in U.S. courts, including judgments predicated upon the civil liability
provisions of the federal securities laws of the United States.
Our Indonesian legal advisor, Assegaf Hamzah & Partners, has advised us that judgments of courts outside
Indonesia are not enforceable in Indonesian courts. A foreign court judgment could be offered and accepted into
evidence in a proceeding on the underlying claim in an Indonesian court and may be given such evidentiary
weight as the Indonesian court may deem appropriate in its sole discretion. A claimant may be required to pursue
claims in Indonesian courts on the basis of Indonesian law.
The issuer is incorporated as a private company with limited liability under the laws of Singapore. All of the
directors of the issuer reside outside Singapore and substantially all the assets of the issuer and the guarantors are
located outside Singapore. As a result, it may be difficult for investors to enforce against the issuer judgments
obtained in non-Singapore courts. Purchasers of the notes may not be able to enforce against the issuer judgments
obtained in the United States based upon certain of the civil liability provisions of the securities laws of the
United States or any state thereof in Singapore courts and Singapore courts may not enter judgments in original
actions brought in Singapore courts based solely upon the civil liability provisions of the securities laws of the
United States or any state thereof.
ENFORCEABILITY OF THE NOTES AND THE GUARANTEES UNDER INDONESIAN LAW

Several Indonesian companies that have defaulted on debt incurred through offshore financing entities
(using structures similar to that used in this offering) have sued their creditors in Indonesian courts to invalidate
their debt obligations and have sought damages from creditors exceeding the original proceeds of the debt issued.
In some of these cases, the courts have ruled for the Indonesian companies. Court reports of some of these
decisions are not available, and those that are available do not provide a clear factual basis or legal rationale for
these judgments. The Indonesian legal system does not recognize the concept of precedent recognized in the
common law system but does acknowledge the concept of jurisprudence, which means that these cases may have
persuasive force in future cases. Accordingly, an Indonesian court could take a similar approach in any dispute
regarding the notes or the guarantees of Berau Coal Energy, Armadian and Berau Coal and declare them
unenforceable and may award us damages from purchasers of the notes.
Under the Indonesian Civil Code, a guarantor may waive its right to require an obligee to exhaust its legal
remedies against an obligors assets on a guaranteed obligation prior to the obligee exercising its rights under the
related guarantee. The guarantees contains a waiver of this obligation. Nonetheless, Berau Coal Energy,
Armadian and Berau Coal could successfully petition a court to require the trustee and noteholders to exhaust
their remedies against the issuer before acting against Berau Coal Energy, Armadian and Berau Coal. If a court
grants such a request, Berau Coal Energy, Armadian and Berau Coal may not be required to comply with their
obligations under their guarantees until the trustee and noteholders have exhausted all legal remedies against the
issuer. This could increase the costs of pursuing a claim and the time required to obtain relief.
For more information on these risks, see Risk FactorsRisks Relating to the Offering Structure.
vi
FORWARD-LOOKING STATEMENTS
This offering circular contains forward-looking statements that relate to future events which are, by their
nature, subject to significant risks and uncertainties. Statements regarding our forecast production volumes,
future financial position and results of operations, strategy, targets and future developments in the markets where
we participate, including forecast supply and demand in the coal industry, and statements that include the words
believe, expect, aim, intend, will, may, project, estimate, forecast, anticipate, predict,
seek, should or similar words or expressions, are forward-looking statements.
The future events referred to in these forward-looking statements involve known and unknown risks,
uncertainties and other factors, many of which are beyond our control, which may cause the actual results to be
materially different from those expressed or implied by the forward-looking statements. These forward-looking
statements are based on numerous assumptions regarding our present and future business strategies and the
environment in which we operate and are not a guarantee of future performance. Important factors that could
cause the actual results to differ materially from those in the forward-looking statements include the following:
the price of coal, including factors influencing the price of coal, such as domestic, regional and global
supply and demand;
changes in economic growth of Indonesia and other Asian countries and their demand for coal;
changes in laws or governmental policies affecting the Indonesian, regional or global coal mining
industries;
the inherent difficulty of predicting the presence, yield or quality of coal reserves;
unforeseen difficulties in extracting, processing or transporting coal on an economical basis;
technological changes that affect the extraction, processing, transportation or combustion of coal;
our ability to successfully implement our plans to increase coal production;
accidents, natural disasters or inclement weather at our mines and other facilities;
increasing costs of, or difficulty in obtaining, fuel, raw materials or equipment from suppliers;
loss of, or reductions of purchases by, major customers;
the ability of our contractors to perform in accordance with contractual terms;
increasing inflation in Indonesia; and
depreciation of the Rupiah against the U.S. dollar.
Additional factors that could affect our results include those discussed under Risk Factors. When relying
on forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and
events, especially in light of the political, economic, social and legal environment in which we operate. Such
forward-looking statements speak only as of the date on which they are made. We are not obligated to update or
revise any of them, whether as a result of new information, future events or otherwise. We do not make any
representation, warranty or prediction that the results anticipated by such forward-looking statements will be
achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and
should not be viewed as the most likely or standard scenario. Accordingly, you should not place undue reliance
on any forward-looking statements.
vii
SUMMARY
This summary does not contain all the information that may be important to you in deciding to invest in the
notes. You should read the entire offering circular, including the section entitled Risk Factors and the
financial statements and related notes thereto included elsewhere in this offering circular, before making an
investment decision.
Overview
Berau Coal Energy is a holding company that indirectly owns 90% of Berau Coal, the fifth largest coal
producer in Indonesia in terms of production volume in 2009, according to the Annual Coal Production Report
dated December 2009 by Indonesias Ministry of Energy and Mineral Resources. Berau Coal engages in
open-cut mining of coal in its concession area in East Kalimantan, Indonesia, where it holds coal mining rights
until April 26, 2025. Berau Coal operates three mining areas in Lati, Binungan and Sambarata, where reserves
were estimated to be 346 million tons as of December 31, 2009, of which 146 million tons are of the proved
category and 200 million tons are of the probable category, according to MMC. Berau Coals concession area of
approximately 118,400 hectares also contains three other reserve locations, namely Kelai, Gurimbang and Punan.
Berau Coal supplies coal, both directly and through marketing agents, to customers in Indonesia and
elsewhere in Asia. Its customers are mainly utility companies and coal trading companies that purchase coal from
it for resale. In recent years, Berau Coal has derived approximately 40% of its total sales revenues from domestic
sales and approximately 60% of its total sales revenues from international sales. Berau Coal exports to customers
in China, Hong Kong, India, Japan, South Korea, Taiwan and Thailand.
Berau Coal produces thermal coal at its three mining locations and blends them in order to adjust the overall
quality grade of the coal. It markets the coal under four brand namesMahoni, Mahoni-B, Agathis and
Sungkai, with calorific values ranging from 5,000 kcal/kg to 5,600 kcal/kg (on a gross as received basis) and
appropriate levels of ash and sulfur for use in coal-fired power plants in Indonesia and many other Asian
countries.
In 2007, 2008, 2009 and the three months ended March 31, 2010, Berau Coal produced 11.8 million tons,
13.1 million tons, 14.3 million tons and 3.7 million tons of coal, respectively. As of July 1, 2010, Berau Coal had
contracts with aggregate commitments to purchase coal totaling 17.0 million tons in 2010, all of which was at an
agreed price.
Berau Coal began producing coal commercially from the Lati and Binungan mines in 1995 and the
Sambarata mine in 2001. Lati is the largest of its three active mining areas and accounted for 56.8% of its
production in 2009. Sambarata has the highest quality coal of all three mining areas in terms of calorific value.
The three mining areas are similar in their operations but are independent, with their own separate coal terminals
and barge lines. Berau Coal expects to commence commercial coal production in Gurimbang in 2012 and Kelai
in 2013.
Berau Coal subcontracts all of its mining, barging and drilling and blasting operations, which allows it to
minimize capital expenditures and working capital requirements and focus on exploration, mine planning,
supervision and sales and marketing. Berau Coal works closely with its two mining contractors, PT Bukit
Makmur Mandiri Utama (BUMA) and PT Saptaindra Sejati (SIS), each of which undertakes land clearing,
overburden removal, coal excavation, hauling activities and road maintenance. However, pursuant to Indonesias
new mineral and coal mining law and one of its implementing regulations, by September 29, 2012, Berau Coal
will need to amend its existing contracts with its mining contractors and conduct its own coal mining and
processing activities, as mining services companies will only be allowed to perform overburden removal and
transportation of coal in the mining process.
Berau Coal uses multiple contractors for each of its other operations, such as barging, coal quality analysis
and transshipping. Once the coal is mined, crushed and stockpiled, contractors barge the loads to a transshipment
area at Muara Pantai in the Sulawesi sea located approximately 50 kilometers to 100 kilometers from the ports at
Lati, Suaran and Sambarata. At Muara Pantai, higher energy coal from the Sambarata mine is blended with coal
from the Lati or Binungan mines, depending on the quality grade requirements of the shipment.
In 2007, 2008, 2009 and the three months ended March 31, 2010, we had sales of Rp. 3,445.0 billion, Rp.
6,110.2 billion, Rp. 8,318.6 billion and Rp. 2,041.8 billion, respectively, and net income of Rp. 25.6 billion, Rp.
170.1 billion, Rp. 853.7 billion and Rp. 219.6 billion, respectively.
In December 2009, PT Recapital Advisors (Recapital) acquired an effective interest of 99% in us.
Recapital has brought to Berau Coal new members for its board of commissioners, as well as a new President
Director and a new Finance Director, while maintaining the existing personnel at the operational level with an
aim to improve production levels, increase exploration activities and expand Berau Coals infrastructure.
Competitive Strengths
Berau Coals principal competitive strengths are the following:
Sizable and long-standing operations with a consistent track record of production growth.
Low cost coal producer.
Well-positioned to capture growth opportunities in thermal coal markets in Asia.
Strong customer relationships and a high quality customer base.
Experienced management team.
See BusinessCompetitive Strengths.
Strategy
The main elements of Berau Coals business strategy are the following:
Increase coal production at an accelerating rate by expanding infrastructure while managing costs.
Increase coal reserves by using internally generated cash flows from existing mines to explore for new
reserves and enhance exploration efforts.
Maintain core customers in Berau Coals domestic and export markets and secure orders from long-term
customers for the majority of Berau Coals production.
Consider strategic alliances with companies serving the Indonesian mining sector.
Continue to strengthen relationships with local communities through development and environmental
rehabilitation programs.
See BusinessStrategy.
The Issuer
The issuer, Berau Capital Resources Pte. Ltd., was incorporated as a private company limited by shares
under the laws of Singapore on February 9, 2010. The registered office of the issuer is located at 10 Anson Road,
#03-05 International Plaza, Singapore 079903. The issuer is a wholly-owned subsidiary of Berau Coal Energy.
The principal activities of the issuer are to issue the notes, lend the proceeds of that issuance to companies in the
Group and undertake administrative functions associated with servicing the notes.
Organizational Structure
Our organizational structure is set forth in the chart below:
PT Recapital Advisors
(Indonesia)
99%(1)
PT Bentara Energi Asia Utama
(Indonesia)
99.6%(1)
<0.001%
PT Bukit Mutiara
(Indonesia)
100%
99.999%
Sojitz Corporation(2)
(Japan)
Berau Coal Energy (3)

(Indonesia)
Regulus International Pte.

Ltd.
(Singapore)
10%
100%
Maple Holdings Limited
(Labuan)
100%
0.01%
100%
99.99%
Seacoast Offshore
Inc.
(British Virgin
Islands)
Berau Capital
Resources Pte. Ltd.(4)
(Singapore)
Armadian
(Indonesia)
0.01%
100%
51%
Berau Coal
(Indonesia)
Winchester Investment
Holdings PLC
(Seychelles)
99.99%
Aries Investments Limited
(Malta)
87.2%
12.8% Rognar Holding B.V.

(Netherlands)
39%
100%
Empire Capital
Resources Pte. Ltd.
(Singapore)
Notes:
(1) The remaining interest is held by a nominee shareholder.
(2) Sojitz Corporation is not part of the Group.
(3) The guarantors are shaded in the chart above. Berau Coal Energy is the parent guarantor. Entities inside the
dotted lines are Restricted Subsidiaries.
(4) Issuer of the notes.
Recent Developments
Guaranteed Senior Secured Notes
On July 8, 2010, we issued $350 million aggregate principal amount of guaranteed senior secured notes due
2015 (the existing notes). The notes offered hereby will be additional notes under the indenture pursuant to
which we issued the existing notes. See Description of the Notes.
Senior Secured Credit Facility
On July 23, 2010, we entered into a US$400 million senior secured credit facility (the Senior Secured
Credit Facility) and drew down the entire US$400 million available thereunder.
Berau Coal Energy is the borrower under this facility and its obligations under this facility rank pari passu
with its obligations under its guarantees of the notes. The facility comprises two tranches: (i) tranche A in a
principal amount of US$300 million and (ii) tranche B in a principal amount of US$100 million. The term loans
under tranche A have a final maturity of four years and the term loans under tranche B have a final maturity of 57
months. Both tranches will amortize. The facility has the benefit of guarantees from Berau Coal and other
subsidiaries of Berau Coal Energy that rank pari passu with the guarantees by such entities in favor of the notes
and shares with the notes on a pari passu basis in the Common Security (as defined in Description of the
Notes). For more information on this facility, including financial and other covenants that we are required to
comply with, events of defaults, and other provisions, see Description of Other Material Indebtedness.
Proposed Acquisition of Maple Holdings Limited
Seacoast Offshore Inc., a wholly-owned special purpose company of Berau Coal Energy, has entered into a
conditional share sale and purchase agreement dated May 21, 2010 with Regulus International Pte. Ltd., a
wholly-owned subsidiary of our parent, PT Bukit Mutiara, to acquire Maple Holdings Limited (Maple), one of
Berau Coals marketing agents, for US$200 million. The payment will be made in two tranches: (i) a payment of
US$175 million using a portion of the proceeds from the issuance of the notes, the existing notes and the loans
under the Senior Secured Credit Facility and (ii) a payment of US$25 million using a portion of the proceeds
from a contemplated initial public offering of Berau Coal Energy, as discussed below. Berau Coal Energy will
not own any shares of Maple until the closing of the share sale and purchase agreement, which is conditional on
and will follow the contemplated initial public offering of Berau Coal Energy. See Description of Material
AgreementsAgreement to Acquire Maple Holdings Limited and Risk FactorsWe might not be able to
complete our proposed acquisition of Maple Holdings Limited.
Repayment of Debt
On July 23, 2010, we paid (or arranged to pay) US$303 million as repayment in full of a US$300 million
credit facility of our finance subsidiary Empire Capital Resources Pte. Ltd. and US$314 million as repayment in
full of a US$300 million loan from our parent, PT Bukit Mutiara, to Berau Coal Energy.
On July 23, 2010, PT Bukit Mutiara paid (or arranged to pay) US$314 million as repayment in full of a
US$300 million credit facility, US$52 million as a partial repayment of a loan from PT Bumi Resources Tbk and
US$52 million as a partial repayment of notes it issued to the sellers of Berau Coal Energy when Recapital
acquired us in December 2009. PT Bukit Mutiara is making these repayments using the proceeds of the
repayment of its loan to Berau Coal Energy and the proceeds of the payment of the first installment of the
acquisition price of Maple, each as described above.
Settlement with Montelena Capital Limited

On July 23, 2010, we paid US$20 million to Montelena Capital Limited as full and final settlement of its
claims against our subsidiary Armadian in connection with an option agreement for shares of Berau Coal. See
BusinessLitigation.
Proposed Initial Public Offering
Berau Coal Energy is preparing to conduct an initial public offering. The Indonesian Stock Exchange (the
IDX) has approved our application to list Berau Coal Energys ordinary shares on the IDX, and the Indonesian
Capital Markets and Financial Institutions Supervisory Agency (BAPEPAM-LK) is reviewing our registration
statement for the initial public offering. Our shares will not be registered under the U.S. Securities Act or the
securities laws of any jurisdiction other than Indonesia, and there will be no public offering of our shares outside
of Indonesia.
The initial public offering will comprise solely a primary offering by Berau Coal Energy of newly issued
shares. As a result of the initial public offering, we expect that Recapital will beneficially own at least 80.4% of
our issued and outstanding ordinary shares (subject to any sales of our shares that PT Bukit Mutiara makes prior
to the closing of the initial public offering) and investors in the initial public offering will own up to 18.2%, with
the remaining 1.4% being held by nominee shareholders. See Principal Shareholders.
We intend to use the proceeds from the initial public offering for the final payment of US$25 million to
complete our acquisition of Maple, as discussed above, and the remainder for general corporate purposes.
The initial public offering is subject to various factors, including the approval of the BAPEPAM-LK and
market conditions. Accordingly, we do not know if or when we will be able to complete the IPO.
Corporate Information
Berau Coal Energy was incorporated as a limited liability company under the laws of Indonesia on
September 7, 2005. Our registered office is located at Wisma GKBI 38th floor, Jl. Jend Sudirman No. 28, Jakarta
10210, Indonesia. The information on Berau Coals website, www.beraucoal.co.id, does not constitute a part of
this offering circular.
THE OFFERING
The following summary contains basic information about the notes and is not intended to be complete. It
does not contain all the information that is important to you. Some of the terms described below are subject to
important limitations and exceptions. For a more complete understanding of the notes, see Description of the
Notes. Capitalized terms used in this section have the meanings given in Description of the Notes.
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parent Guarantor . . . . . . . . . . . . . . . . . . . . .
PT Berau Coal Energy Tbk.
Notes Offered . . . . . . . . . . . . . . . . . . . . . . . .
US$100,000,000 aggregate principal amount of 12.5% Guaranteed

Senior Secured Notes due 2015.
The Notes offered hereby will be issued as Additional Notes under
the Indenture pursuant to which, on July 8, 2010, the Issuer issued
US$350,000,000 principal amount of its Notes (the Existing Notes).
The Notes offered hereby will be treated as a single series with the
Existing Notes under the Indenture and will have the same terms as
the Existing Notes. Holders of the Notes offered hereby and the
Existing Notes will vote as one class under the Indenture.
Issue Price. . . . . . . . . . . . . . . . . . . . . . . . . . .
103.5% of the principal amount of the Notes plus accrued interest

from July 8, 2010.
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . .
July 8, 2015.
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Notes will bear interest from and including July 8, 2010 at a rate
of 12.5% per annum, payable semi-annually in arrears.
Interest Payment Dates . . . . . . . . . . . . . . . .
January 8 and July 8 of each year, commencing on January 8, 2011.
Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Notes will:

be general obligations of the Issuer;
be senior in right of payment to any existing and future obligations
of the Issuer expressly subordinated in right of payment to the
Notes;
rank at least pari passu in right of payment with all unsubordinated
Indebtedness of the Issuer (subject to any priority rights of such
unsubordinated Indebtedness pursuant to applicable law);
be guaranteed by the Guarantors on an unsubordinated basis; and
be secured by first-priority Liens on the Collateral.
Parent Guarantee . . . . . . . . . . . . . . . . . . . . .
The Parent Guarantor will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Notes.
The Parent Guarantee may be released in certain circumstances. See
Description of the NotesThe Parent GuaranteeRelease of the
Parent Guarantee.
Ranking of the Parent Guarantee . . . . . . .
The Parent Guarantee will:

be a general obligation of the Parent Guarantor;
be effectively subordinated to secured obligations of the Parent
Guarantor, to the extent of the value of the assets (other than the
Common Security) serving as security therefor;
be senior in right of payment to all future obligations of the Parent
Guarantor expressly subordinated in right of payment to the Parent
Guarantee; and
rank at least pari passu in right of payment with all unsecured,
unsubordinated Indebtedness of the Parent Guarantor (subject to
any priority rights of such unsecured, unsubordinated Indebtedness
pursuant to applicable law).
Subsidiary Guarantees . . . . . . . . . . . . . . . .
PT Armadian Tritunggal, Berau Coal, Empire Capital Resources Pte.

Ltd., Winchester Investment Holdings PLC, Aries Investments
Limited and Seacoast Offshore Inc. guarantee the Existing Notes and
will guarantee the Notes offered hereby on their issue date. Except for
Berau Coal, all of these initial Subsidiary Guarantors are holding
companies, financing subsidiaries or dormant companies that do not
have significant operations.
The Parent Guarantor will (i) cause each of its future Restricted
Subsidiaries (other than a Finance Subsidiary), immediately upon the
Parent Guarantor becoming the direct or indirect holder of more than
80% of the Voting Stock of such Restricted Subsidiary, and (ii) use its
reasonable best efforts to cause each of its other future Restricted
Subsidiaries (other than a Finance Subsidiary), immediately upon
becoming a Restricted Subsidiary, to execute and deliver to the
Trustee a supplemental indenture to the Indenture pursuant to which
such Restricted Subsidiary will guarantee the payment of the Notes.
The Subsidiary Guarantee of each Subsidiary Guarantor will:
be a general obligation of such Subsidiary Guarantor;
be effectively subordinated to secured obligations of such
Subsidiary Guarantor, to the extent of the value of the assets (other
than the Common Security) serving as security therefor;
be senior in right of payment to all future obligations of such
Subsidiary Guarantor expressly subordinated in right of payment to
such Subsidiary Guarantee; and
rank at least pari passu in right of payment with all unsecured,
unsubordinated Indebtedness of such Subsidiary Guarantor (subject
to any priority rights of such unsecured, unsubordinated
Indebtedness pursuant to applicable law).
Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . .
The obligations of the Issuer and the Guarantors under the Notes, the
Guarantees and the Indenture will be secured by the Notes Collateral
and the Common Security.
For more details on the Collateral, see Description of the Notes

Security.
Notes Collateral . . . . . . . . . . . . . . . . . . . . . .
The Notes Collateral consists of a security interest in the Notes Debt

Service Account and the Notes Interest Reserve Account.
Common Security . . . . . . . . . . . . . . . . . . . .
The Common Security consists of the following:

Subject to the terms and conditions of the Intercreditor Agreement
described under the caption Intercreditor Agreement below,
the Parent Guarantor has pledged, for the benefit of the Secured
Parties, or caused the initial Subsidiary Guarantors to pledge the
Capital Stock owned by the Parent Guarantor or such Subsidiary
Guarantor of any Person that is a Restricted Subsidiary (other than
a Finance Subsidiary (except the Issuer)) on the date hereof on a
first priority basis (subject to Permitted Liens) in order to secure
the obligations under the Common Secured Indebtedness;
The Parent Guarantor has also agreed, for the benefit of the
Secured Parties, to pledge, or cause each Subsidiary Guarantor to
pledge, the Capital Stock owned by the Parent Guarantor or such
Subsidiary Guarantor of any Person that is a Restricted Subsidiary
or becomes a Restricted Subsidiary (other than a Finance
Subsidiary (other than the Issuer)) after the Original Issue Date,
immediately upon such Person becoming a Restricted Subsidiary,
to secure the obligations under the Common Secured Indebtedness;
Berau Coal has executed deeds of fiduciary security granting
security interests to the Common Security Agent, for the benefit of
the Secured Parties, with respect to material assets owned by it,
including insurance, its rights under certain principal agreements
and its rights to cash receivables under those principal agreements
(including coal supply agreements) and all of its intercompany
advances governed by Indonesian law, in each case, to the extent
permitted by applicable law and subject to relevant third party
consents;
Each of the Parent Guarantor, the Issuer and the Subsidiary
Guarantors has assigned its interest under intercompany advances
(other than those governed by Indonesian law) including any
Intercompany Loans, to the Common Security Agent for the
benefit of the Secured Parties;
The Issuer has executed a security document granting security
interests to the Common Security Agent for the benefit of the
Secured Parties, with respect to all of its property and assets (other
than the Notes Debt Service Account and the Notes Interest
Reserve Account);
Berau Coal has executed an assignment of principal agreements,
assigning to the Common Security Agent its rights under certain
principal agreements, including coal supply agreements (other than
those governed by Indonesian law) described therein;
Pursuant to various Common Security Documents, each of the

Parent Guarantor, Berau Coal and certain other Restricted
Subsidiaries has granted to the Common Security Agent, for the
benefit of the Secured Parties, security interests over its respective
rights and claims with respect to onshore accounts as provided for
under the Cash and Accounts Management Agreement; and
Pursuant to various Common Security Documents, each of the
Issuer, the Parent Guarantor, Berau Coal and certain other
Restricted Subsidiaries has granted to the Common Security Agent,
for the benefit of the Secured Parties, security interests over its
rights and claims with respect to offshore accounts as provided for
under the Cash and Accounts Management Agreement; and Berau
Coal will grant to the Common Security Agent security interests
over its rights and claims with respect to its offshore cash
receivables.
Cash and Accounts Management
Agreement . . . . . . . . . . . . . . . . . . . . . . . .
On July 20, 2010, we entered into a Cash and Accounts Management

Agreement, pursuant to which we established a series of domestic and
offshore bank accounts with designated account banks. With certain
limited exceptions, all of the cash receipts of Berau Coal Energy and
the Subsidiary Guarantors, including all the coal sales revenues of
Berau Coal, will be deposited into designated accounts and applied to
fund payment of operating expenses, taxes and capital expenditures of
Berau Coal, to fund amounts payable to Sojitz as the 10% shareholder
of Berau Coal, and to debt service and required interest reserves
under the Notes and the Senior Secured Credit Facility. After required
amounts for debt service and interest reserves for the Notes and the
loans under the Senior Secured Credit Facility are funded, 50% of the
remaining funds will be deposited in a lender reserve account from
which funds may only be applied to payment, redemption or
repurchase of senior secured debt, and the other 50% of such
remaining funds will be deposited in a reserve account from which we
will be free to apply funds at our discretion, subject to applicable
covenants in our indebtedness.
The Cash and Accounts Management Agreement is governed by and
construed in accordance with English law. For more details on the
cash and accounts management agreement, see Description of
Material AgreementsCash and Accounts Management Agreement.
Intercreditor Agreement . . . . . . . . . . . . . . .
On July 19, 2010, the Trustee, on behalf of the Holders, entered into
an intercreditor agreement that governs the relationship among the
Holders, the lenders under the New Credit Facility and the holders of
any other Permitted Pari Passu Secured Indebtedness (or their
representatives).
The Intercreditor Agreement is governed by and construed in
accordance with English law. For more details on the Intercreditor
Agreement, see Description of the NotesIntercreditor Agreement.
Notes Interest Reserve Account . . . . . . . .
In addition to the amounts required to be deposited and held in the

Notes Debt Service Account under the Cash and Accounts
Management Agreement, the Parent Guarantor shall ensure that the
Notes Interest Reserve Account has at all times on deposit an amount
at least equal to the interest and Additional Amounts, if any, due on
the next Notes Interest Payment Date with respect to the Notes.
Optional Redemption of the Notes . . . . . .
At any time and from time to time prior to July 8, 2013, the Issuer
may redeem up to 35% of the aggregate principal amount of the
Notes with the Net Cash Proceeds of one or more Equity Offerings at
a redemption price of 112.5% of the principal amount of the Notes,
plus accrued and unpaid interest, if any, to the redemption date;
provided that at least 65% of the aggregate principal amount of the
Notes originally issued on the Original Issue Date remains
outstanding after each such redemption and any such redemption
takes place within 60 days after the closing of the related Equity
Offering.
At any time and from time to time prior to July 8, 2013, the Issuer
may at its option redeem the Notes, in whole or in part, at a
redemption price equal to 100% of the principal amount of the Notes
plus the Applicable Premium as of, and accrued and unpaid interest, if
any, to the redemption date.
At any time and from time to time on or after July 8, 2013, the Issuer
may redeem the Notes, in whole or in part, at a redemption prices set
forth under Description of the NotesOptional Redemption.
Repurchase of Notes upon a Change of

Control Triggering Event. . . . . . . . . . . .
Withholding Tax; Additional

Amounts . . . . . . . . . . . . . . . . . . . . . . . . . .
Not later than 30 days following a Change of Control Triggering

Event, the Issuer or the Parent Guarantor will make an Offer to
Purchase all outstanding Notes (a Change of Control Offer) at a
purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the Offer to Purchase Payment
Date. See Description of the NotesRepurchase of Notes Upon a
Change of Control Triggering Event.
Payments with respect to the Notes and the Guarantees will be made
without withholding or deduction for taxes imposed by the
jurisdictions in which the Issuer or Guarantors are organized or
resident for tax purposes or through which payments are made, except
as required by law. Where such withholding or deduction is required
by law, the Issuer or the applicable Guarantor will make such
deduction or withholding and will, subject to certain exceptions, pay
such additional amounts as will result in receipt by the Holder of such
amounts as would have been received by such Holder had no such
withholding or deduction been required. See Description of the
NotesAdditional Amounts.
10
Redemption for Taxation Reasons . . . . . .
Subject to certain exceptions, the Issuer may redeem the Notes, in

whole but not in part, at a redemption price equal to 100% of the
principal amount thereof, together with accrued and unpaid interest, if
any, to the date fixed by the Issuer for redemption, if, as a result of
certain changes in tax law, the Issuer or a Guarantor (as the case may
be) would be required to pay certain additional amounts; provided
that where the additional amounts are payable as a result of changes
affecting Indonesian taxes, the Notes may be redeemed only in the
event that the withholding rate exceeds 20%. See Description of the
NotesRedemption for Taxation Reasons.
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Indenture contains covenants that, among other things, limit the
ability of the Issuer, the Parent Guarantor and the Restricted
Subsidiaries to:
incur additional Indebtedness;
make investments or other specified Restricted Payments;
declare dividends on Capital Stock or purchase or redeem Capital
Stock;
enter into agreements that restrict the Restricted Subsidiaries
ability to pay dividends and transfer assets or make inter-company
loans;
issue or sell Capital Stock of Restricted Subsidiaries;
have Restricted Subsidiaries issue guarantees;
enter into transactions with equity holders or affiliates;
create any Lien;
enter into Sale and Leaseback Transactions;
sell assets;
engage in different business activities; or
effect a consolidation or merger.
These covenants are subject to a number of important limitations,
exceptions and qualifications. See Description of the Notes.
Selling and Transfer Restrictions . . . . . . .
The Notes will not be registered under the U.S. Securities Act or
under any state securities law of the United States and will be subject
to customary restrictions on transfer and resale. See Transfer
Restrictions.
Form, Denomination and Registration. . .
The Notes will be issued only in fully registered form, without

coupons, in denominations of US$100,000 and integral multiples of
US$1,000 in excess thereof and will be initially represented by Global
Notes registered in the name of a nominee of DTC.
Book-Entry Only . . . . . . . . . . . . . . . . . . . . .
The Notes will be issued in book-entry form through the facilities of

DTC for the accounts of its participants, including Euroclear and
11
Clearstream. For a description of certain factors relating to clearance

and settlement, see Description of the NotesBook-Entry; Delivery
and Form.
Delivery of the Notes . . . . . . . . . . . . . . . . .
We expect to make delivery of the Notes, against payment in

same-day funds, on or about July 29, 2010, which we expect will be
the third business day following the date of this offering circular,
referred to as T+3. See Plan of DistributionDelivery, Payment
and Settlement.
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . .
The Issuer will on-lend the net proceeds of this offering to companies
in our Group, which will in turn use the funds, together with the
proceeds of the existing notes, the Senior Secured Credit Facility and
cash released from Berau Coals former cash and accounts
management agreement, to repay indebtedness and make the first
payment for our proposed acquisition of Maple. See Use of
Proceeds.
Rule 144A Global Note . . . . . . . . . . . . . . .
CUSIP Number: 083518 AA8

ISIN: US083518AA82
Common Code: 052401658
Regulation S Global Note . . . . . . . . . . . . .
CUSIP Number: Y1004W AA4

ISIN: USY1004WAA46
Common Code: 052401267
Governing Law . . . . . . . . . . . . . . . . . . . . . .
The Notes and the Guarantees (other than the Indonesian Law
Guarantees) will be, and the Indenture is, governed by, and construed
in accordance with the laws of, the State of New York. The
Indonesian Law Guarantees will be governed by, and construed in
accordance with, the laws of the Republic of Indonesia.
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HSBC Bank USA, National Association.
Principal Paying Agent, Transfer Agent

and Registrar . . . . . . . . . . . . . . . . . . . . . . HSBC Bank USA, National Association.
Common Security Agent . . . . . . . . . . . . . .
Credit Suisse AG, Singapore Branch.
Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
We have received approval-in-principle for the listing of the Notes on

the SGX-ST. The Notes will be traded on the SGX-ST in a minimum
board lot size of US$200,000 for so long as the Notes are listed on the
SGX-ST.
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . .
For a discussion of certain factors that should be considered in

evaluating an investment in the Notes, see Risk Factors.
12
SUMMARY FINANCIAL INFORMATION AND OTHER DATA

You should read the following summary financial information and other data together with the section
entitled Managements Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements and related notes included elsewhere in this offering circular.
We have derived the following summary financial information from our financial statements as of and for
the years ended December 31, 2007, 2008 and 2009, which have been audited by KAP Tjiendradjaja and
Handoko Tomo (formerly KAP Handoko Tomo), independent public accountants, and our unaudited financial
statements as of and for the three months ended March 31, 2009 and 2010, all of which are included elsewhere in
this offering circular. Our unaudited financial statements as of and for the three months ended March 31, 2009
and 2010 have been reviewed by KAP Tjiendradjaja and Handoko Tomo and contain all adjustments that our
management believes are necessary for the fair presentation of such information. Results for interim periods are
not necessarily indicative of results for the full year.
Our financial statements as of and for the year ended December 31, 2007 have been restated. The figures
included below are the restated figures. See Note 41 to our financial statements as of and for the years ended
December 31, 2007, 2008 and 2009 included elsewhere in this offering circular.
Our financial statements are reported in Rupiah, and our functional currency is the Rupiah. We prepare and
present our financial statements in accordance with Indonesian GAAP, which differs in certain respects from
U.S. GAAP. For a description of certain differences between Indonesian GAAP and U.S. GAAP, see Summary
of Certain Principal Differences Between Indonesian GAAP and U.S. GAAP.
2007
Statement of Income
Data:
Sales . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . .
Gross profit . . . . . . . . . . . .
Operating expenses:
General and
administrative . . .
Selling and
marketing . . . . . . .
Year Ended December 31,

Three Months Ended March 31,
2008
2009
2009(1)
2009
2010
2010(2)
(Rp. in billions and US$ in millions)
Rp.3,445.0
2,658.4
Rp.6,110.2
4,458.8
Rp.8,318.6
4,921.4
US$885.0
523.6
Rp.1,721.1
1,036.9
Rp.2,041.8
1,473.2
US$224.0
161.6
786.6
1,651.4
3,397.2
361.4
684.2
568.6
62.4
120.3
179.4
270.2
28.7
39.5
125.3
13.8
39.1
64.0
101.4
10.8
22.2
29.0
3.2
Total operating
expenses . . . . . . . . . . . .
159.4
243.4
371.6
39.5
61.7
154.3
17.0
Operating income. . . . . . .
627.2
1,408.0
3,025.6
321.9
622.5
414.3
45.4
13
2007
Other income (charges):

Interest income . . . . . .
Foreign exchange gain
(loss) net. . . . . . . .
Realization of
difference in value
from restructuring
transactions of
entities under
common control . . .
Interest expenses. . . . .
Loss from early
redemption of
senior notes . . . . . . .
Amortization of
deferred financing
charges. . . . . . . . . . .
Amortization of
goodwill. . . . . . . . . .
Others net . . . . . . . . .
225.4
(39.1)

2008
2009
2009(1)
2009
2010
2010(2)
243.2
259.7
27.6
71.8
5.1
0.6
(155.7)
175.9
18.7
(78.6)
236.1
25.9
(300.6)
(294.4)
8.0
(280.4)
0.8
(29.8)
(81.7)
(100.9)
(11.1)
(156.3)
(16.6)
(19.9)
(21.1)
(67.6)
(7.2)
(6.3)
(34.1)
(3.7)
(49.3)
4.8
(49.3)
4.9
(38.6)
4.9
(4.1)
0.5
(12.3)
0.4
(30.7)
(0.2)
(3.4)
Other income (charges)

net . . . . . . . . . . . . . . . . . . .
(178.7)
(272.4)
(94.4)
(10.1)
(106.7)
75.3
8.3
Income before income tax

expense . . . . . . . . . . . . . . .
Income tax expense. . . . . . .
448.5
(256.6)
2,931.2
(1,291.7)
311.8
(137.4)
515.8
(261.6)
489.6
(239.9)
53.7
(26.3)
1,639.5
174.4
254.2
249.7
27.4
(83.6)
(159.4)
(30.1)
(3.3)
Income before minority

interest in net income of
consolidated
subsidiaries . . . . . . . . . . .
Minority interest in net
income of consolidated
subsidiaries . . . . . . . . . . .
Net income . . . . . . . . . . . . . .
Rp.
1,135.6
(597.4)
191.9
538.2
(166.3)
(368.1)
25.6
Rp. 170.1
(785.8)
Rp. 853.7
US$ 90.8
Rp. 94.8
Rp. 219.6
US$ 24.1
Notes:
(1) Converted into U.S. dollars at the rate of Rp. 9,400 = US$1.00, which was the exchange rate as of
December 31, 2009.
(2) Converted into U.S. dollars at the rate of Rp. 9,115 = US$1.00, which was the exchange rate as of March 31,
2010.
14
2007
As of December 31,
2008
2009
2009(1)
2009
As of March 31,
2010
2010(2)
Balance Sheet Data:

Total current assets . . . Rp.1,462.9 Rp.2,820.8 Rp. 4,448.2 US$ 473.2 Rp.3,336.7 Rp. 4,734.6 US$ 519.4
Total non-current
assets(3) . . . . . . . . . . .
3,378.5
4,078.6
7,832.6
833.3
4,484.4
7,618.2
835.8
Total assets . . . . . . . . . .
4,841.4
6,899.4
12,280.8
1,306.5
7,821.1
12,352.8
1,355.2
1,344.9
2,383.4
5,482.1
583.2
2,840.5
5,590.6
613.3
2,904.7
3,113.9
2,968.6
315.8
3,206.6
2,863.5
314.2
Total liabilities . . . . . . .
4,249.6
5,497.3
8,450.7
899.0
6,047.1
8,454.1
927.5

assets of
consolidated
subsidiaries . . . . . . . .
523.1
1,024.5
324.5
34.5
1,241.6
344.2
37.8
Total equity . . . . . . . . . .
68.7
377.6
3,505.6
373.0
532.4
3,554.5
389.9
Total current
liabilities(3) . . . . . . . .
Total non-current
liabilities(3) . . . . . . . .
Total liabilities and

equity . . . . . . . . . . . . . Rp.4,841.4 Rp.6,899.4 Rp.12,280.8 US$1,306.5 Rp.7,821.1 Rp.12,352.8 US$1,355.2
Notes:
December 31, 2009.
2010.
(3) Deferred financing charges were offset with short-term loans as of December 31, 2009 and senior notes as
of December 31, 2007 and 2008 to conform to the March 31, 2010 consolidated financial statements
presentation.
15
2007

2008
2009
2009(1)
2009
2010
2010(2)
Statement of Cash Flow

Data:
Net cash flows from
operating activities(3) . . . . . Rp. 281.2 Rp.1,048.5 Rp. 2,372.4 US$ 252.4 Rp. 444.2 Rp. 505.9 US$ 55.5
Net cash flows provided by
(used in) investing
activities . . . . . . . . . . . . . . .
(264.0)
(201.4)
(3,697.7)
(393.4)
78.8
(342.9)
(37.6)
(used in) financing
activities . . . . . . . . . . . . . . .
(6.4)
(266.0)
2,115.9
225.1
(82.4)
(2.1)
(0.3)
Effect of exchange rate
changes(3) . . . . . . . . . . . . . .
1.8
(88.0)
(13.1)
(1.4)
(14.1)
(4.0)
(0.4)
Net increase in cash and
cash equivalents. . . . . . . . .
12.6
493.1
777.5
82.7
426.5
156.9
17.2
Cash and cash equivalents at
the beginning of the
period. . . . . . . . . . . . . . . . . .
520.7
533.3
1,026.4
109.2
1,026.4
1,803.9
197.9
the end of the period . . . . . Rp. 533.3 Rp.1,026.4 Rp. 1,803.9 US$ 191.9 Rp.1,452.9 Rp.1,960.8 US$215.1
Notes:
December 31, 2009.
2010.
(3) Effect of exchange rate changes on cash and cash equivalents are presented separately from cash flows from
operating activities.
Non-GAAP financial measures are set out below:
2007

2008
2009
2009(1)
2009
2010
2010(2)
(Rp. in billions and US$ in millions, except for ratios)
Non-GAAP Financial
Measures:
EBITDA(3) . . . . . . . . . . . . . . . . Rp.705.3 Rp.1,484.4 Rp.3,111.9 US$331.1 Rp. 645.0 Rp. 523.0 US$ 57.3
Interest expenses . . . . . . . . . . .
300.6
294.4
280.4
29.8
81.7
100.9
11.1
Total debt(4) . . . . . . . . . . . . . . . 2,987.7
3,214.9
5,539.5
589.3
3,332.1
5,396.1
592.0
Total debt/EBITDA(5) . . . . . . .
4.2
2.2
1.8
1.8
1.3
2.6
2.6
EBITDA/interest expenses . .
2.3
5.0
11.1
11.1
7.9
5.2
5.2
Notes:
December 31, 2009.
2010.
(3) We calculate EBITDA by adding depreciation and amortization, foreign exchange losses, interest expense,
loss from early redemption of senior notes, minority interest in the net income of subsidiaries and income
tax expenses and subtracting interest income, foreign exchange gains, realization in value from restructuring
16
transactions of entities under common control and income tax benefit from net income as calculated under
Indonesian GAAP. EBITDA is a supplemental measure of our performance that is not required by, or
presented in accordance with, Indonesian GAAP or U.S. GAAP. EBITDA is not a measurement of financial
performance or liquidity under Indonesian GAAP or U.S. GAAP and should not be considered as an
alternative to net income, operating income or any other performance measures derived in accordance with
Indonesian GAAP or U.S. GAAP or an alternative to cash flows from operating activities as a measure of
liquidity. Our presentation of EBITDA may not be comparable to similarly titled measures presented by
other companies or Consolidated EBITDA as defined in the notes or our Senior Secured Credit Facility.
You should not compare our EBITDA with EBITDA presented by other companies because not all
companies use the same definition. We have included EBITDA because we believe it is an indicative
measure of our operating performance and is used by investors and analysts to evaluate companies in our
industry. See Managements Discussion and Analysis of Financial Condition and Results of Operations
EBITDA. The following table reconciles our net income under Indonesian GAAP to our definition of
EBITDA for the periods indicated:
2007

2008
2009
2009(a)
2009
2010
2010(b)
Net income . . . . . . . . . . . . . . . . . . . . . Rp. 25.6 Rp.170.1 Rp. 853.7 US$ 90.8 Rp. 94.8 Rp. 219.6 US$ 24.1
Adjustments:
Interest expenses (net of
interest income) . . . . . . . . . .
75.2
51.2
20.7
2.2
9.9
95.8
10.5
Income tax expense . . . . . . . . .
256.6
597.4
1,291.7
137.4
261.6
239.9
26.3
Depreciation and
amortization(c) . . . . . . . . . . . .
73.3
71.5
81.4
8.7
22.1
20.1
2.2
Amortization of deferred
financing charges . . . . . . . . .
19.9
21.1
67.6
7.2
6.3
34.1
3.7
Amortization of goodwill . . . .
49.3
49.3
38.6
4.1
12.3
30.7
3.4
Amortization of coal
resources . . . . . . . . . . . . . . . .
88.8
9.7
Foreign exchange loss (gain)
net . . . . . . . . . . . . . . . . . . . .
39.1
155.7
(175.9)
(18.7)
78.6
(236.1)
(25.9)
Realization in value from
restructuring transactions of
entities under common
control . . . . . . . . . . . . . . . . . .
(8.0)
(0.8)
Loss from early redemption of

senior notes . . . . . . . . . . . . . .
156.3
16.6

subsidiaries . . . . . . . . . . . . . .
166.3
368.1
785.8
83.6
159.4
30.1
3.3
EBITDA . . . . . . . . . . . . . . . . . . . . . . . Rp.705.3 Rp.1,484.4 Rp.3,111.9 US$331.1 Rp.645.0 Rp. 523.0 US$ 57.3
(a) Converted into U.S. dollars at the rate of Rp. 9,400 = US$1.00, which was the exchange rate as of
December 31, 2009.
(b) Converted into U.S. dollars at the rate of Rp. 9,115 = US$1.00, which was the exchange rate as of
March 31, 2010.
(c) Depreciation represents depreciation of fixed assets, and amortization represents amortization of
deferred exploration and development costs.
(4) Total debt includes long-term debt (net of current maturities), short-term debt and current maturities of longterm debt.
(5) EBITDA for the three months ended March 31, 2009 and 2010 are annualized for the purpose of presenting
total debt/EBITDA.
17
PT Berau Coal
We have derived the following summary financial information from Berau Coals financial statements as of and
for the year ended December 31, 2007, which have been audited by KAP Jimmy Budhi & Rekan, independent public
accountants, its financial statements as of and for the years ended December 31, 2008 and 2009, which have been
audited by KAP Tjiendradjaja and Handoko Tomo (formerly KAP Handoko Tomo), independent public accountants,
and its unaudited financial statements as of and for the three months ended March 31, 2009 and 2010, all of which have
been included elsewhere in this offering circular. Berau Coals unaudited financial statements as of and for the three
months ended March 31, 2009 and 2010 have been reviewed by KAP Tjiendradjaja and Handoko Tomo and contain
all adjustments that Berau Coals management believes are necessary for the fair presentation of such information.
Results for interim periods are not necessarily indicative of results for the full year.
Berau Coals financial statements are reported in U.S. dollars, and its functional currency is the U.S. dollar.
Berau Coal prepares and presents its financial statements in accordance with Indonesian GAAP, which differs in
certain respects from U.S. GAAP. For a description of certain differences between Indonesian GAAP and U.S.
GAAP, see Summary of Certain Principal Differences Between Indonesian GAAP and U.S. GAAP.
2007
Statement of Income Data:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . .
2008
2009
(US$ in millions)
US$384.2 US$631.2 US$ 800.0

296.1
460.6
473.3
2009
2010
US$148.0
89.2
US$220.5
149.5
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Selling and marketing . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . .
88.1
170.6
326.7
58.8
71.0
4.3
13.4
6.6
18.3
9.7
23.6
1.9
3.4
3.1
13.5
Total operating expenses . . . . . . . . . . . . . . . . . .
17.7
24.9
33.3
5.3
16.6
Operating income . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expenses):
Interest income . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on foreign exchangenet . .
Amortization of deferred financing
charges. . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expenses . . . . . . . . . . . . . . . . . . . .
Loss from early redemption of senior
notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Othersnet . . . . . . . . . . . . . . . . . . . . . . . . .
70.4
145.7
293.4
53.5
54.4
32.1
(1.5)
30.4
(4.6)
28.7
4.3
7.3
(2.8)
7.2
4.7
(2.2)
(33.8)
(2.2)
(30.4)
(6.5)
(26.9)
(0.5)
(7.0)
(3.7)
(4.2)
0.8
0.4
(15.0)
0.4
0.0
(0.0)
Other income (charges)net . . . . . . . . . . . . . .
(4.6)
(6.4)
(15.0)
(3.0)
4.0
Income before income tax expense . . . . . . . . .

Income tax expense . . . . . . . . . . . . . . . . . . . . . .
65.8
(28.7)
139.3
(61.7)
278.4
(124.2)
50.5
(22.5)
58.4
(25.9)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US$ 37.1
18
US$ 77.6
US$ 154.2
US$ 28.0
US$ 32.5
2007
Balance Sheet Data:

Total current assets . . . . . . . . . . . . . . . . . . . . . . .
Total non-current assets(1) . . . . . . . . . . . . . . . . . .
As of December 31,
2008
2009
(US$ in millions)
US$152.8 US$255.3 US$473.2

411.0
437.7
470.8
As of March 31,
2009
2010
US$285.9
455.4
US$ 519.1
485.1
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
563.8
693.0
944.0
741.3
1,004.2
Total current liabilities(1). . . . . . . . . . . . . . . . . . .

Total non-current liabilities(1) . . . . . . . . . . . . . .
142.6
307.9
217.4
284.6
583.0
15.8
245.4
277.0
612.4
14.2
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
450.5
502.0
598.8
522.4
626.6
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
113.3
191.0
345.2
218.9
377.6
US$563.8 US$693.0 US$944.0
US$741.3
US$1,004.2
Total liabilities and equity . . . . . . . . . . . . . . . . .
Note:
presentation.
2007
2008
2009
2009
2010
(US$ in millions)
Statement of Cash Flow Data:

Net cash flows provided by operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows provided by (used in) investing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows used in financing activities . . . . .
Net increase in cash and cash equivalents. . . . . .
Cash and cash equivalents at the beginning of
the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at the end of the
period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US$ 59.7 US$ 97.8 US$249.4
US$ 30.6
US$ 74.6
(25.1)
(34.5)
0.1
(4.5)
(56.2)
37.1
(97.2)
(52.0)
100.2
8.9
(7.7)
31.8
(40.6)
(11.1)
22.9
54.5
54.6
91.7
91.7
191.9
US$ 54.6 US$ 91.7 US$191.9
US$123.5
US$214.8
19

2007
2008
2009
2009
2010
(US$ in millions, except for ratios)
Non-GAAP Financial Measures:

EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt/EBITDA(3) . . . . . . . . . . . . . . . . . . . . .
EBITDA/Interest expenses. . . . . . . . . . . . . . . . .
US$ 79.3
33.8
317.2
4.0
2.3
US$153.5 US$301.6
30.4
26.9
293.6
289.3
1.9
1.0
5.0
11.2
US$ 55.4
7.0
287.9
1.3
7.9
US$ 56.6
4.2
292.0
1.3
13.5
Notes:
(1) Berau Coal calculates EBITDA by adding depreciation and amortization, foreign exchange losses, loss from
early redemption of senior notes, interest expense, income tax expenses and subtracting interest income,
foreign exchange gains and income tax benefit from net income as calculated under Indonesian GAAP.
EBITDA is Berau Coals supplemental measure of its performance that is not required by, or presented in
accordance with, Indonesian GAAP or U.S. GAAP. EBITDA is not a measurement of financial performance
or liquidity under Indonesian GAAP or U.S. GAAP and should not be considered as an alternative to net
income, operating income or any other performance measures derived in accordance with Indonesian GAAP
or U.S. GAAP or an alternative to cash flows from operating activities as a measure of liquidity. Berau
Coals presentation of EBITDA may not be comparable to similarly titled measures presented by other
companies or Consolidated EBITDA as defined in the notes or our Senior Secured Credit Facility. You
should not compare Berau Coals EBITDA with EBITDA presented by other companies because not all
companies use the same definition. We have included EBITDA because we believe it is an indicative
measure of Berau Coals operating performance and is used by investors and analysts to evaluate companies
in our industry. The following table reconciles Berau Coals net income under Indonesian GAAP to its
definition of EBITDA for the periods indicated:
2007
2008
2009
2009
2010
(US$ in millions)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$37.1 US$ 77.6 US$154.2

Adjustments:
Interest expenses (net of interest income) . .
1.7
(1.8)
Income tax expense . . . . . . . . . . . . . . . . . . . . .
28.7
61.7
124.2
Depreciation and amortization(a) . . . . . . . . . .
8.1
7.4
7.8
charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2
2.2
6.5
notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.0
Loss (gain) on foreign exchange net . . . . .
1.5
4.6
(4.3)
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$79.3 US$153.5 US$301.6
US$28.0
US$32.5
(0.3)
22.5
1.9
(3.0)
25.9
2.2
0.5
3.7
2.8
US$55.4
(4.7)
US$56.6
(a) Depreciation represents depreciation of fixed assets, and amortization represents amortization of
total debt/EBITDA.
20
The following table sets forth operating data of Berau Coal for the periods indicated.
2007
2008
2009
Operating Data:
Production volume (million tons) . . . . . . . . . . . . . . . . . . . . . .
Sales volume (million tons) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average selling price per ton (US$ per ton of sales)(1) . . . .
Cash cost per ton (US$)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average strip ratio(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.8
12.1
31.86
23.81
7.84
13.1
13.0
48.54
34.88
8.06
14.3
14.1
56.74
33.03
8.65

2009
2010
3.2
2.8
53.01
31.18
9.39
3.7
3.9
56.43
37.79
7.94
Notes:
(1) Average selling price per ton is calculated by dividing sales by sales volumes for the period presented.
(2) Cash cost per ton is calculated by adding mining costs, freight and handling costs, royalties paid to the
Government of Indonesia, coal processing and other production costs, restoration costs and increases or
decreases in coal inventories, and dividing by sales volumes for the periods presented. Although depreciation
and amortization are added to our cost of goods sold, this is not included in cash costs.
(3) The strip ratio is the number of bank cubic meters of overburden (rock and soil) that must be removed to
access and extract one ton of coal.
21
RISK FACTORS
An investment in the notes is subject to significant risks. You should carefully consider all of the information
in this offering circular and, in particular, the risks described below before deciding to invest in the notes. The
following describes some of the significant risks that could affect us and the value of the notes. As we are a
holding company and all our operations are conducted through our indirect subsidiary, Berau Coal, the risks
relating to our business are risks relating to Berau Coals business. Additionally, some risks may be unknown to
us and other risks, currently believed to be immaterial, could be material. All of these could materially and
adversely affect our business, financial condition, results of operations and prospects. The market price of the
notes could decline due to any of these risks and you may lose all or part of your investment. This offering
circular also contains forward-looking statements that involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as a result of certain factors,
including the risks we face as described below and elsewhere in this offering circular.
In general, investing in securities of issuers in emerging market countries, such as Indonesia, involves risks
not typically associated with investing in the securities of companies in countries with more developed economies
and regulatory regimes.
Risks Relating to Berau Coals Business
Global coal prices are cyclical and subject to significant fluctuations and declines in coal prices will
adversely affect Berau Coals results of operations.
Berau Coal sells a substantial portion of its coal under term coal supply agreements. The contract prices for
coal shipped under these agreements are generally negotiated and adjusted annually or on a shorter basis with
reference to prevailing coal market prices, or are linked to coal price indices. The remainder of its coal is sold on
a spot basis. For example, in 2009, Berau Coal sold 80.4% of its coal under term coal supply agreements and
19.6% on a spot basis.
World coal markets are sensitive to changes in coal mining capacity, output levels, patterns of demand and
consumption of coal from the electricity generation industry and other industries for which coal is the principal
fuel, and changes in the world economy. The coal consumption patterns of the electricity generation industry and
other industries for which coal is the principal fuel are affected by the demand for their products, local
environmental and other governmental regulations, technological developments and the price and availability of
competing coal and alternative fuel supplies. All of these factors can have a significant impact on selling prices
for Berau Coals coal and therefore our results of operations.
The price of Berau Coals coal products is also affected by a variety of other factors over which Berau Coal
has no control. Increases in world coal prices in recent years are partly attributable to the sustained high levels of
economic growth and development in China, India and other parts of Asia. Substantial economic growth in China
has led the Chinese government to restrict exports of coal, while permitting increased imports of coal, which also
contributed to higher coal prices. The price of Berau Coals coal is also affected by the value the market will
place on environmentally friendly coal and other economic benefits of its coal. Demand for coal is also affected
by the price of alternative energy sources, including nuclear energy, natural gas, oil and renewable energy
sources, such as hydroelectric power. In addition, distribution problems affecting Australias Newcastle and
Dalrymple Bay coal ports and South Africas Richards Point coal port have also affected global coal prices.
In the third quarter of 2008, world coal prices began to decline as a result of the current global financial
crisis. The global economic downturn has affected industrial activity as well as consumer demand for utilities,
and has also caused an economic slowdown in China, India and other parts of Asia. The effect of the recent
global financial crisis has persisted, with many of the worlds major economies remaining in recession in 2010.
While there has been improvement in some areas, it is still unclear whether the recovery is sustainable. There are
22
uncertainties over the impact of the bailout of Greece by the European Union and the International Monetary
Fund and the impact this may have on the global economy.
Further, because a significant percentage of Berau Coals coal products are sold under contracts that have
prices fixed annually, Berau Coal is unable to benefit much from short-term increases in spot prices of coal.
As Berau Coals results of operations are highly dependent upon the prices it receives for its coal, an
extended or substantial decline in global coal prices or the price for Berau Coals coal products will materially
and adversely affect us.
Indonesias new mining law and other laws and regulations could increase Berau Coals costs and
adversely affect its operations.
Berau Coals coal mining operations are regulated by the Government of Indonesia primarily through the
Ministry of Energy and Mineral Resources, as well as the Ministry of Forestry, the State Ministry for
Environmental Affairs and the Investment Coordinating Board. In addition, the local governments where Berau
Coals concession area is located can implement regulations affecting Berau Coal.
A new mineral and coal mining law came into effect in January 2009 (the Mining Law). Some provisions
of the Mining Law could materially and adversely affect Berau Coal. For example, all coal contracts of work
must be adjusted in accordance with the Mining Law through an amendment to the coal contract of work. The
Ministry of Energy and Mineral Resources has sent the proposed amendment to the coal contract of work to
Berau Coal, and Berau Coal has submitted its responses to the draft amendment. The Government of Indonesia
has proposed amending, among others, clauses on regional taxes and adjustments to the concession area in
accordance with the mining plan. The amendment is still under negotiation. The Mining Law and related
regulations also require that, from September 30, 2009, mining companies must conduct their own coal mining
and processing activities and limit the use of contractors to performing overburden removal and transportation
services in the mining process, provided, however, that mining contracts relating to mining and processing
activities entered into prior to such date will remain valid, and they must be adjusted to comply with the above
requirements by September 29, 2012. Berau Coal currently uses contractors to conduct all of its mining
operations. Accordingly, Berau Coal will need to conduct its own mining operations after that date. See
Regulation of the Indonesian Coal Mining IndustryMining RegulationMining Law.
The Mining Law also references new regulations implementing domestic market sales obligations as well as
pricing for such sales. In April 2010, the Minister of Energy and Mineral resources issued a decree which sets out
a minimum percentage of domestic market sales obligation for 2010 which must be fulfilled by several coal
mining companies, including Berau Coal. Under the decree, the minimum percentage for domestic market sales
obligations applicable to Berau Coal is 24.75%. It is uncertain if further regulations will be implemented and
applicable to Berau Coal, result in Berau Coal having to increase the proportion of its domestic sales, or reduce
the price at which Berau Coal is able to sell its coal products domestically. It is also unclear which provisions of
the law existing coal contracts of work need to conform to, or their impact on Berau Coal. Furthermore, the
Government of Indonesia has not yet issued some of the implementing regulations under the Mining Law. Future
implementing regulations could create additional costs or operational difficulties for Berau Coal.
In accordance with the Mining Law, Berau Coal submitted a mining activity plan for the remainder of its
concession period under its coal contract of work to the Ministry of Energy and Mineral Resources in July 2009 for
approval. If the Ministrys approval is not obtained, it could result in the reduction of our concession area. We are in
discussion with the Ministry of Energy and Mineral Resources regarding their views on our mining activity plan.
In October 2009, the Government of Indonesia enacted Law 32 of 2009 concerning Environmental
Protection and Management which imposes several new obligations on businesses. The law requires Berau Coal
23
to consolidate all of its environmental approvals and permits into an Environmental Permit before October 3,
2010. The law also requires businesses to deposit an environmental guarantee at a state-owned bank to ensure
sufficient funds for recovery of the environment. Businesses must also conduct environmental risk analysis and
environmental audits on a periodic basis. These issues are to be detailed in implementing regulations which have
not been issued.
Law No. 40 of 2007, which regulates limited liability companies, requires companies operating in the
natural resource industries, including coal mining, to undertake corporate social and environmental
responsibility to itself, the local community in which it operates and the general public. This responsibility is
defined as a commitment to take part in sustainable economic development in order to improve the quality of life
and the environment for the benefit of the company itself, the local community and the general public. The
measures a company must take to comply with this obligation are not specified in the law but may be included in
future implementing regulations. Compliance with this general obligation or the implementing regulations may
increase Berau Coals costs.
The Government of Indonesia could terminate or restrict Berau Coals coal contract of work.
Berau Coals most significant license is its coal contract of work with the Government of Indonesia, which
gives it the right to mine coal within its concession area through April 26, 2025. The Ministry of Energy and
Mineral Resources could revoke the coal contract of work if Berau Coal fails to satisfy its contractual obligations
thereunder, including the payment of royalties and taxes to the Government of Indonesia and the satisfaction of
certain mining, environmental, health and safety requirements. As Berau Coal conducts some operations through
contractors, any failure by these contractors to perform under their operating agreements may result in Berau
Coals failure to satisfy its obligations under its coal contract of work.
Coal mining operations in Indonesia are subject to a 1996 Presidential decree which stipulates that all rights
and obligations of PT Tambang Batubara Bukit Asam (Persero) Tbk., the counterparty to all coal contracts of
work entered into prior to 1996, relating to cooperation agreements on coal mining operations (that existed
before the effectiveness of the decree) are assigned to the Minister of Mines and Energy (now known as the
Minister of Energy and Mineral Resources). Some government officials and others in Indonesia have questioned
the validity of mining contracts entered into by the Government of Indonesia prior to October 1999. See
Risks Relating to IndonesiaThe interpretation and implementation of legislation on regional governance in
Indonesia is uncertain and may adversely affect Berau Coal. Government officials or others could challenge
Berau Coals coal contract of work for political or other reasons, or the Government could terminate or refuse to
comply with the coal contract of work.
If Berau Coals coal contract of work is terminated or some of its rights under the coal contract of work are
restricted or revoked, Berau Coal will have to stop or modify its operations, which would likely materially and
adversely affect us.
Berau Coal is paying the Government of Indonesia cash equal to 13.5% of the proceeds of coal sales
instead of delivering coal. If the Government of Indonesia chooses to require delivery of coal instead of
cash, this could result in Berau Coal defaulting on its delivery requirements with other customers.
In November 2001, Berau Coal entered into the Agreement for Cooperation of Sale of Coal (Perjanjian
Kerjasama Penjualan Batubara) (Coal Sale Agreement) with the Government of Indonesia. Pursuant to the
Coal Sale Agreement, Berau Coal sells the Government of Indonesias coal portion required to be delivered
under the coal contract of work for the Government of Indonesia and delivers the cash proceeds net of certain
costs to the Government of Indonesia in lieu of delivering such coal to the Government of Indonesia . The Coal
Sale Agreement expired in 2006. Discussions between Berau Coal and the Government of Indonesia for the
extension of the Coal Sale Agreement are still on-going, particularly in relation to the cost that Berau Coal incurs
in connection with the coal sales and that are payable by the Government of Indonesia. In the absence of an
24
effective agreement, both parties continue to perform their obligations under the expired Coal Sale Agreement.
This arrangement is similar to that of other companies that had entered into first generation coal contracts of
work. If the Government of Indonesia chooses to require delivery of coal instead of the sales proceeds, this could
result in Berau Coal defaulting on its delivery requirements with other customers, which could materially and
Berau Coal depends on contractors to conduct certain mining and other operations, and the loss of, or
problems with, their services could materially and adversely affect us.
Berau Coal conducts certain of its mining operations through two mining contractors, BUMA and SIS,
under a number of contracts that are scheduled to expire between December 31, 2010 and December 31, 2018.
Under these contracts, the contractor is responsible for providing substantially all plant, equipment, materials,
services, labor and management required for the operation and maintenance of the designated mining pits. Each
contractor is responsible for adhering to Berau Coals mining plan. Each contractor employs substantially all of
the personnel who operate in the mining areas under its operational control. SIS has the right to terminate two
mining contracts for Sambarata upon giving 90 days written notice to Berau Coal. If any of the contracts is
terminated, mining operations at the affected mine could be disrupted for a significant period of time to allow the
contractor to remove its equipment and a new contractor to install its equipment. Berau Coal might not be able to
find suitable replacement contractors within a reasonable time, or at all, if any of the contractors cease to perform
their services or terminated their contracts with Berau Coal. In addition, Berau Coal uses contractors for other
operations such as barging, stevedoring, coal quality analysis and transshipping. In 2008 and 2009, Berau Coal
and BUMA had a difference in calculation of the fuel price adjustment in their mining contracts. As of
December 31, 2009, we had US$68.8 million in payables to BUMA, a portion of which represented the
difference in calculation. Berau Coal and BUMA are currently in discussion to finalize the reconciliation of such
portion.
Damage to, failure of or operational difficulties with plant or equipment could materially and adversely
affect us. In addition, the contractors performance may be constrained by labor disputes or supply shortages, or
non-delivery, of equipment, labor or materials.
Any significant increase in the fees payable to our contractors would increase our mining costs and
adversely affect our profitability. Any significant failure by Berau Coals contractors to comply with their
obligations under their operating agreements, whether as a result of financial or operational difficulties or
otherwise, any termination or significant breach of Berau Coals operating agreements, any protracted dispute
with a contractor or any material labor dispute between the contractors and their employees, could materially and
Berau Coal and its contractors face risks under Berau Coals expansion program.
Berau Coal plans to increase its annual gross coal production from 14.3 million tons in 2009 to 17.9 million
tons in 2010 and 19.9 million tons in 2011 by increasing production at its existing mines. Berau Coal also plans
to develop additional areas in its existing mines as well as in Gurimbang and Kelai in 2012 to 2014, reaching
30.0 million tons of coal production by 2014. In order to increase its coal handling capacity, Berau Coal has
increased its budgeted annual capital expenditures for maintenance and expansion, especially at the Lati mine.
Berau Coal intends to use cash generated internally from existing mines to fund its expansion plans. See
BusinessExpansion Plan and Growth Strategy. Berau Coals mining contractors are responsible for obtaining
and installing any additional equipment and hiring any additional personnel required for them to increase their
production capacity at the existing mines to comply with Berau Coals expansion plans and their contractual
obligations. However, Berau Coal has to acquire governmental permits and licenses for its exploration activities
and the production of coal. Further, if the mine area belongs to the local communities, Berau Coal has to acquire
the land rights from the local communities to conduct its exploration, mining and stockpiling activities in
25
accordance with its expansion plans. If the mine area belongs to the department of forestry, state-owned
companies or other third parties, then a borrow-use permit or land use agreement has to be obtained or entered
into prior to conducting the operations.
Berau Coal may not be able to successfully implement its expansion program as a result of many factors,
including:
difficulties Berau Coals mining contractors encounter in obtaining machinery and equipment, particularly
coal hauling trucks and excavators, as well as materials such as explosives, required to increase production,
due to capacity and supply constraints in the world steel, rubber and other markets and high global demand
for those materials and mining equipment. For example, in 2008, high global coal prices resulted in a
significant ramp-up in production by coal producers, resulting in a shortage of mining machinery and
equipment and spare parts. Due to this shortage, Berau Coals mining contractors were unable to obtain the
required mining machinery and equipment and spare parts and this was one of the reasons why Berau Coal
was unable to achieve its target production of 15.1 million tons in 2008;
Berau Coals ability to expand its infrastructure to handle the increased production;
difficulties its contractors encounter in fulfilling their contractual obligations which would require Berau
Coal to make alternative arrangements, cause delays and potentially increase the costs of Berau Coals
expansion plans;
difficulties Berau Coal encounters in contracting with additional contractors on acceptable terms or at all;
difficulties Berau Coal encounters in acquiring the necessary permits and land rights for its expansion
plans;
difficulties Berau Coal or its contractors encounter in fulfilling their capital expenditures and operating
plans, which are subject to risks, contingencies and other factors, some of which are beyond their control,
such as increases in costs of equipment and materials and their ability to secure necessary approvals,
recruit a sufficient number of qualified employees and obtain required financing on acceptable terms or at
all;
unforeseen conditions or developments that could substantially delay Berau Coals planned expansion,
including inclement weather such as heavy rainfall and forest fires, shipping delays, safety issues and
equipment and machinery malfunctions once operations commence;
insufficient cash flow generated from operations and difficulties Berau Coal encounters in obtaining
additional financing to meet its capital expenditure requirements; and
difficulties Berau Coal encounters in obtaining the Government of Indonesias approval of its
environmental impact study which is required before Berau Coal may increase its production capacity or
the failure to obtain other permits, licenses and approvals required to proceed with its expansion plan
within the requisite timeframe or at all.
The occurrence of any of the above factors and Berau Coals inability to expand its operations and
production as planned could materially and adversely affect us. As of July 1, 2010, Berau Coal had committed
obligations to deliver 17.0 million tons of coal in 2010, which is a significant increase from its coal production of
14.3 million tons in 2009. If Berau Coal is not able to expand its production in accordance with its committed
obligations, it would be in breach under its sales contracts.
26
Berau Coals operations are subject to unexpected disruptions from operational and infrastructure risks,
inclement weather and natural disasters.
The mining operations and transportation activities that Berau Coal and its contractors conduct are subject
to a number of risks that could disrupt the production, loading and transportation of coal for significant periods of
time. These risks include:
operating and infrastructure risks, such as the risk of fire, explosions, embargos, accidents, labor disputes,
unexpected geological conditions, mine collapses and environmental hazards;
inclement weather and natural disasters. For example, Berau Coal had several interruptions to its
operations in 2007 and 2008, particularly during the first half of 2008, due to exceptionally heavy rains
for a prolonged period of time. As a result of these and other events and operating conditions, Berau Coal
was unable to achieve its target production of 15.1 million tons in 2008;
hazards of maritime operations, such as piracy, capsizing, collision and adverse sea conditions;
failure by Berau Coal or its contractors to obtain key machinery, equipment and spare parts;
unexpected failures and maintenance problems of machinery and equipment;
protests by the local community against Berau Coals mines relating to the environment and
compensation claims for land acquisition may disrupt its operations, such as in 2004 when protests barred
Berau Coals mining contractors at Sambarata from conducting operations, resulting in work stoppages
for over one month and in 2007, when protests from the local community over the price to be paid for
land acquisition prevented Berau Coals mining contractors at Sambarata Block B1 from commencing
mining operations during the trial production stage;
variations in coal seam thickness, the amount and type of rock and soil (overburden) overlying the coal
seam and other discrepancies from Berau Coals geological models;
changes in geologic conditions and geotechnical instability of Berau Coals mining pits;
barging delays due to river congestion and limited rainfall causing shallow conditions along the key rivers
Berau Coal used in its operations; and
disruptions in coal production logistics and shipments of coal products, such as in July 2006 when some
customers requested a delay in delivery of coal due to inclement weather at their ports.
Berau Coal could incur substantial losses if any of these operating risks occur. Examples of such losses
include liability for personal injury or loss of life, damage to property and equipment, liability for environmental
damage and cleanup responsibilities, regulatory investigation and penalties and suspension of operations.
Customers that experience such losses in their maritime operations may elect to purchase coal from other coal
suppliers not subject to these risks. SeeBerau Coals insurance may not be adequate to cover losses or
liabilities that may arise and BusinessInsurance.
Berau Coals results of operations are subject to fuel price volatility.
Under the terms of Berau Coals contracts with certain of its mining and barging contractors, Berau Coal
bears a portion of any fuel price increase, although the terms of most of these contracts pass along some fuel
price fluctuations to the other party. Global oil prices increased significantly in 2007 and remained high in 2008
and, as a result, Berau Coals production costs and its contractors operational costs attributable to fuel have
increased. Primarily as a result of fuel price increases, Berau Coals freight and handling costs increased from
US$61.5 million in 2007 to US$100.6 million in 2008 and US$78.6 million in 2009 and was US$23.0 million in
the three months ended March 31, 2010. Fuel price may also increase as a result of a reduction in fuel price
subsidy by the Government of Indonesia. See Risks Relating to IndonesiaPolitical and social instability in
Indonesia may adversely affect Berau Coal. Beginning October 2008, Berau Coal ceased to reimburse SIS for
27
its fuel costs and instead began purchasing fuel directly from PT Pertamina (Persero), Indonesias state-owned oil
and gas company, and providing the purchased fuel to SIS. Berau Coal intends to enter into the same
arrangement with BUMA with retrospective effect from January 1, 2010. This adjustment is expected to increase
Berau Coals exposure to fluctuations in the price of fuel. Berau Coal has not hedged its fuel price risk. Any
increases in the price of fuel would cause a corresponding increase in Berau Coals costs and if such costs are
passed on to customers, they could terminate the coal supply agreements with Berau Coal, which would
materially and adversely affect us.
Berau Coal could incur costs or be subject to penalties in connection with a dispute with the Ministry of
Energy and Mineral Resources over royalties.
Berau Coals coal contract of work sets-out an exhaustive list of taxes applicable to Berau Coal. Since 2001,
sales of unprocessed coal have not been subject to value-added taxes (VAT) in Indonesia. Accordingly, since
2001, Berau Coal has not received output VAT on its coal sales against which it can set off the input value-added
taxes it pays on its imports, local purchase of materials, supplies and other goods it purchases. Hence, Berau Coal
ended up paying a new tax in addition to those under the coal contract of work. Under Berau Coals coal contract
of work, the Ministry of Energy and Mineral Resources is required to indemnify Berau Coal against all
Indonesian taxes, duties, rentals and royalties levied by the Government of Indonesia, other than those expressly
imposed under its coal contract of work. On this basis, Berau Coal claimed reimbursement from the Ministry for
the VAT it paid since 2001. However, the Ministry rejected such claims and as a result, since 2001, consistent
with what it believes other coal mining companies with first generation coal contracts of work similar to Berau
Coals coal contract of work were doing, Berau Coal began setting off the VAT against its royalty or coal
entitlement payments due to the Ministry of Energy and Mineral Resources under its coal contract of work. As of
March 31, 2010, Berau Coal had set off an aggregate of US$176.7 million in value-added taxes against its royalty
or coal entitlement payments.
In July 2007, Berau Coal received a letter from the Commission on State Claims (Panitia Urusan Piutang
Negara) demanding unpaid royalty on coal resulting from Berau Coals set off of VAT against its coal
entitlement payments due to the Ministry of Energy and Mineral Resources from 2001 to 2005. In connection
with this letter, the Directorate General of State Assets issued a final notice of collection (surat paksa) ordering
Berau Coal to pay the royalty liability of Rp.312.7 billion and US$26.2 million by September 11, 2007, failing
which the Government of Indonesia would appropriate Berau Coals assets to the extent of the claimed amount.
Other first generation coal mining companies in Indonesia also faced similar claims from the Directorate General
of State Assets. Berau Coal and the other first generation coal mining companies challenged this notice, arguing
that the various coal contracts of work explicitly indemnified them from present and future Indonesian taxes
except those set forth in the respective coal contracts of work. Berau Coal and the other first generation coal
mining companies also argued that the coal contracts of work stated that all disputes were to be resolved by
arbitration and, as such, the Commission of State Claims had no jurisdiction to settle the dispute. In July 2008,
the Government of Indonesia imposed a travel ban on 14 senior executives from various first generation coal
mining companies, prohibiting them from traveling out of Indonesia for a period of six months on allegations that
those coal mining companies had failed to pay off debts owed to the Government of Indonesia. The travel ban
was subsequently lifted in December 2008.
In March 2008, the Administrative Court of Jakarta granted Berau Coal its petition and ordered the
Commission on State Claims to permanently withdraw the final notice of collection. However, the court did not
rule on the issue of whether the Government of Indonesia could pursue the collection of royalty Berau Coal
offset against its VAT. The Commission on State Claims appealed this decision to the High Administrative
Court, which granted a decision in favor of the Commission on State Claims. Similar verdicts were issued in
respect of the proceedings by other first generation coal mining companies. In January 2009, Berau Coal
submitted a cassation (annulment) petition to the Supreme Court of Indonesia. The Supreme Courts online case
tracking system shows that the Supreme Court denied the cassation petition in a decision dated March 22, 2010,
although its orders are not specified and we have not received any formal document evidencing such decision and
28
its detailed orders. Typically after deliberation and coming to a decision, the Supreme Court will prepare the
judgment and deliver the same to the originating court, which will then deliver a formal notice to the litigating
parties attaching the courts order. The duration between the time the decision is taken and the delivery of the
decision to the originating court cannot be ascertained. The litigating parties may request a copy of the judgment
soon thereafter.
If the online information as set out above is accurate, the Supreme Court may (i) declare that the final notice
of collection is valid, and (ii) order Berau Coal to comply with the notice. The Supreme Courts decision is final,
binding and enforceable as of the date the decision is formally delivered to the defendant. Thereafter, the
Commission on State Claims can enforce its final notice of collection requiring Berau Coal to pay the royalty
liability of Rp. 312.7 billion and US$26.2 million. If (i) the Commission on State Claims decides to proceed with
the final notice of collection despite ongoing discussions between first generation coal mining companies
including Berau Coal and (ii) Berau Coal does not comply with it, the Commission on State Claims may seize
Berau Coals assets, and subsequently appropriate those assets against Berau Coals royalty liability. If Berau
Coal (i) does not comply with the final collection notice or (ii) is deemed able to settle the debt but unwilling to
do so, the Commission on State Claims may also impose debt imprisonment (paksa badan) for a maximum of 12
months against Berau Coals directors or commissioners. Berau Coal may also file for a civil request motion
(peninjauan kembali) against the verdict on the basis of misapplication of the law; however, such motion does
not prohibit any enforcement actions.
In September 2008, the Government of Indonesia and all first generation coal mining companies, including
Berau Coal, agreed that the provisions in the various coal contracts of work shall prevail in their dispute in
respect of the royalty payments which had been set off against VAT payments. The first generation coal mining
companies agreed that they would pay the Ministry of Energy and Mineral Resources the royalty amounts and
sales taxes on certain goods sold to them and certain services rendered to them, as set forth in their respective
coal contracts of work, and the Ministry agreed that it would reimburse all first generation coal mining
companies for their output VAT. In this respect, the coal contract of work provides that sales tax on certain goods
sold and certain services rendered to Berau Coal will not exceed 5.0% of the assessable value. As of March 31,
2010, Berau Coal has accrued Rp. 68.7 billion in its accounts to provide for such sales tax. The amount of VAT
that may be levied on goods sold to Berau Coal is imposed under a new VAT law that is effective from April 1,
2010 (the New VAT Law). The New VAT Law retains coal as a VAT exempt product. While Berau Coal is
still in discussion with the Government of Indonesia to reach an agreement on the mechanics of settlement under
the September 2008 agreement, in accordance with Berau Coals coal contract of work, failure to pay royalties or
other non-compliance could lead the Government of Indonesia to terminate the coal contract of work. See
The Government of Indonesia could terminate or restrict Berau Coals coal contract of work.
As a demonstration of goodwill, the first generation coal mining companies paid an aggregate of Rp. 600
billion to the Account of the Office of State Assets and Auction, Directorate General of State Assets, Department
of Finance (Rekening Kantor Pelayanan Kekayaan Negara dan Lelang, Dirjen Kekayaan Negara, Departemen
Keuangan) as a deposit to guarantee their royalty payments, of which Berau Coal paid Rp. 90 billion. The actual
payment due to the Ministry of Energy and Mineral Resources by the first generation coal mining companies for
royalties and sales tax, after set off of the VAT, is pending assessment by the Government of Indonesias internal
auditor.
Until the dispute is finally resolved, the Government of Indonesia could impose other penalties on Berau
Coal.
Berau Coal depends on a small number of customers for a substantial portion of its total revenues.
In 2009, Berau Coal derived 40.4% of its total revenues from its three largest customers, PT Indonesia
Power, PT Jawa Power and Taiwan Power Company, and 82.5% of its total revenues from its ten largest
customers. As of December 31, 2009, Berau Coal had coal supply agreements with its ten largest customers that
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will expire at various times from 2010 to 2018. Any delay in or failure of payment by a significant customer
could materially and adversely affect us.
Berau Coals coal supply agreements generally contain provisions that allow its customers to suspend or
terminate the contract if certain events occur, such as Berau Coals failure to perform its obligations under the
contract or other events beyond the reasonable control of the affected party, including strikes, riots, breakdown of
machinery and changes in governmental regulations.
In addition, Berau Coals coal supply agreements requires it to deliver coal meeting quality threshold for
certain characteristics, such as calorific value, moisture content, sulfur content and ash content. Failure to meet
these specifications could result in economic penalties, including price adjustments, rejection of deliveries or
termination of the contracts.
If any of these customers terminates its contract with Berau Coal or significantly reduces the amount of coal
it purchases from Berau Coal, Berau Coal may not be able to find replacement customers and its results of
operations could be materially and adversely affected.
Berau Coal is dependent on international marketing agents for its export coal sales and some of its
marketing agency agreements are on an exclusive basis.
Berau Coal has marketing agreements with international marketing agents for terms ranging between eight
months to four years, and it relies on these agents for all its export coal sales to single customers in China, Hong
Kong, India, Taiwan and Thailand, various customers in South Korea, and to Japan. Sales to these customers
comprised 36.7%, 43.5%, 52.1% and 62.4% of Berau Coals total revenues in 2007, 2008, 2009 and the three
months ended March 31, 2010, respectively. Berau Coal has five marketing agents, namely, Kin Rich
International Enterprises Ltd., Sojitz Corporation (Sojitz), NC Korea Co., Honson International Corporation
and Maple, an affiliate of ours.
All of Berau Coals marketing agency agreements are on an exclusive basis with respect to a particular
customer or group of customers, except for Sojitz and Maple. Berau Coals agreement with Sojitz is on an
exclusive basis for Japan, and Berau Coals agreement with Maple is for the exclusive marketing of coal outside
Japan, subject to the existing marketing agreements (which will continue until their expiry dates). Accordingly,
Berau Coal may not be able to take advantage of opportunities to expand its sales in the short term in Japan or to
those particular customers, as the case may be, given the exclusivity granted to its agents.
If any of Berau Coals marketing agents terminates or breaches its marketing agreement, Berau Coal may
need to seek other marketing agents for its coal products or conduct its own marketing activities, which could
disrupt its sales of coal and materially and adversely affect us. Further, once existing marketing agreements
expire, Berau Coal will depend on Maple for all marketing activities. If we are unable to complete our proposed
acquisition of Maple or Maple is unable to perform its obligations under the marketing agreement, this could
have a material adverse effect on us. See Description of Material AgreementsAgreement to Acquire Maple
Holdings Limited.
Berau Coal is subject to the risks inherent in conducting substantially all of its operations in a limited
geographical area.
All of Berau Coals mining operations are located in East Kalimantan, Indonesia. This dependence on
operations at a single location subjects us to a number of risks, including natural disaster and inclement weather
in the area. Any significant operational or other difficulties in the mining, processing, storing, transporting or
shipping of coal at or from Berau Coals concession area could reduce, disrupt or halt Berau Coals coal
production, which could in turn materially and adversely affect us.
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Berau Coals insurance may not be adequate to cover losses or liabilities that may arise.
Berau Coal does not maintain insurance against some operational and infrastructure risks and natural
disasters. In particular, Berau Coal does not have insurance coverage for business interruption or acts or
omissions of its contractors. Under the mining contracts, insurance against risks or loss to the operation is
provided by Berau Coals mining contractors for each of the relevant mining areas. However, some of its
contractors may not carry adequate liability coverage. Berau Coals insurance may not be adequate to cover all
losses or liabilities that may arise. Also, insurance may only be available at premium levels that are prohibitively
expensive. In addition, due to the enactment of the Mining Law which will limit the scope of mining operations
that can be performed by a mining contractor, Berau Coal may need to obtain insurance to cover such operations.
A significant uninsured or underinsured claim against Berau Coal or the failure of its insurers to pay claims
Berau Coals ability to operate effectively could be impaired if it loses key personnel or if Berau Coal or its
mining contractors are unable to attract and retain skilled and qualified personnel.
Berau Coal manages its business with a number of key personnel with specific skills, qualifications and
experience relevant to Berau Coals operations and the loss of any of those personnel could materially and
adversely affect our operations. Berau Coal may not be able to continue to employ its key personnel or attract
and retain skilled and qualified personnel.
As Berau Coals mining operations expand, Berau Coal believes its success will depend on it and its
contractors continued ability to attract and retain skilled and qualified personnel. Any difficulty in Berau Coals
or its contractors ability to attract, recruit, train and retain skilled and qualified personnel could materially and
adversely affect our operations.
Berau Coals results of operations could be adversely affected by commodity hedging arrangements.
Berau Coal may enter into coal price hedges pursuant to commodity hedging agreements. If Berau Coal
enters into coal price hedge agreements, and if the market price of coal is higher than the price at which it sold its
coal under a forward hedging agreement, it would not be able to realize the profit it would have received had it
sold its coal at the higher price.
In addition to its ability to maintain its mining concession, Berau Coals operations depend on its ability to
obtain, maintain and renew necessary licenses, agreements and approvals.
In addition to the coal contract of work, Berau Coal is required to have various licenses and approvals for its
operations. These approvals include approvals for manpower and for its mining contractors to perform certain
mining services as well as environmental approvals. The licenses from the Government of Indonesia or regional
governments required for Berau Coals operations include business, mining, capital investment, export and
import, and land utilization permits. The licenses have various expiration dates ranging from six months to five
years from the date of issue. Berau Coal must renew all of its licenses and approvals as they expire, as well as
obtain new licenses and approvals when required. Relevant government authorities could revoke or refuse to
issue or renew the licenses and approvals which Berau Coal requires to operate its business. This uncertainty
partly arises as a result of the decentralized legislative framework within which Berau Coal operates. A loss of,
or failure to obtain or renew, any licenses, agreements and approvals necessary for Berau Coals operations could
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If Berau Coal is unable to maintain good relations with local communities near its concession area, its
operations could be materially and adversely affected.
There have been protests in certain parts of Berau Coals concession area. For example, in 2004, protestors
barred Berau Coals mining contractors from entering Sambarata Block A, resulting in work stoppages for over
one month. In 2007, protests from the local community arising from a dispute over the price to be paid for land
acquisition prevented Berau Coals mining contractors at Sambarata Block B1 from commencing mining
operations during the trial production stage. Protests or complaints from members of the local communities could
materially impair Berau Coals operations.
Berau Coal could incur significant environmental compliance costs.
Berau Coals mining operations involve water use, disposal of overburden, creation of runoff, coal
stockpiles, overburden and top soil storage piles and discharge of emissions, which could adversely affect the
environment. Berau Coal is subject to Indonesian national and regional environmental, health and safety laws,
forestry laws and other legal requirements. These laws govern the discharge of substances into the air and water,
the management and disposal of hazardous substances and wastes, site clean-up, groundwater quality and
availability, plant and wildlife protection, reclamation and rehabilitation of mining properties after mining is
completed and the restriction of open-cut mining activities in conserved forest areas. Berau Coal is required to
submit an environmental impact analysis for approval by the Government of Indonesia before it may undertake
certain mining activities and increase its production capacity. Berau Coal incurs significant costs complying with
these laws. In addition, Berau Coal may be required to bear substantial costs as a result of violations of, liabilities
under or changes in environmental, health and safety laws. Furthermore, Berau Coals coal contract of work may
be suspended if there is evidence of serious failure to meet environmental standards, or withdrawn permanently
in the event of extreme failures.
The impact of Berau Coals mining operations on the environment may be materially greater than it
anticipates or may breach Indonesian environmental laws. In addition, the requirements for compliance and
remediation may be materially increased by new laws or changes in the interpretation or implementation of
existing laws. Berau Coal may experience difficulties in complying with any new environmental requirements.
Any material increase in the costs of environmental compliance and remediation, or the occurrence of a major
environmental accident at Berau Coals mines, could materially and adversely affect us.
Berau Coals mining operations are dependent on its ability to obtain, maintain and renew land use rights
in forestry areas.
Pursuant to Law No. 41 of 1999 on Forestry (the Forestry Law) and related regulations, mining
companies must obtain a borrow-use permit from the Ministry of Forestry before conducting mining activities in
production forest areas. A borrow-use permit is valid for 20 years from its issuance date and can be extended.
If the land in question is managed by a state-owned company such as PT Inhutani (Persero) or PT Perkebunan
Nusantara (Persero), a land use agreement should be entered into prior to the commencement of mining
activities. If Berau Coal conducts mining activities within production forest areas without a land-use agreement
or borrow-use permit, it could be subject to a Rp. 5.0 billion fine and members of its management may be
imprisoned for up to 13 years and four months.
Berau Coal has a borrow-use permit for 2,587 hectares of forestry in the Binungan area that is effective until
August 2027 and a permit for coal exploration in the Kelai area that is effective until December 2011. If Berau
Coal is not able to obtain, maintain or renew its borrow-use permit or land use agreement over the relevant
mining area, it would be materially adversely affected.
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Berau Coal has significant mine reclamation and rehabilitation obligations.

The Government of Indonesia establishes operational, reclamation and closure standards for all aspects of
open-cut mining operations. Under its coal contract of work, Berau Coal is responsible to the Government of
Indonesia for the reclamation and rehabilitation of all areas being mined within its concession areas and has
developed mine reclamation and rehabilitation strategies based on the geological characteristics of its mines. The
long, narrow coal deposits of its open-cut mines permit Berau Coal to use top soil from land clearing
immediately to rehabilitate previously mined blocks. Berau Coal places overburden into the pit as it mines. As
Berau Coal discovers new areas for mining, it records an expense for the estimated cost of these reclamation and
rehabilitation activities (including reclamation and rehabilitation expenses for areas being mined by contract
miners) and record a liability for the estimated future cash outlays for reclamation and rehabilitation. These
expenses increase as Berau Coal disturbs more areas for mining to increase production. Berau Coals mine
reclamation and rehabilitation liabilities can change significantly if its actual costs vary from its assumptions or if
governmental regulations change. Pursuant to Ministry of Energy and Mineral Resources Regulation No. 18 of
2008 concerning Reclamation and Mine Closure (MEMR Regulation 18), Berau Coal must provide a
reclamation guarantee and closing of mine guarantee in the form of a time deposit, bank guarantee or insurance
annually. Pursuant to MEMR Regulation 18, Berau Coal is required to submit a mine closure plan and a
reclamation plan to the Ministry of Energy and Mineral Resources. Berau Coal submitted its mine closure plan
and reclamation plan on March 3, 2010 to the Ministry of Energy and Mineral Resources. The mine closure plan
is being reviewed by the Ministry of Energy and Mineral Resources, while the reclamation plan has been
approved by the Ministry of Energy and Mineral Resources. Any significant unanticipated increase in Berau
Coals reclamation and rehabilitation costs, including as a result of any requirements the Government of
Indonesia imposes under the Mining Law or otherwise, could materially and adversely affect us.
Proved and probable coal reserves are expressions of judgment based on knowledge, experience and
industry practice, and any adjustments to estimated proved and probable coal reserves could adversely
affect Berau Coals development and mining plans.
Estimates of proved and probable coal reserves are expressions of judgment based on knowledge,
experience and industry practice. In determining the feasibility of developing and operating its mines, Berau Coal
uses estimates of coal reserves and resources that are made by its internal personnel and generally reviewed
annually by an independent mining consultant. Numerous uncertainties inherent in estimating quantities and the
value of recoverable and marketable coal reserves exist, including many factors beyond Berau Coals control. As
a result, estimates of reserves are, by their nature, uncertain. When calculating reserves estimates, Berau Coal
makes assumptions about:
geological conditions;
production from the mining area compared with production from other producing areas;
the effects of regulations, including environmental, health and safety regulations, and taxes;
future coal prices; and
future operating costs.
These estimated coal reserves and resources may therefore require revisions based upon actual production
experience, operating costs, coal prices and other factors. Determinations of coal resources or reserves that
appear valid when made may change significantly when new information becomes available.
Actual facts may vary considerably from the assumptions Berau Coal uses in estimating its reserves. For
these reasons, its actual recoverable and marketable reserves and its actual production, costs, revenues and
expenditures relating to its reserves may vary materially from its estimates. Berau Coals estimates may not
accurately reflect its actual reserves or be indicative of future production, costs, revenues or expenditures.
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Berau Coals recovery rates will vary from time to time, which will vary the volumes of coal that it can sell
from period to period. If Berau Coal encounters coal seams or formations different from those predicted by past
drilling, sampling and similar examinations and exploration activities, it may have to adjust its coal reserve
amounts. Also, Berau Coals reserve amounts have been determined based on assumed coal prices and historical
and assumed operating costs. Some of Berau Coals reserves may become unprofitable or uneconomic to develop
if the long-term market price for coal decreases or its operating costs and capital expenditure requirements
increase. Berau Coals exploration activities may not result in the discovery of additional coal deposits that can
be mined profitably. Berau Coals coal products may not meet the quality specifications in its coal supply
agreements. Adjustments to proved and probable coal reserves could affect Berau Coals development and
mining plans and any significant reduction in the volumes and grades of the coal reserves Berau Coal recovers
from that it had estimated could materially and adverse impact us.
Berau Coals coal mining operations could be adversely affected by illegal mining and mining permits or
other licenses issued by local, regional or central governments which conflict with its coal contract of
work.
Unauthorized extraction and removal of coal from mining concession areas is a common problem in
Indonesia. Illegal mining in Indonesia has increased in recent years, primarily due to increases in market prices
for coal and increased black-market demand for coal products. The level of illegal mining typically increases as
coal prices rise. Berau Coal could incur losses from any illegal mining in its concession area such as reserve
losses and rehabilitation costs associated with such illegally mined areas.
In addition, the decentralization of the central governments authority and weakened control over regional
activities in recent years has led to local, regional and central governments issuing permits which conflict with
existing coal contracts of work, including Berau Coals coal contract of work.
Furthermore, departments or ministries in the central government (other than the Ministry of Energy and
Mineral Resources) could also issue licenses for certain land uses which may conflict with Berau Coals mining
activities and concession area. For example, the Ministry of Forestry issued a license to PT Tanjung Redeb
Hutani to use forest areas that overlapped with Berau Coals concession area under the coal contract of work. As
a result, in 2007, Berau Coal entered into a settlement agreement with PT Tanjung Redeb Hutani pursuant to
which Berau Coal paid PT Tanjung Redeb Hutani compensation of US$5.0 million and agreed to engage PT
Tanjung Redeb Hutani as its mining contractor for the Gurimbang mine on an exclusive basis, subject to
approval by the Government of Indonesia, which has been rejected. An amendment to the settlement agreement
is being discussed between Berau Coal and PT Tanjung Redeb Hutani and, once agreed between the parties, may
require approval from the Government of Indonesia.
Increases in transportation costs could adversely affect demand for Berau Coals coal and decreases in
transportation costs could increase competition from coal producers in other parts of Asia and elsewhere
in the world.
For Berau Coals customers, transportation costs are a critical factor in purchasing decisions. Under the
terms of almost all of Berau Coals coal supply agreements, the customer is responsible for paying transportation
costs which represent a significant portion of the total cost of coal purchased. Beginning in early 2003 until the
third quarter of 2008, freight costs for the transportation of products, including coal, increased significantly
worldwide. In particular, high sea freight costs in 2007 and part of 2008 gave Indonesian coal producers,
including Berau Coal, a significant cost advantage over competing coal exporters into Asia, such as Australia and
South Africa. Significant decreases in transportation costs, or the absence of disruptions in coal transportation
systems, could increase competition from coal producers in other parts of Asia, Australia and South Africa.
Decreases in freight rates and the availability of other modes of coal transportation from certain parts of the
world may also give Berau Coals competitors from other areas of the world a pricing advantage over Berau
Coal, depending on their proximity to the target market. Increases in transportation costs could make coal a less
competitive source of energy.
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Berau Coal depends upon ships to deliver coal to its customers. While Berau Coals customers typically
arrange and pay for direct barging of coal from Berau Coals coal terminals at its Lati, Suaran or Sambarata
ports, or the transportation of coal from the transshipment area at Muara Pantai to the point of use, disruption of
these transportation services due to weather-related problems, distribution problems, labor disputes or other
events could temporarily restrict Berau Coals ability to supply coal to its customers or could result in demurrage
claims by ship owners for loading delays.
Coal markets are highly competitive and are affected by factors beyond Berau Coals control.
In recent years, approximately 60% of Berau Coals total revenues comprised sales to customers outside of
Indonesia. Berau Coal competes with both domestic Indonesian coal producers and foreign coal producers
(primarily from Australia and China) in the world coal markets primarily on the basis of coal quality, price,
transportation cost and reliability of supply. Demand for Berau Coals coal by its principal customers is affected
by the price of alternative energy sources, including nuclear energy, natural gas, oil and renewable energy
sources, such as hydroelectric power. Generally, the competitiveness of Berau Coals coal compared to the coal
products of its competitors and alternative fuel supplies is evaluated on a delivered cost per heating value unit
basis. Factors that directly influence production costs of coal producers include the geological characteristics of
their coal which comprise seam thickness, strip ratios, depth of underground reserves (for underground mining
companies), transportation costs, and labor availability and cost. Because world coal prices are denominated in
U.S. dollars, Berau Coals competitors are also affected by the relative rates of exchange between the U.S. dollar
and their home currency. Berau Coals inability to maintain its competitive position as a result of these or other
factors could materially and adversely affect us.
Berau Coal may not be able to produce sufficient amounts of coal to fulfill its customers requirements,
which may harm its customer relationships.
Berau Coal may not be able to produce sufficient amounts of coal to meet its customers demands or its
contractual obligations. This could be attributable to many reasons, including disputes with its contractors, labor
disputes, equipment and machinery failures, operational difficulties, difficulties its contractors encounter in
acquiring essential machinery, equipment and spare parts, inclement weather and variations in the quantity and
quality of coal within the coal seams. If Berau Coal is unable to satisfy its contractual obligations and unable to
negotiate a revised delivery schedule with its customers, this could result in customer claims against Berau Coal
or otherwise harm Berau Coals relationships with its customers, which in turn could materially and adversely
affect us.
An oversupply of coal could adversely affect Berau Coals profitability.
During the past 20 years, a growing world coal market and increased demand for coal worldwide have
attracted new investors to the coal industry, spurred the development of new mines and expansion of existing mines
in various countries, including Indonesia, China, Australia, South Africa and Colombia, and resulted in added
production capacity throughout the industry worldwide. These developments led to increased competition and lower
coal prices before the beginning of 2003. Increases in coal prices from the fourth quarter of 2003 until the third
quarter of 2008 encouraged the development of expanded capacity by new and existing international coal producers.
World coal prices declined from the third quarter of 2008 through the second half of 2009 and have remained at
relatively stable prices since then. Any oversupply of coal in the world markets could reduce world coal prices and
the prices Berau Coal receives under new coal supply agreements which could materially and adversely affect us.
Compliance with environmental standards related to coal combustion may cause Berau Coals customers
to switch to alternative fuels, and materially and adversely affect Berau Coals sales.
Coal contains impurities, including sodium oxide, sulfur, mercury and chlorine, many of which are released
into the air when coal is burned. Stricter environmental regulations of emissions from coal-fired power
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generation plants and other industrial plants could increase the costs of using coal, thereby reducing demand for
coal and adversely affecting Berau Coals revenues. Stricter environmental standards could also result in Berau
Coals coal not being suitable for sale in the relevant markets.
Indonesia and more than 200 other nations are signatories to the 1992 United Nations Framework
Convention on Climate Change which is intended to limit or capture emissions of greenhouse gases such as
carbon dioxide. In 1997, in Kyoto, Japan, the signatories to the convention established specific targets for cutting
greenhouse gas emissions for developed nations. The specific emissions targets vary from country to country. In
2007, the signatories to the convention participated in the United Nations Climate Change Conference in Bali,
Indonesia. At the 2007 conference, the participants agreed to the adoption of the Bali Roadmap, which sets
forth a new negotiating process that was expected to be concluded by 2009 and to lead to a post-2012
international agreement on climate change. The Bali Roadmap negotiations could not be concluded at the United
Nations Climate Change Conference in Copenhagen, Denmark in 2009 and will continue in 2010. The enactment
of an international agreement on climate change or other comprehensive legislation focusing on greenhouse gas
emissions could have the effect of restricting the use of coal in markets Berau Coal services. Other efforts to
reduce emissions of greenhouse gases and initiatives in various countries to encourage the use of natural gas may
also adversely affect the use of coal as an energy source and could materially and adversely affect us. Increased
environmental concerns with respect to the use of coal could also adversely impact financing for and
international trade in coal.
Berau Coal may experience accidents at its mine sites.
Operations at Berau Coals mine sites involve the operation of heavy machinery and industrial accidents
resulting in employee injury or death may occur. In such event, Berau Coal may be liable for loss of life and
property, medical expenses, medical leave payments and fines or penalties under applicable law. Berau Coal may
also be subject to business interruptions or negative publicity as a result of equipment shutdowns for government
investigation or implementation or imposition of safety measures as a result of such accidents. These types of
accidents or enhanced safety measures governmental authorities impose could have a material adverse effect on
Berau Coal.
Our business may be adversely affected if Berau Coal is unable to acquire additional coal resources in its
concession area to convert into economically recoverable coal reserves or if we are unable to acquire
additional coal resources and reserves.
Berau Coals coal reserves will decline as mining continues. Berau Coals growth and long-term success
will depend on its ability to acquire additional coal resources within its exploration areas and to convert such coal
resources into economically recoverable coal reserves. New coal resources may not be found or may not be
economically recoverable or the Government of Indonesia may not approve the expansion of its mining
operations. Berau Coal estimates that all its coal reserves will be mined by the expiry of the coal contract of work
in 2025. We could be materially and adversely affected if Berau Coal is unable to obtain new coal resources or if
we are unable to acquire additional coal resources and reserves.
Even if Berau Coal discovers additional resources, or we acquire additional coal resources, it could take a
number of years from the initial phases of drilling until exploitation is possible, during which time the economic
viability of production may change.
If a project proves not to be economically feasible by the time we are able to exploit it, we may incur
substantial write-offs. In addition, changes or complications involving mining and other logistical processes
arising during the life of a project may increase costs and render the project not economically feasible.
Whether a project is economically viable will depend significantly on the price of coal, which can be subject
to significant volatility. See Global coal prices are cyclical and volatile and declines in coal prices will
adversely affect Berau Coals results of operations.
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As a result of any of these factors, Berau Coal or we may not be able to discover any viable resources, Berau
Coal or we may be unable to exploit any resources discovered, or Berau Coal or we may not be able to recover
all or any portion of its investments in those exploration activities.
Insufficient inventories could increase our operating costs.
Berau Coal generally maintains low levels of inventories, which may be insufficient to meet delivery
requirements in the event of disruption of transportation services due to weather-related problems, distribution
problems, labor disputes or other events that could temporarily restrict Berau Coals ability to supply coal to its
customers. This could result in demurrage claims by ship owners for loading delays, an increase in our operating
costs or a failure to meet our delivery obligations.
Risks Relating to Berau Coal Energy and Third Party Interests in Berau Coal
The rights of Sojitz as a minority shareholder of Berau Coal may entitle it to invalidate the guarantees and
security interests provided by Berau Coal, which would cause an event of default under the notes, or to
seek other remedies which may adversely affect us or the interests of the noteholders.
Sojitz may object to the issuance of the guarantee and the granting of security interests by Berau Coal for
the benefit of the notes being offered hereby. Sojitz has already objected to the issuance of the guarantee and the
granting of security interests by Berau Coal for the benefit of the existing notes. Sojitz may take actions resulting
in the guarantees and security interests becoming void, causing an event of default under the notes and exposing
Berau Coal and its shareholders to significant liability. If the guarantees and the security provided by Berau Coal
is invalidated, you would have no direct claim against Berau Coal and would be structurally subordinated to any
obligations that Berau Coal may have at such time. As a result thereof, only the assets distributed to the holders
of Berau Coals equity holders would be available to satisfy our and the remaining guarantors obligations under
the notes.
We own, through intermediate subsidiaries, a 90% equity interest in Berau Coal and Sojitz owns the
remaining 10%. If we are unable to avoid disputes with and claims by Sojitz, we could suffer material and
adverse effects. For example, Sojitz could seek remedies such as damages for losses suffered on their investment
in Berau Coal, a requirement to repurchase Sojitzs interest in Berau Coal at fair value, or the avoidance of the
guarantees and security granted by Berau Coal in favor of the notes and the Senior Secured Credit Facility, which
would in turn result in events of default under the notes and our other indebtedness. We could also be impaired in
effecting future financings that require the grant of a guarantee and security by Berau Coal and in our marketing
efforts in which Sojitz is involved.
In a recent letter to us and communications from counsel for Sojitz to counsel for us and counsel for the
initial purchasers, Sojitz objected to the issuance of guarantees and the granting of security interests by Berau
Coal in support of our obligations under the existing notes and the Senior Secured Credit Facility. Sojitz also
indicated that it has been advised by local counsel that its rights as a minority shareholder under Indonesian law
include consent rights with respect to Berau Coals participation in the issuance of the existing notes and the
related transactions, and that it does not believe that the issuance of the guarantee and security provided by Berau
Coal for the benefit of the existing notes is beneficial to Berau Coal or Sojitz. At Berau Coals June 3, 2010
shareholders meeting, Sojitz voted against the approval of Berau Coals participation in the issuance of the
existing notes and the related transactions, including the guarantees and security provided by Berau Coal. Sojitz
may likewise vote against Berau Coals participation in the issuance of the notes being offered hereby at Berau
Coals shareholders meeting that is scheduled to be held on July 29, 2010 to approve these matters. Sojitz has
sought to raise similar objections in the past. In 2006, Sojitz initially objected to the Indonesian Department of
Mining and Energy (the DOME) concerning the issuance of notes by Empire Capital Resources Pte. Ltd., a
finance subsidiary of Berau Coal. In response, the DOME instructed Berau Coal not to conduct that financing.
Sojitz subsequently withdrew its objection, and the DOME then permitted Berau Coal to proceed with the
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transaction. In December 2009, Sojitz voted against Berau Coal providing a guarantee in respect of a credit
facility that Empire Capital Resources Pte. Ltd. obtained and granting security interests over its assets to secure
that facility. The transaction was completed based on the approval of the other shareholders of Berau Coal.
Sojitz could argue that the guarantees and security being granted by Berau Coal for the benefit of the notes
and the Senior Secured Credit Facility are detrimental to Berau Coal and, accordingly, detrimental to Sojitz as a
shareholder. Sojitz could also claim that Berau Coal did not receive commensurate benefit in these transactions.
Sojitz could sue Berau Coal for compensation if Sojitz suffers losses from the issuance of the guarantees and the
granting of the security. Sojitz could also seek remedies including the rescission of the guarantees and the
security interests or the repurchase of the shares of Berau Coal that it owns at a fair price. If a court granted
Sojitzs request to rescind the guarantees or the security interests, the guarantees and the security interests would
not be enforceable, which would result in an event of default under the notes and the Senior Secured Credit
Facility. If a court granted Sojitzs request to have its shares repurchased, Berau Coal may have to pay a
significant amount of money to Sojitz, and may not be permitted under the terms of the notes, our Senior Secured
Credit Facility or other agreements to fund or finance such repurchase.
Sojitz could also raise an objection to the issuance of the guarantees and the granting of the security interests
by Berau Coal with the DOME. The DOME could require Berau Coal to rescind the guarantees and the security
interests, which would render them unenforceable and result in an event of default under the notes and the Senior
Secured Credit Facility. Even if the DOME did not do so, it could impose other penalties or obligations that
In 1993, Sojitz and the other shareholders of Berau Coal at that time entered into a shareholders agreement
concerning their ownership and control of Berau Coal. When Recapital acquired us in December 2009, the
selling shareholders represented that the shareholders agreement was no longer in effect. While we believe that
this is the case, Sojitz has asserted to us that it is still in effect. We believe that Sojitz has limited rights under
Indonesian law as a minority shareholder of Berau Coal. However, if the shareholders agreement is still in
effect, Sojitz would have additional rights, including approval rights over Berau Coals work programs and
budgets, a right of first refusal over any sale, transfer or assignment of shares of Berau Coal by any other
shareholder, the encumbrance of Berau Coals assets, long-term borrowings by Berau Coal, amendments of
Berau Coals articles of association, and appointments of the president director and vice-president director of
Berau Coal.
If the shareholders agreement is still in effect, it could significantly impair our ability to operate Berau Coal
efficiently. In addition, Sojitz could claim that Berau Coals granting of security interests to support our
obligations under the notes and the Senior Secured Credit Facility violates Sojitzs rights under the shareholders
agreement and could seek remedies as described above. Even if Sojitz does not raise any such claims, any actual
or alleged rights of first refusal in respect of the sale, transfer or assignment of shares of Berau Coal could impair
the ability of the common security agent to enforce the noteholders security interest over the shares of Berau
Coal. This in turn could reduce the value of those shares in any enforcement proceeding, and accordingly reduce
the amount of any recovery available to the noteholders.
The continued assertion by Sojitz of rights as a minority shareholder or pursuant to its purported
shareholders agreement could prevent or delay us in effecting future financings or refinancings that would
include guarantees and grants of security by Berau Coal, which will likely be required given that we are a
holding company and Berau Coal will be our principal asset and operation for the foreseeable future. If we are
unable to raise such financings, or are unable to do so on a timely basis and on satisfactory terms, we may not be
able to finance the growth of our businesses or assure that we have adequate liquidity and capital resources. Any
dispute with Sojitz could also lead to a reduction or cessation of their marketing efforts as one of our
international marketing agents, which in turn could adversely affect our sales.
See BusinessSales and Marketing, Principal Shareholders and Related Party Transactions for more
information about our relationship with Sojitz.
38
Our holding company structure makes us dependent on Berau Coal for our cash flows and subordinates us
to the rights of creditors of Berau Coal if Berau Coal becomes insolvent or liquidates. In addition,
dividends and other payments by Berau Coal to us are restricted under the terms of the cash and accounts
management agreement.
We are a holding company and, accordingly, all of our operations are conducted through Berau Coal. As a
result, our cash flows will depend upon the earnings of Berau Coal. The ability of Berau Coal to provide us with
funds may be limited by its other obligations. In addition, we depend on the distribution of earnings, loans or
other payments by Berau Coal to us. Berau Coal has no obligation to provide us with funds for our payment
obligations. If there is an insolvency, liquidation or other reorganization of Berau Coal, creditors of Berau Coal
will be entitled to payment in full from the sale of the assets of Berau Coal before we, as a shareholder, would be
entitled to receive any distribution from such sale.
We depend upon the receipt of dividends from Berau Coal to make payments with respect to our
obligations, including our obligations under the issuers intercompany loan from the issuer to us and the parent
guarantee. We have entered into a cash and accounts management agreement with, among others, the common
security agent and the trustee. Substantially all of the cash flows of our Group are administered under the cash
and accounts management agreement. In addition, the cash and accounts management agreement prescribes the
time in which funds can be disbursed, sets limits on the amount of funds that can be disbursed to satisfy certain
obligations of our Group and provides a waterfall that sets out the priority in which payments can be made out of
our Groups cash flows. Under the cash and accounts management agreement, dividends from our subsidiaries to
us can only be paid every alternate Friday after all other payments provided for in the waterfall have been made.
We might not receive sufficient dividends from our subsidiaries to satisfy our obligations under the issuers
intercompany loan to us and the parent guarantee or, alternatively, to transfer funds or make payments to the
issuer, in the form of equity contributions or otherwise, to enable the issuer to make its payments under the notes.
The interests of our principal shareholder may conflict with our interests and those of the noteholders.
Recapital has an effective interest of 99% in us through intermediate holding companies including PT Bukit
Mutiara, which directly owns over 99% of Berau Coal Energy. Recapital and PT Bukit Mutiara have significant
influence over us, including the power to elect our commissioners and directors and determine the outcome of
actions requiring shareholder approval. They also may take actions that favor the interests of other companies
over our interests.
Our parent has a significant level of indebtedness, which could adversely affect it and indirectly adversely
affect us or the noteholders.
PT Bukit Mutiara has a significant amount of indebtedness arising from its acquisition of us in December
2009, including as of March 31, 2010 a US$300 million unsecured subordinated loan from PT Bumi Resources
Tbk (the Bumi Loan) and US$580 million aggregate principal amount of notes issued to the selling
shareholders of Berau Coal Energy. These debt instruments contain covenants that restrict PT Bukit Mutiara and,
in some cases, our Group, from engaging in various transactions. PT Bukit Mutiara or Recapital could also incur
additional indebtedness that directly or indirectly restricts our Group or otherwise adversely affects our interests.
For more information, see Principal Shareholders and The rights of the Vendors under the Vendor Notes
could adversely impact us below. In addition, certain breaches, misrepresentations or defaults by, or an
insolvency of, PT Bukit Mutiara could trigger an event of default under our Senior Secured Credit Facility, which
in turn would trigger an event of default under the notes. This could materially and adversely affect us and the
noteholders. See Description of Other Material Indebtedness.
The rights of the Vendors under the Vendor Notes could adversely impact us.
In connection with the acquisition of Berau Coal Energy, PT Bukit Mutiara issued US$580 million in
principal amount of notes (the Vendor Notes) to the selling shareholders of Berau Coal Energy (the Vendors)
39
pursuant to a trust deed dated December 29, 2009. The Vendor Notes mature on December 30, 2010 and are
secured by a pledge over 50% of the shares in PT Bukit Mutiara.
Under the terms of the Vendor Notes, for so long as Montrose International Trading Limited (Montrose)
or any of its affiliates holds 51% or more of the Vendor Notes outstanding, Montrose has the right to appoint one
director of Berau Coal and one commissioner of Berau Coal. Any amendments to Berau Coals coal contract of
work (other than as required by law) will require the approval of the holders of the Vendor Notes by ordinary
resolution or the approval of the director of Berau Coal appointed by Montrose.
The Vendor Notes contain covenants that restrict PT Bukit Mutiara and certain of its subsidiaries, including
us and our subsidiaries, from engaging in various transactions, such as incurring indebtedness; paying dividends,
purchasing capital stock or making investments or other restricted payments; entering into agreements that
restrict the ability to pay dividends, pay indebtedness, make loans or sell assets, in each case to PT Bukit Mutiara
or its subsidiaries; selling and issuing capital stock; issuing guarantees; entering into transactions with
shareholders and affiliates; creating liens; entering into sale and leaseback transactions; selling assets; effecting a
consolidation or merger; and entering into new lines of businesses. As described in Risks Relating to the Notes
and the GuaranteesThe indenture contains covenants limiting our financial and operating flexibility, these
types of covenants could limit our ability to pursue our growth plans, restrict our flexibility in planning for, or
reacting to, changes in our business and industry and increase our vulnerability to general adverse economic and
industry conditions. The covenants in the Vendor Notes are in many respects more restrictive than the covenants
in the indenture and the Senior Secured Credit Facility. Accordingly, the Vendor Notes could exacerbate the risks
described in that risk factor.
The restrictive covenants in the indenture and the senior secured credit facility, particularly the restrictions
on our ability to make Restricted Payments, may impair PT Bukit Mutiaras ability to repay the Vendor Notes
when due. Upon the occurrence of an event of default under the Vendor Notes, PT Bukit Mutiara must transfer to
the security trustee for the Vendor Notes, Berau Coal Energy shares representing 66 2 3% of the issued share
capital of Berau Coal Energy at such time, together with an irrevocable assignment in favor of the security
trustee of voting rights in respect of such shares representing 8 1 3% of the issued share capital of Berau Coal
Energy. This would result in a Change of Control requiring prepayment in full of the loans under the Senior
Secured Credit Facility and an offer to redeem all of the notes, which we might not be able to finance. See Risk
FactorsRisks Relating to the Notes and the GuaranteesWe may not be able to finance an offer to repurchase
the notes upon the occurrence of certain events constituting a change of control as required by the indenture.
Upon the occurrence of an event of default under the Vendor Notes, the marketing services agreement between
Berau Coal and Maple and the related coal off-take arrangements shall immediately terminate. The occurrence of
any of the foregoing events could have a material and adverse effect on us.
PT Bukit Mutiara and the Vendors intend to amend the Vendor Notes such that upon the closing of our
proposed initial public offering, the Vendor Notes will no longer be secured by a pledge of 50% of the shares of
PT Bukit Mutiara. Instead, the Vendor Notes will be secured by a pledge of such number of our shares owned by
PT Bukit Mutiara that at all times after the initial public offering have a fair market value equal to at least 150%
of the aggregate principal amount of the Vendor Notes then outstanding together with accrued interest.
PT Bukit Mutiara has informed us that it is exploring various alternatives for the settlement of the Vendor
Notes, including (i) exchanging the Vendor Notes, in whole or in part, for shares in us, (ii) selling a portion of the
shares that PT Bukit Mutiara holds in us for cash to a strategic or financial investor in order to raise funds for a
cash payment to the Vendors, (iii) obtaining alternative financing for a cash payment to the Vendors or
(iv) renegotiating the terms of the Vendor Notes with the Vendors. If Recapitals beneficial ownership of us
decreases to less than 50.1%, it could trigger a change of control under the notes and the Senior Secured Credit
Facility, which in turn would require us to make an offer to redeem the notes and, if requested by the lenders, to
repay the loans.
In connection with our proposed initial public offering, PT Bukit Mutiara and the Vendors intend to amend
the Vendor Notes to give the Vendors an option, at the maturity of the Vendor Notes, to require PT Bukit
40
Mutiara to settle up to US$280 million of the Vendor Notes by the delivery of our ordinary shares. The terms of
the Vendor Notes permit PT Bukit Mutiara to redeem the Vendor Notes at its option for cash. If we consummate
our proposed initial public offering, PT Bukit Mutiara will be subject to an eight month lock-up that would
prevent it from delivering our shares to the Vendors and would require it to negotiate a resolution with the
Vendors.
We might not be able to complete our proposed acquisition of Maple Holdings Limited.
We intend to use US$175 million of the proceeds from the issuance of the notes, the existing notes and the
loans under the Senior Secured Credit Facility to pay for the first tranche of the purchase consideration of our
proposed acquisition of Maple. We intend to fund the remainder of the purchase consideration from the proceeds
of the proposed Berau Coal Energy initial public offering. The acquisition will only be completed after such
initial public offering and therefore the shares of Maple will only be transferred at such time. Accordingly, the
acquisition might not be completed in a timely manner or at all. If the Berau Coal Energy initial public offering is
not completed, the shares of Maple will not be transferred to Seacoast Offshore Inc. and the portion of purchase
consideration paid will be refunded by Regulus International Pte. Ltd. See Use of Proceeds and Description of
Material AgreementsAgreement to Acquire Maple Holdings Limited.
As the boards of commissioners and boards of directors of Berau Coal Energy and Berau Coal have been
appointed recently, it may take some time for them to work effectively with management.
After Recapitals December 2009 acquisition of an effective interest of 99% in Berau Coal Energy and 90%
in Berau Coal, Recapital appointed new members for the boards of commissioners and boards of directors of
Berau Coal Energy and Berau Coal. It may take some time for the new boards of commissioners and boards of
directors to work effectively with management and they might not succeed in working well together, which could
We are not a listed company and are not required to publish information about our business in accordance
with stock exchange rules.
We are not a listed company and our shares are not traded on any stock exchange. Accordingly, we are not
required to publish information about our business in accordance with stock exchange rules and there may be less
publicly available information about us than for companies that are subject to the disclosure requirements of a
stock exchange. However, after the completion of our proposed initial public offering and our shares are listed on
the IDX, we will be required to publish annual audited and quarterly unaudited financial statements. The rules
and regulations of the BAPEPAM-LK and the IDX are subject to ongoing change and development. The amount
of information made publicly available by issuers in Indonesia is significantly less than that made publicly
available by comparable companies in certain more developed countries, and certain statistical and financial
information of a type typically published by companies in certain more developed countries may not be
available. As a result, our shareholders may not have access to the same level and type of disclosure as that
available in other countries, and comparisons with other companies in other countries may not be possible in all
respects.
The financial statements of Berau Coal Energy and Berau Coal are not prepared in accordance with U.S.
GAAP and if they were prepared in accordance with U.S. GAAP, the results of operations and financial
conditions as reflected in the financial statements could be materially different.
Berau Coal Energy and Berau Coal prepare their consolidated financial statements in accordance with
Indonesian GAAP, which differ in certain significant respects from U.S. GAAP. As a result, Berau Coal
Energys or Berau Coals results of operations and financial conditions could be materially different from those
that would be reported under U.S. GAAP. This offering circular does not contain a reconciliation of the financial
statements of Berau Coal Energy or Berau Coal to U.S. GAAP; such a reconciliation may reveal material
differences.
41
Certain business relationships, and interests relating thereto, among some of the parties involved in this
offering may adversely affect the noteholders.
Credit Suisse and its affiliates have from time to time provided in the past, and may provide in the future,
investment banking, commercial lending, consulting and financial advisory services to us and our affiliates in the
ordinary course of business. For example, Credit Suisse AG, Singapore Branch acted as Recapitals financial
adviser in its acquisition of Berau Coal Energy, which was completed in December 2009, and was an arranger
and a lender of financing for the acquisition. Credit Suisse AG, Singapore Branch is also one of the lenders and
the arranger, facility agent and security agent under the Senior Secured Credit Facility and the common security
agent under the Intercreditor Agreement and the cash and accounts management agreement.
Our business relationships with Credit Suisse may cause it to take actions that it deems necessary or
appropriate to protect its interest without regard to the consequences for the noteholders, which could have a
material adverse effect on the noteholders.
We and our subsidiaries incorporated in Indonesia have not established a reserve for net income as
required by applicable Indonesian law.
Under Law No. 40 of Limited Liability Companies (Law No. 40), an Indonesian limited liabilities
company must establish a general reserve of at least 20% of its total issued and fully paid capital from its net
income each year it has positive retained earnings. We and our subsidiaries incorporated in Indonesia have not
established such a reserve for net income in accordance with Law No. 40, however, we plan to establish such a
reserve in 2011. No consequences are identified under Law No. 40 for failure to establish a general reserve; Law
No. 40 also does not prescribe how much net income must be set aside each year.
We currently do not have an internal audit unit or audit committee and may have an insufficient number
of employees performing accounting functions.
We have not yet established an internal audit unit or an audit committee. Our internal audit function may be
limited in its effectiveness in the absence of such an internal audit unit or audit committee. Moreover, if we were
to become a public company and offer our shares on the Indonesia Stock Exchange, establishment of an audit
committee and internal audit unit are required. We currently plan to establish an audit committee and internal
audit unit in accordance with relevant rules.
Additionally, our external auditors have advised us that we currently may employ an insufficient number of
people who perform accounting functions, and that such deficiency may lead to less reliable or inaccurate
financial statements or reports. We are in the process of considering the recruitment of additional employees to
perform accounting functions. Any weakness in our audit or accounting functions could adversely impact us.
Risks Relating to Indonesia
Berau Coal Energy and Berau Coal are incorporated in Indonesia. The majority of their
commissioners, directors and officers are based in Indonesia and substantially all of their assets and
operations are located in Indonesia. Political, economic, legal and social conditions in Indonesia could
materially and adversely affect their business.
Political and social instability in Indonesia may adversely affect Berau Coal.
Since President Soehartos regime ended in 1998, Indonesia has experienced a process of democratic
change, which on occasion has resulted in political instability and social and civil unrest.
Since 2000, thousands of Indonesians have participated in demonstrations throughout the country for and
against individual politicians and in response to specific issues, including fuel subsidy reductions, privatization of
state assets, anti-corruption measures, decentralization and provincial autonomy and the American-led military
42
campaigns in Afghanistan and Iraq. Some of these demonstrations turned violent. In 2001, demonstrations and
strikes affected at least 19 cities after the Government mandated a 30% increase in fuel prices. Similar
demonstrations occurred in 2003, when the Government again tried to increase fuel prices, as well as electricity
rates and telephone charges. In both instances, the Government was forced to drop or substantially reduce the
proposed increases. In March 2005, the Government implemented a 29% increase in fuel prices. In October
2005, the Government implemented a new policy that resulted in a 120% increase in fuel prices. Several mass
protests were organized in opposition to the increases.
Separatist movements and clashes between religious and ethnic groups have resulted in social and civil
unrest in parts of Indonesia. In the provinces of Aceh and Papua, there have been clashes between supporters of
separatist movements and the Indonesian military. In Papua, continued activity by separatist rebels has led to
violent incidents, in the province of Malukus, clashes between religious groups have resulted in casualties and
displaced persons, and in the province of Kalimantan, clashes between ethnic groups have produced fatalities and
refugees over the past several years. There have also been many allegations of human rights violations, including
by high-ranking military personnel, and demonstrations against the Governments perceived failure to prosecute
human rights violations more vigorously.
Indonesia has held free elections since 2004. Political campaigns in Indonesia may increase political and
social uncertainty. Political and social unrest may also occur if the results of elections are disputed or unpopular.
Political and social developments in Indonesia have been unpredictable in the past and, as a result,
confidence in the Indonesian economy has remained low. Any resurgence of political instability could adversely
affect the Indonesian economy, which could adversely affect our business.
Berau Coal could be adversely affected if it or its contractors fail to maintain satisfactory labor relations.
Laws and regulations which facilitate the forming of labor unions, combined with weak economic
conditions, have resulted and may continue to result in labor unrest and activism in Indonesia. In 2000, the
Government of Indonesia issued Law No. 21 of 2000, a labor union law allowing employees to form unions
without employer intervention. In February 2003, a committee of the Indonesian parliament, the Peoples
Representative Council, Dewan Perwakilan Rakyat (DPR) passed Law No. 13 of 2003 (the Labor Law)
which, among other things, increased the amount of severance, service and compensation payments to terminated
employees. The Labor Law took effect in March 2003 and requires further implementation of regulations that
may substantively affect labor relations in Indonesia. The Labor Law requires bipartite forums with participation
from employers and employees and the participation of more than 50% of the employees of a company in order
for a collective labor agreement to be negotiated and creates procedures that are more permissive to the staging
of strikes. Under the Labor Law, employees who voluntarily resign are also entitled to payments for, among
other things, (i) unclaimed annual leave; and (ii) relocation expenses. Employees have the right to refuse to
continue their employment if there is a change of status, change of ownership, merger or consolidation of a
company. Following the enactment, several labor unions urged the Indonesian Constitutional Court to declare the
Labor Law unconstitutional and order the Government of Indonesia to revoke it. The Indonesian Constitutional
Court declared the Labor Law valid except for certain provisions relating to, among others, (i) the right of an
employer to terminate its employee who committed a serious mistake; and (ii) the imprisonment of, or imposition
of a monetary penalty on, an employee who instigates or participates in an illegal labor strike or persuades other
employees to participate in a labor strike.
Labor unrest and activism in Indonesia could disrupt the operations of Berau Coal, its suppliers or
contractors and could affect the financial condition of Indonesian companies in general, depressing the prices of
Indonesian securities on the IDX and the value of the Rupiah relative to other currencies. Such events and any
significant labor dispute or labor action that Berau Coal or its contractors experience could have a material
adverse affect on us.
43
The interpretation and implementation of legislation on regional governance in Indonesia is uncertain and
may adversely affect Berau Coal.
During the administration of former President Soeharto, the central government controlled almost all aspects
of national and regional administration. Following the end of his administration, the government enacted a
number of laws to increase regional autonomy. Under these laws, regional governments have greater powers and
responsibilities over the use of national assets and to create a more balanced and equitable financial relationship
with the central government. Regional governments have been allowed to impose taxes and other charges on
contractors, notwithstanding the terms of coal contract of work which disallow such local taxes and charges.
This decentralization of power has created uncertainties, including with respect to the validity, scope,
interpretation and application of the Mining Law, in part due to the lack of implementing regulations for the
Mining Law and the regional autonomy laws and a lack of government infrastructure with mineral sector
experience at some regional government levels. Berau Coal cannot clearly ascertain the impact of the regional
autonomy laws on the powers of Ministry of Energy and Mineral Resources and the regional governments for the
grant of coal contracts of work and other mining licenses and approvals, and on the supervision of mining
activities. Moreover, limited precedent or other guidance exists on the interpretation and implementation of the
regional autonomy laws. This uncertainty has increased the risks, and may increase the costs, involved in mining
activities in Indonesia.
The regional government where Berau Coals concession is located could adopt regulations, or interpret or
implement the regional autonomy laws in a manner that conflicts with Berau Coals rights under its coal contract
of work or otherwise adversely affect its operations. Any new regulations, and the interpretation and
implementation of those new regulations may differ materially from the legislative and regulatory framework of
the Mining Law and its current interpretation and implementation. Berau Coal may also face conflicting claims
between the central government and regional governments regarding, among others, jurisdiction over its
operations, claims for participating interests in its mining operations, and new or increased local taxes or
additional concessions.
Indonesia is located in an earthquake zone and is subject to significant geological risk that could lead to
social unrest and economic loss.
Indonesia is located in one of the most volcanically active regions in the world and is subject to significant
seismic activity that can lead to destructive earthquakes and tsunamis, or tidal waves. In December 2004, an
underwater earthquake off the coast of Sumatra created a tsunami that devastated coastal communities in
Indonesia, Thailand and Sri Lanka and caused billions of U.S. dollars in damages. In Indonesia, more than
220,000 people died or were recorded as missing in the disaster. In May 2006, a 6.3 magnitude earthquake struck
roughly 30 miles southwest of Mount Merapi, killing over 6,000 people and leaving over 200,000 people
homeless in the Yogyakarta region. In July 2006, a 7.7 magnitude earthquake struck approximately 220 miles
south of Jakarta and the resulting tsunami killed over 500 people and left over 35,000 people homeless. Most
recently, in September and October 2009, a series of earthquakes ranging in magnitude of up to 7.6 struck
various parts of Indonesia.
The Government of Indonesia has had to expend significant amounts of resources on emergency aid and
resettlement efforts. Most of these costs have been underwritten by foreign governments and international aid
agencies. However, such aid may not continue to be forthcoming or delivered to recipients on a timely basis. If
the Government of Indonesia is unable to timely deliver foreign aid to affected communities, political and social
unrest could result. Additionally, recovery and relief efforts could strain the Government of Indonesias finances
and may adversely affect its ability to meet its obligations on its sovereign debt. Any such failure on the part of
the Government of Indonesia, or declaration by it of a moratorium on its sovereign debt, could potentially trigger
an event of default under numerous private-sector borrowings including those of Berau Coal, thereby materially
and adversely affecting us.
A significant earthquake, geological disturbance or tsunami affecting any of Indonesias more populated
cities could severely disrupt the Indonesian economy and undermine investor confidence, thereby materially and
adversely affecting us.
44
Terrorist activities in Indonesia have led to substantial and continuing economic and social volatility.
In recent years, there have been various bombing incidents directed toward the Government of Indonesia
and foreign governments, and public and commercial buildings frequented by foreigners. In October 2002, over
200 people were killed in a bombing in Bali. In August 2003, a bomb exploded at the JW Marriott Hotel in
Jakarta, killing at least 13 people and injuring 149 others. In September 2004, a car bomb exploded at the
Australian Embassy in Jakarta, killing more than six people. In May 2005, bomb blasts in Sulawesi killed at least
21 people and injured at least 60 people. In October 2005, bomb blasts in Bali killed at least 23 people and
injured at least 101 others. Most recently, in July 2009, bomb blasts at the JW Marriott Hotel and Ritz-Carlton
Hotel in Jakarta killed a total of nine people and wounded 53 people. Indonesian, Australian and U.S.
government officials have indicated that these bombings may be linked to an international terrorist organization.
Demonstrations have also taken place in Indonesia in response to the U.S.-led military actions in Iraq and
Afghanistan.
Further terrorist acts could destabilize Indonesia and increase internal divisions within the Government of
Indonesia as it considers responses to such instability and unrest, thereby adversely affecting purchasers
confidence in Indonesia and the Indonesian economy. Violent acts arising from and leading to instability and
unrest have had, and could continue to have, a material adverse effect on investment and confidence in, and the
performance of, the Indonesian economy, and in turn Berau Coals business.
Regional or global economic changes could materially and adversely affect the Indonesian economy and
Berau Coals business.
The economic crisis that affected Southeast Asia, including Indonesia, from mid-1997 was characterized in
Indonesia by, among other effects, currency depreciation, a significant decline in real gross domestic product,
high interest rates, social unrest and extraordinary political developments. The economic crisis resulted in the
failure of many Indonesian companies to repay their debts when due. These conditions had a material adverse
effect on Indonesian businesses, including Berau Coals business and financial condition. Indonesia entered a
recessionary phase with relatively low levels of growth between 1999 to 2002. Indonesias GDP growth rate was
6.32% in 2007, 6.10% in 2008, and 4.55% in 2009. Indonesias economy remains significantly affected by the
Asian economic crisis, and more recently, by the global economic crisis that begun in late 2007, as evidenced by
the decrease in its rate of growth to 6.10% in 2008 and 4.55% in 2009 due to a slow down in the global economic
growth rate. The Government of Indonesia has had to rely on the support of international agencies and
governments to prevent sovereign debt defaults.
The Government of Indonesia continues to have a large fiscal deficit and a high level of sovereign debt, its
foreign currency reserves are modest, the Rupiah continues to be volatile and has poor liquidity, and the banking
sector is weak and suffers from high levels of non-performing loans. Government funding requirements to areas
affected by the Asian tsunami in December 2004 and other natural disasters, as well as increasing oil prices, may
increase the Government of Indonesias fiscal deficits. The economic difficulties faced by Indonesia during the
Asian economic crisis that began in 1997 resulted in, among other things, significant volatility in interest rates,
which had a material adverse impact on the ability of many Indonesian companies to service their existing
indebtedness. While the interest rate for one-month Bank of Indonesia certificates has declined from 70.6% in
September 1998 to 6.2% in April, 2010, the recent improvement in economic condition may not continue or the
previous adverse economic condition in Indonesia and the rest of Asia could reoccur. In particular, a loss of
investor confidence in the financial systems of emerging and other markets, or other factors, may cause increased
volatility in the Indonesian financial markets and inhibit or reverse the growth of the Indonesian economy. The
global economic crisis which began in late 2007 affected the global economy, including Indonesia and Southeast
Asia, and is characterized by, among other things, a shortage in the availability of credit, a reduction in foreign
direct investment, the failure of global financial institutions, a drop in global stock markets, a slowdown in global
economic growth and a drop in demand of certain commodities, including coal. In particular, slowing global
economic growth and a drop in demand for coal may adversely affect Berau Coals business.
45
Appreciation in the value of the Rupiah may result in a decrease in our revenues.
One of the most important immediate causes of the economic crisis that began in Indonesia in mid-1997 was
the depreciation and volatility of the value of the Rupiah as measured against other currencies, such as the U.S.
dollar. The Rupiah continues to experience significant volatility against the U.S. dollar. See Exchange Rates and
Exchange Controls for further information on changes in the value of the Rupiah as measured against the
U.S. dollar in recent periods. We derive all of our revenues from Berau Coals sales of coal. Berau Coals export
sales are priced, invoiced and paid in U.S. dollars. Berau Coals domestic sales are invoiced and paid in Rupiah
based on U.S. dollar-denominated prices, converted at the exchange rate on the date the relevant agreement is
entered into. Therefore, an appreciation in the value of the Rupiah would have the effect of decreasing our
consolidated sales when expressed in Rupiah.
Downgrades of credit ratings of Indonesia and Indonesian companies could materially and adversely affect
us and the market price of the notes.
In the late 1990s, certain rating agencies, including Moodys Investors Service, Inc. (Moodys) and
Standard & Poors Ratings Group (Standard & Poors) downgraded Indonesias sovereign rating and the credit
ratings of various credit instruments of the Government of Indonesia and a large number of Indonesian banks and
other companies. Indonesias sovereign foreign currency long-term debt is rated Ba2 by Moodys, BB by
Standard & Poors and BB+ by Fitch Ratings, and its short-term foreign currency debt is rated B by
Standard & Poors and Fitch Ratings. These ratings reflect an assessment of the Government of Indonesias
overall financial capacity and willingness to pay its obligations as they become due.
Moodys, Standard & Poors, Fitch Ratings and other rating agencies may downgrade the credit ratings of
Indonesia or Indonesian companies. Any such downgrade could have an adverse impact on liquidity in the
Indonesian financial markets, the ability of the Government of Indonesia and Indonesian companies, including
Berau Coal, to raise additional financing and the interest rates and other commercial terms at which such
additional financing is available and could have a material adverse effect on us.
An outbreak of a contagious disease could adversely affect the economies of Asian countries and us.
In recent years, large parts of Asia experienced unprecedented outbreaks of the avian flu. In addition, the
World Health Organization announced in June 2006 that human-to-human transmission of avian flu had been
confirmed in Sumatra, Indonesia. According to the United Nations Food and Agricultural Organization, the avian
flu virus is entrenched in 31 of Indonesias 33 provinces and efforts to contain avian flu are failing in Indonesia,
increasing the possibility that the virus may mutate into a deadlier form. No fully effective avian flu vaccine has
been developed and an effective vaccine may not be discovered in time to protect against a potential avian flu
pandemic.
In 2003, certain countries in Asia experienced an outbreak of SARS, a highly contagious form of
pneumonia, which seriously interrupted economic activity in the affected regions. More recently, in April 2009,
there was a global outbreak of the Influenza A (H1N1) virus including confirmed reports in Hong Kong, Japan
and elsewhere in Asia. The Influenza A (H1N1) virus is believed to be highly contagious and may not be easily
contained.
An outbreak of these or another contagious disease or measures taken by the governments of affected
countries, including Indonesia, against such potential outbreaks, could seriously interrupt our operations or those
of our contractors, suppliers and customers. The perception that an outbreak of a contagious disease may occur
may also have an adverse effect on the economic conditions of countries in Asia, including Indonesia.
Agreements related to the offering of the notes must also be executed in or may be translated into Bahasa
Indonesia and the rights of the respective parties may ultimately be governed by the Bahasa Indonesia
version of such documents.
Pursuant to Law No. 24 of 2009 regarding Flag, Language, Coat of Arms and National Anthem enacted
July 9, 2009 (Law 24/2009), agreements between Indonesian entities and other parties must be set out in
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Bahasa Indonesia, which is the national language of Indonesia, save that where such party is a foreign entity or
individual, the agreement may also be prepared in the language of such foreign party or in the English. Law
24/2009 does not specify any consequences in the event that applicable agreements are not prepared in the
Bahasa Indonesia, and to date, no implementing regulations have been issued. In addition, in accordance with the
Indonesian civil procedural law, documents executed in English must be translated into Indonesian for the
Indonesian courts review.
Article 31 of Language Law No. 24/2009 further states that if the agreements or memoranda of
understanding involve foreign parties, the national language of those foreign parties and/or the English language
can also be used. The elucidation of Article 31 states that each version of an agreement executed in multiple
languages is equally original. However, Language Law No. 24/2009 is silent on the governing language, if there
is more than one language used in a single agreement. Article 40 of Language Law No. 24/2009 states that
further stipulation on the use of Bahasa Indonesia shall be regulated by the implementing regulations when
issued. Accordingly, until such implementing regulations are issued, it is unclear whether Bahasa Indonesia will
be stipulated as the governing language of agreements related to Berau Coals business or to the notes, and when
such implementing regulations are issued, English might not be recognized as the governing language of such
agreements, even if agreed to by the contracting parties.
The agreements related to this offering, including the indenture, have been or will be executed in both
English and Bahasa Indonesia versions; however the agreement do or will expressly state that the English version
governs the interpretation of the agreements. Despite such governing language, if the agreements relating to the
notes (including the indenture) are to be enforced in Indonesia, the Indonesian courts may rely on the Indonesian
version or translation. In addition, the Indonesian versions or translations might not accurately reflect the
meaning as intended in the English versions.
As the implementing regulation for Law No. 24/2009 has not been published and the law itself does not
specify any sanctions for non-compliance, we cannot predict how the implementation of Law No. 24/2009
(including its implementing regulation) will impact the validity and enforceability of the notes, the guarantees
and the collateral in Indonesia.
Risks Relating to the Offering Structure
Indonesian courts have held the legal structures of debt obligations with structures similar to the notes and
the guarantees to be invalid, have ordered disgorgement of payments thereunder to Indonesian debtors,
and assessed against creditors damages payable to Indonesian debtors in respect thereof.
In June 2006, the Indonesian Supreme Court affirmed lower courts judgments involving PT Indah Kiat
Pulp & Paper Tbk. (Indah Kiat) as plaintiff and various parties as the defendants that invalidated US$500
million of notes issued in a similar offshore offering financing structure with similar documentation to that
contemplated in this offering, whereby notes were issued through a Dutch subsidiary of Indah Kiat and
guaranteed by Indah Kiat. The Indonesian Supreme Court upheld the decisions of the lower courts in Indonesia
in favor of the Indah Kiat, holding that the defendants (including the trustee, underwriter and security agent of
the notes) have committed a tort (perbuatan melawan hukum) by entering into the transaction, and therefore, the
issuance of the notes was declared void, null and unenforceable (the June 2006 decision). The Indonesian
Courts nullified the notes on the basis that the contracts made in relation to the notes were signed without any
legal cause, and so did not meet the requirement of legal cause under Indonesian contract law. The Indonesian
courts accepted the plaintiffs argument that Indah Kiat acted both as a debtor and as a guarantor of the same debt
despite in the facts that Indah Kiats Dutch subsidiary was the issuer of the notes and Indah Kiat was the
guarantor of the notes. The Indonesian courts also ruled that the establishment of Indah Kiats Dutch subsidiary
to issue the notes was unlawful as it was intended to avoid Indonesian withholding tax payments.
In August 2008, the Supreme Court granted a civil review (peninjauan kembali) and annulled the June 2006
Decision described above. The Supreme Court in its civil review decision stated that the claim should be brought
in a court of the State of New York and not in the District Court of Bengkalis, Indonesia, as the agreements were
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governed by law of the State of New York. The Supreme Court further stipulated that it was clear that the money
borrowed by Indah Kiat from its Dutch subsidiary originated from the issuance of notes, as evidenced in the
recital of the relevant loan agreement, and thus the claim that the whole transaction was a manipulation of law
had no merit. Moreover, with regard to the validity and enforceability of the security documents, the civil review
stated that the security agreements would prevail as long as the underlying agreements were still valid and
binding. On the tax issues, the civil review decided that the Indonesian Supreme Court had misapplied the tax
law as it did not prohibit tax saving, and thus the claim relating to tax was set aside. While the Indonesian
Supreme Court in its civil review largely overturned its earlier June 2006 Decision, the Indonesian Supreme
Court could hold that a debt offering structure similar to the notes and the parent guarantee is void, null and
unenforceable. Some published Indonesian court decisions prior to the August 2008 decision, when considering
legal structures of debt instruments similar to the notes and the parent guarantee, have granted relief to the
Indonesian debtors, including:
a declaration that the entire debt obligation and related security is null and void;
disgorgement of prior payments made to holders of the debt instruments;
damages from holders of debt instruments and other transaction participants in amounts exceeding the
original proceeds of the debt securities issued; and
injunctions prohibiting creditors from enforcing their rights under the transaction documents, both inside
and outside Indonesia, and trading in the notes.
Furthermore, the documents governing many of the debt obligations which have been held invalid have
stated that such obligations were to be governed by the laws of other jurisdictions, including English law and
New York law. In rendering their decisions, the Indonesian courts do not appear to have applied the choice of
law provisions of these documents, but instead appear to have applied Indonesian law.
The published decisions relating to the cases in which debt obligations of Indonesian debtors have been held
invalid do not provide a clear basis or legal rationale for the decisions. However, in their pleadings, the
Indonesian debtors have, among other things, challenged the validity of key elements of the structures of those
debt offerings which are also key elements of the structure of the notes and the parent guarantee. These
challenges have included:
two liabilitiesthe notes issued by the offshore issuer and the intercompany loan agreement between the
offshore issuer and the onshore borrowerwere drawn up for a single loan transaction in violation of
Indonesian law;
only the offshore issuer is responsible for paying the noteholders and the only creditor of the onshore
borrower is the offshore issuer, since only a creditor of the onshore borrower (i.e., the offshore issuer)
may be the beneficiary of the guarantee under Indonesian law, the noteholders may not benefit from the
onshore borrowers guarantee;
Indonesian law does not recognize the concept of a trustee, including, without limitation, the relationship
of trustee and beneficiary or other fiduciary relationships;
a trustee is distinct from a creditor and only a creditor can receive the benefit of a mortgage lien;
the appointment of a security agent is invalid if the security agent is not itself a creditor; and
the transactions were made for the purpose of obtaining tax benefits and should be voided on public
policy grounds.
The Supreme Court in its August 2008 decision stated that the claim should be brought in a court of the
State of New York and not the District Court of Bengkalis, Indonesia, as the agreements were governed by New
York law. The Supreme Court further stipulated that it was clear that the money borrowed by the Indonesian
company from the Dutch subsidiary originated from the issuance of notes, as evidenced in the recital of the
relevant loan agreement, and thus the claim that the whole transaction was a manipulation of law had no merit.
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Moreover, with regard to the validity and enforceability of the security documents, the Supreme Court, in its civil
review, stated that the security agreements would prevail as long as the underlying agreements were still valid
and binding.
According to Indonesian Supreme Court decision in the civil review level in March 2009 (March 2009
Decision) , the Supreme Court refused a civil review petition against a judgment originated from the District
Court of Kuala Tungkal, in South Sumatra as later be upheld by the Supreme Court in cassation. These decisions
invalidated notes issued by APP International Finance Company B.V. (APP International), a sister corporation
of Indah Kiat (who was the plaintiff in the court case related to the June 2006 decision), which was guaranteed by
PT Lontar Papyrus Pulp & Paper Industry (Lontar Papyrus). Lontar Papyrus legal arguments in its lower court
case were fundamentally the same as those in the earlier cases by Indah Kiatnamely, that, under the notes
structure, the plaintiff was acting as both the debtor and guarantor for the same debt and, therefore, the structure
was invalid. The Supreme Courts refusal to grant a civil review of the lower courts decision effectively
affirmed that courts decision to invalidate Lontar Papyrus obligations under the notes and meaning that the
verdict is now final. Lontar Papyrus and Indah Kiat are subsidiaries of Asia Pulp & Paper Company Ltd., and
their original court cases against their creditors were filed approximately the same time. While the lower court
decisions in certain of these cases have been ultimately annulled by the Supreme Court, as was the case in
August 2008, it appears that the Supreme Court has taken a contradictory view on the Lontar Papyrus case.
The Supreme Court was of the view that Lontar Papyrus has fully paid its debt to APP International under
the relevant loan agreement, thus there is no other legal obligation that must be fulfilled by Lontar Papyrus,
whether in its capacity as debtor under the loan agreement or guarantor under the indenture. Further, the Supreme
Court was of the view that any claim from the noteholders should be addressed to APP International as the issuer
and should be pursued separately. In addition, the Supreme Court affirmed the lower court decision which has
invalidated all of the transaction documents, including the guarantee. The Supreme Court did not take into
account the fact that it was APP International who defaulted on its payment obligation to the noteholders and that
Lontar Papyrus had guaranteed the payment obligation of APP International under the notes.
The Indonesian court decisions are not binding precedents and do not constitute a source of law at any level
of the judicial hierarchy (as would be the case in common law jurisdictions such as the United States and
England) but may have persuasive force with the lower courts. However, the outcome of specific cases in the
Indonesian legal system is subject to considerable discretion and uncertainty. As such, a court could issue a
decision similar to the June 2006 decision in relation to the validity and enforceability of the notes or the parent
guarantee or grant additional relief to the detriment of noteholders, if the issuer or the parent guarantor were to
contest efforts made by noteholders to enforce theses obligations. Furthermore, there can be no assurance that
any similar cases currently on appeal will be resolved in favor of the creditors or that a successful appeal would
constitute a legal precedent disabling future cases on the same basis from being brought at the district court level.
The structure of the notes and the parent guarantee contains many of the same features as prior debt
obligations which the Indonesian courts have found to be invalid, including in the March 2009 Decision
discussed above. Consequently, an Indonesian court could find the notes and the parent guarantee to be invalid
on the basis that the structure of the notes and the parent guarantee contains the same or similar elements.
Noteholders are advised that they may not be able to effectively enforce the notes or the parent guarantee in
Indonesia, may be exposed to money judgments against them and may be subject to Indonesian judicial decisions
which interfere with their exercise of remedies elsewhere. Prospective noteholders are urged to consult with their
own professional advisors regarding these risks.
Indonesias legal system is subject to considerable discretion and uncertainty and noteholders may not be
able to pursue claims under the notes or the guarantees.
Indonesian legal principles relating to the rights of debtors and creditors, or their practical implementation
by Indonesian courts, differ materially from those that would apply within the United States or the European
Union. Neither the rights of debtors nor the rights of creditors under Indonesian law are clearly established or
recognized as under legislation or judicial precedent in most United States and European Union jurisdictions. In
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addition, under Indonesian law, debtors may have rights and defenses to actions filed by creditors that such
debtors would not have in jurisdictions such as the United States and the European Union member states.
Indonesias legal system is a civil law system based on written statutes; judicial and administrative decisions
do not constitute binding precedent and are not systematically published. Indonesias commercial and civil laws
were historically based on Dutch law as in effect prior to Indonesias independence in 1945, and some have not
been revised to reflect the complexities of modern financial transactions and instruments. Indonesian courts may
be unfamiliar with sophisticated commercial or financial transactions, leading in practice to confusion in the
interpretation and application of Indonesian legal principles. The application of Indonesian laws depends upon
subjective criteria such as the good faith of the parties to the transaction and principles of public policy, the
practical effect of which is difficult or impossible to predict. Indonesian judges have very broad fact-finding
powers and a high level of discretion in relation to the manner in which those powers are exercised. As a result,
the administration and enforcement of laws and regulations by Indonesian courts and Indonesian governmental
agencies may be subject to considerable discretion and uncertainty.
In addition, under the Indonesian Civil Code, although a guarantor may ostensibly waive its right to require the
obligee to exhaust its legal remedies against the obligors assets prior to the obligee exercising its rights under the
related guarantee, a guarantor may be able to argue successfully that the guarantor can nonetheless require the
obligee to exhaust such remedies before acting against the guarantor. An Indonesian court could side with Berau
Coal Energy or Berau Coal on this matter, despite the express waiver by them of this obligation in their guarantees.
As a result, it will likely be difficult for noteholders to pursue a claim against the issuer, the parent guarantor
or Berau Coal in Indonesia, which may adversely affect or eliminate entirely the noteholders ability to obtain
and enforce a judgment against the issuer, the parent guarantor or Berau Coal in Indonesia or increase the
noteholders costs of pursuing, and the time required to pursue, claims against the issuer, the parent guarantor or
Berau Coal.
Enforcing your rights under the notes or the guarantees across multiple jurisdictions may prove difficult.
The notes will be issued by the issuer which is incorporated with limited liability under the laws of Singapore,
and the notes will be guaranteed by the parent guarantor, which is established under the laws of Indonesia. In
addition, the notes, the guarantees and the indenture are governed by the laws of the State of New York.
In the event of a bankruptcy, insolvency or similar event, proceedings could be initiated in Singapore,
Indonesia and the United States. Any such multi-jurisdictional proceeding would be complex and costly for
creditors and otherwise may result in greater uncertainty and delay regarding the enforcement of your rights.
Your rights under the notes and the guarantees will be subject to the insolvency and administrative laws of
several jurisdictions, and you may not be able to effectively enforce your rights in any such complex multiple
bankruptcy, insolvency or similar proceedings.
In addition, the bankruptcy, insolvency, administrative and other laws of Singapore, Indonesia and the
United States may be materially different from, or be in conflict with, each other and those with which you may
be familiar, including in the areas of rights of creditors, priority of governmental and other creditors, ability to
obtain post-petition interest and duration of the proceedings. The application of these laws, or any conflict among
them, could call into question whether any particular jurisdictions laws should apply, adversely affect your
ability to enforce your rights under the notes and the guarantees in the relevant jurisdictions or limit any amounts
that you may receive.
Furthermore, a third party creditor could challenge any of the guarantees and prevail in court.
Indonesian tax rulings may adversely affect us by increasing withholding tax payable on interest payments
under the notes and intercompany loans.
On November 5, 2009, the Indonesian Directorate General of Tax (DGT) issued two regulations targeted at
preventing tax treaties being used in an abusive manner, i.e. DGT Regulation No. 61/PJ./2009 (DGT61)
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regarding the administrative procedures to apply a double tax treaty and DGT Regulation No. 62/PJ./2009 (DGT
62) regarding the avoidance of double tax treaty abuse. On December 15, 2009, the DGT amended DGT61. On
April 30, 2010, the DGT issued two regulations, DGT Regulation No. 24/PJ./2010 (DGT24) and DGT
Regulation No. 25/PJ./2010 (DGT25) to amend DGT61 and DGT62, respectively.
These new regulations and their amendments became effective on January 1, 2010. The new regulations set out
stringent anti-treaty abuse tests and administrative requirements. To obtain tax treaty benefits, non- resident income
recipients must be able to demonstrate that they are the beneficial owner of income. Agents, nominees and conduit
(pass-through) companies are not regarded as beneficial owners. In addition, as part of the administrative
requirements to be able to obtain tax treaty benefits, the non-resident income recipient must provide the payer of the
income with a certificate of tax residence in the prescribed form acceptable by the DGT (commonly referred to as
Form DGT 1 or Form DGT 2, where applicable). The requirements stated in the DGT Forms must be satisfied to
enable the tax treaty benefits to apply. Failure to comply with the conditions means that Indonesian withholding tax
will apply at the statutory rate of 20%.
As a result of the new regulations, we may be required to deduct and pay the Government withholding tax at the
statutory rate of 20% on interest paid on loans to the issuer. Also if any payments attributable to interest (or treated as
interest) are required to be made directly by Indonesian guarantors to the noteholders who are non-residents, the 20%
statutory withholding tax rate will apply. The terms of the notes and the intercompany loans require us to gross up
payments to the noteholders and the issuer for any withholding tax so deducted. An increase in the amount of
withholding tax payable on interest payments to noteholders and the issuer to the statutory rate of 20% could have an
adverse effect on us, the issuers ability to pay interest and additional amounts, if any, on, and to repay the principal
of, the notes and on the guarantors ability to satisfy their obligations under the guarantees.
Risks Relating to the Notes and the Guarantees
The indenture contains covenants limiting our financial and operating flexibility.
The indenture contains covenants that restrict the ability of the issuer, the parent guarantor, the subsidiary
guarantors and other Restricted Subsidiaries to, among other things:
incur or guarantee additional indebtedness;
pay dividends, purchase capital stock, make investments or other Restricted Payments;
issue or sell capital stock of Restricted Subsidiaries of the parent guarantor;
sell assets (including capital stock of subsidiaries);
create liens;
enter into sale and leaseback transactions;
enter into transactions with shareholders or affiliates;
enter into agreements that restrict the ability of the parent guarantor or any of its Restricted Subsidiaries
to pay dividends or interest on intercompany loans, transfer assets or make intercompany loans to the
issuer or the parent guarantor, as the case may be; and
effect a consolidation or merger.
These limitations are subject to important limitations, exceptions and qualifications described in
Description of the NotesCertain Covenants.
These restrictive covenants could limit our ability to pursue our growth plans, restrict our flexibility in
planning for, or reacting to, changes in our business and industry and increase our vulnerability to general
adverse economic and industry conditions. Our Senior Secured Credit Facility as well as any additional financing
arrangements we may enter into in the future could further restrict our flexibility.
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Any defaults of covenants contained in the notes may lead to an event of default under the notes and the
indenture and may lead to cross-defaults under our other indebtedness, including the Senior Secured Credit
Facility. We may not be able to pay any amounts due to holders of the notes in the event of such default and such
default may significantly impair the ability of the issuer and the guarantors to satisfy their obligations under the
notes and the guarantees.
The parent guarantor is a holding company and its obligations under the parent guarantee and the
intercompany loans will be structurally subordinated to all existing and future obligations of the parent
guarantors subsidiaries.
The parent guarantor is a holding company that operates through subsidiaries. As a result, the parent
guarantors obligations under the parent guarantee and the intercompany loans will be effectively subordinated to
all existing and future obligations of its direct and indirect subsidiaries. All claims of creditors of these
subsidiaries, including trade creditors, lenders and all other creditors, will have priority as to the assets of these
companies over claims of the parent guarantor and its creditors, including noteholders. As of March 31, 2010, the
total liabilities of the parent guarantors subsidiaries (including trade payables) were US$928.7 million. In
addition, the parent guarantor may in the future incur unsecured or secured obligations directly. Secured creditors
of the parent guarantor would have priority as to the assets of the parent guarantor securing the related
obligations over claims of the noteholders as beneficiaries of the parent guarantee. Moreover, issues of equity
interests by subsidiaries of the parent guarantor could dilute the ownership interest of the parent guarantor in
such subsidiaries.
Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our
obligations under the notes and the guarantees.
As of March 31, 2010 after giving pro forma effect to the issuance of the existing notes, the borrowings
under the Senior Secured Credit Facility and the application of the proceeds of each of those debt incurrences,
but excluding the issuance of the notes being offered hereby, we would have had US$718.9 million of
indebtedness outstanding. In addition, the indenture permits us to incur additional debt, subject to certain
limitations. Our degree of leverage may have important consequences to you, including the following:
we may have difficulty satisfying our obligations under the notes or other indebtedness, which could in
turn result in an event of default;
we may be required to dedicate a substantial portion of our cash flow from operations to required
payments of indebtedness, thereby reducing the availability of cash flow for working capital, capital
expenditures and other general corporate activities;
covenants relating to our indebtedness may limit our ability to obtain additional financing for working
capital, capital expenditures and other general corporate activities;
covenants relating to our indebtedness may limit our flexibility in planning for, or reacting to, changes in
our business and the coal mining industry;
we may be unable to obtain funding for acquisitions of new businesses and projects;
we may be more vulnerable than our competitors to the impact of economic downturns and adverse
developments in our business;
we may be placed at a competitive disadvantage against any less leveraged competitors; and
our business may not generate cash in an amount sufficient to enable us to service our debt or fund our
other liquidity needs.
The occurrence of any of these events could have a material adverse effect on us and on the ability of the
issuer and the guarantors to satisfy their obligations under the notes and the guarantees.
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We may incur additional indebtedness, which could further exacerbate the risks described above.
Subject to restrictions in the indenture and the Senior Secured Credit Facility, we may incur additional
indebtedness, which could increase the risks associated with our substantial indebtedness following this offering.
Covenants in agreements governing debt that we may incur in the future may materially restrict our
operations, including our ability to incur debt, pay dividends, make certain investments and payments, and
encumber or dispose of assets. In addition, financial covenants contained in agreements relating to our future
debt could lead to a default in the event that our results of operations do not meet our plans. A default under one
debt instrument may also trigger cross-defaults under our other debt instruments. An event of default under any
debt instrument, if not cured or waived, could have a material adverse effect on us. Any new debt that we incur in
the future could have important consequences to holders of the notes. For example, it could:
make it more difficult for us to satisfy our obligations with respect to the guarantees;
increase our vulnerability to general adverse economic and industry conditions;
limit our ability to fund future working capital, capital expenditures, research and development,
production expansion, acquisitions of new businesses and projects and other general corporate
requirements;
require us to dedicate a substantial portion of our cash flows from operations to service payments on our
debt;
limit our flexibility to react to changes in our business and the coal industry;
place us at a competitive disadvantage to any of our competitors that have less debt;
require us to meet additional financial covenants; and
limit our ability to borrow additional funds.
The provisions of the cash and account management agreement are not sufficient to ensure that we can
satisfy our obligations under the notes.
The provisions of the cash and accounts management agreement provide a framework for the receipt and
application of our cash receipts. However, the cash and accounts management agreement does not ensure that we
will have sufficient cash to meet our obligations under the notes when they become due or at all.
Future subsidiaries of Berau Coal Energy, other than Maple, will not become party to the cash and accounts
management agreement and accordingly their respective revenues and other cash receipts will not be subject to
the cash and accounts management agreement. As a result, a significant portion of the consolidated revenues and
cash receipts of Berau Coal Energy and its subsidiaries may not be subject to the cash and accounts management
agreement.
No additional funds will be deposited in the Berau Coal Energy lender reserve account under the cash and
account management agreement if the amount on deposit in such account equals or exceeds 50% of the principal
amount of the common secured debt under the intercreditor agreement. Additionally, as soon as no amounts remain
outstanding under the Senior Secured Credit Facility, the Berau Coal Energy lender reserve account will be
terminated and the entire remaining amount on deposit in the Berau Coal Energy lender reserve account will be
transferred to the Berau Coal Energy reserve account, from which we can withdraw from subject to limited
restrictions.
We may not be able to generate sufficient cash flows to meet our debt service obligations.
Our ability to make scheduled payments on, or to refinance our obligations with respect to, our
indebtedness, including the notes, will depend on our financial and operating performance, which in turn will be
affected by general economic conditions and financial, competitive, regulatory and other factors beyond our
control. Our business may not generate sufficient cash flow from operations and future sources of capital may not
53
be available to us in an amount sufficient to enable us to service our indebtedness, including the notes, or to fund
our other liquidity needs. If we are unable to generate sufficient cash flow to satisfy our debt obligations, we may
have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets,
reducing or delaying capital investments or seeking to raise additional capital. In addition, the notes do not
require sinking funds which may be utilized at the time of redemption of the notes and our ability to make such
payments would depend on the cash flow generated by our business and our ability to obtain refinancing. We
cannot assure you that any refinancing would be possible, that any assets could be sold or, if sold, of the timing
of the sales and the amount of proceeds that may be realized from those sales, or that additional financing could
be obtained on acceptable terms, if at all. Our inability to generate sufficient cash flows to satisfy our debt
obligations, or to refinance our indebtedness on commercially reasonable terms, would materially and adversely
affect our financial condition and results of operations and our ability to satisfy our obligations under the notes
and the guarantees.
The Intercreditor Agreement and the cash and accounts management agreement may impair the ability of
the issuer and the guarantors to pay amounts due under the notes and the guarantees and the
Intercreditor Agreement may limit the rights of the noteholders to the common security.
The cash and accounts management agreement provides, among others, that all amounts payable to Berau
Coal Energy under the cash and accounts management agreement, with certain exceptions, shall be paid into
designated accounts held in the name of Berau Coal Energy. These accounts form part of the common security
and amounts standing to the credit of Berau Coal Energy in these accounts are applied, on a monthly basis, to
service the debts secured by the common security. The excess of such amounts (if any) will only be paid to Berau
Coal Energy after all monthly debt service payments have been made. If an event of default occurs under such
debts, the common security agent is required to take action to enforce the common security in accordance with
the instructions of the secured creditors given under Intercreditor Agreement. Any enforcement action taken by
the common security agent will adversely affect our entitlement to receive payments under the cash and accounts
management agreement. This will adversely affect our ability to repay the intercompany loans, which will, in
turn, have an adverse impact on the issuers ability to fulfill its payment obligations under the notes. Further, our
ability to pay under the guarantee will be adversely affected.
The ability of the noteholders to enforce the common security is restricted under the Intercreditor
Agreement, as only the common security agent is permitted to take enforcement actions. If a payment event of
default occurs under the notes, the noteholders must decide whether to take any enforcement action and
thereafter, through the trustee, may instruct the common security agent to take such enforcement action.
However, if the event of default is not a payment event of default, the common security agent would only act if
instructed to do so by the creditors holding 66 2 3% of the then outstanding common secured indebtedness
(Majority Secured Creditors) or an Affected Secured Creditor (as defined in the Intercreditor Agreement). It is
possible that in a non-payment event of default, the enforcement action desired by the noteholders is not taken by
a common security agent, because the noteholders (represented by the trustee) do not constitute the Majority
Secured Creditors or an Affected Secured Creditor. In addition, by virtue of the instructions of the Majority
Secured Creditors or an Affected Secured Creditor, actions may be taken in respect of the common security that
may be adverse to you. In such event, the only remedy available to the noteholders would be to sue for payment
on the notes, the guarantees and the collateral. For a description on the Intercreditor Agreement, see Description
of the NotesIntercreditor Agreement.
We may not be able to finance an offer to repurchase the notes upon the occurrence of certain events
constituting a change of control as required by the indenture.
Upon a Change of Control Triggering Event, the issuer must make an offer to purchase all outstanding notes
at a purchase price of 101% of their principal amount plus accrued and unpaid interest, if any, up to the date of
purchase. If such an event occurs, we may not have sufficient funds to pay the purchase price for all the notes.
The source of funds for payment under the guarantees would be from our available cash or third party financing.
See Description of the NotesRepurchase of Notes Upon a Change of Control Triggering Event. The failure
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by the issuer to make an offer to purchase all outstanding notes upon a Change of Control Triggering Event
would constitute an event of default under the notes. This may, in turn, constitute an event of default under our
other indebtedness at the time, any of which could cause the related debt to be accelerated. If our other debt were
to be accelerated, we may not have sufficient funds to fulfill our obligations under the notes and the guarantees.
The change of control provision contained in the indenture may not necessarily afford noteholders
protection in the event of certain important corporate events, including a reorganization, restructuring, merger or
other similar transaction involving Berau Coal Energy or Berau Coal that may adversely affect noteholders,
because such corporate events may not involve a shift in voting power or beneficial ownership or, even if they
do, may not constitute a Change of Control as defined in the indenture. Except as described under Description
of the NotesRepurchase of Notes Upon a Change of Control Triggering Event, the indenture does not contain
provisions that require the issuer to offer to repurchase or redeem the notes in the event of a reorganization,
restructuring, merger, recapitalization or similar transaction.
Security over the collateral will not be granted directly to the holders of the notes, and the common
security will generally be shared with creditors under certain other financings.
Security over the collateral for the obligations of the issuer and the guarantors under the notes, the
guarantees and the indenture will not be granted directly to the holders of the notes but will be granted only in
favor of the trustee and the common collateral agent on behalf of the holders of the notes. As a consequence,
holders of the notes will not have direct security and will not be entitled to take enforcement action in respect of
the security for the notes and the guarantees, except through the trustee or the common collateral agent, which
have agreed to apply any proceeds of enforcement on such security towards such obligations.
In addition, other than Indonesian capital markets regulations and states shariah securities law, Indonesian
law does not recognize the concept of trustee including, without limitation, the relationship of trustee and
beneficiary or other fiduciary relationships. Accordingly, enforcement of the provisions granting security in favor
of third party beneficiaries and otherwise relating to the nature of the relationship between a trustee (in its
capacity as such) and the beneficiaries of a trust in Indonesia will be subject to an Indonesian court accepting the
concept of trustee under New York law and accepting proof of the application of equitable principles under such
security documents.
Further, the collateral consists of (a) a security interest in the Notes Debt Service Account (including the
Notes Interest Reserve Account) and (b) the common security (as defined in the Intercreditor Agreement) and
further described under Description of the NotesSecurityDescription of the Common Security. In addition,
the indenture provides that the common security will be shared equally and ratably with the creditors under the
Senior Secured Credit Facility, and all obligations of the guarantors and any other obligors under all other future
permitted pari passu secured indebtedness which has been granted a lien on the common security in accordance
with the terms of the Intercreditor Agreement. For a further discussion of the Intercreditor Agreement, see
Description of the NotesSecurityIntercreditor Agreement. Because the common security will be shared
equally and ratably with creditors under other financings, the full value of the collateral will not be available to
satisfy noteholders claims.
The indenture also permits us to enter into certain future financings, and creditors under those future
financings may share the common security pari passu with the trustee acting on behalf of the noteholders. See
Description of the NotesSecurityPermitted Pari Passu Secured Indebtedness for a further discussion of the
sharing of the common security with future financings. If creditors under future financings opt to share the
common security under the Intercreditor Agreement, a smaller portion of the proceeds from the enforcement of
the collateral will be available to satisfy noteholders claims, which could have a material adverse effect on the
ability of the noteholders to recover sufficient proceeds to satisfy their claims under the notes.
55
The value of the collateral may not be sufficient to satisfy the obligations of the issuer and the guarantors
under the notes and the guarantees.
The notes and the guarantees will be secured by first priority security interests in the collateral. The amount
of proceeds that ultimately would be distributed in respect of the notes upon any enforcement action or otherwise
may not be sufficient to satisfy the issuers obligations under the notes and the guarantors obligations under the
guarantees. The value of the collateral and any amount to be received upon enforcement against the collateral
will depend upon many factors including, among others, the jurisdiction in which the enforcement action or sale
is completed, the ability to sell the collateral in an orderly sale, the availability of buyers and the condition of the
collateral. Each of these factors could reduce the likelihood of an enforcement action as well as reduce the
amount of any proceeds in the event of a successful enforcement action.
The guarantees will be effectively subordinated to any secured obligations of the guarantors to the extent
of the assets serving as security for such obligations.
Except with respect to the security created in respect of the collateral, the guarantees will constitute
unsubordinated obligations of the guarantors and will rank pari passu in right of payment with all other existing
and future unsubordinated indebtedness of the guarantors and senior in right of payment to all subordinated
indebtedness of the guarantors, if any. Except with respect to the security provided in respect of the collateral,
each guarantee will be issued as a general obligation of the relevant guarantor. However, the guarantees will be
effectively subordinated to any secured obligations of the guarantors to the extent of the assets serving as security
for such secured obligations. In bankruptcy, the holder of a security interest with respect to any assets of the
guarantors would be entitled to have the proceeds of such assets applied to the payment of such holders claim
before the remaining proceeds, if any, are applied to the claims of the noteholders.
A failure by the parent guarantor to comply with the offshore borrowing requirements could affect the
validity of the notes.
Under applicable Indonesian laws and regulations, the parent guarantor is required to report details
regarding its offshore borrowings to the Minister of Finance of Indonesia, Bank Indonesia (Indonesias central
bank) and the Team of Offshore Commercial Borrowing. In addition, the parent guarantor is required to
periodically submit various other reports regarding its offshore borrowings to Bank Indonesia. The parent
guarantor undertakes in the indenture to comply with all such requirements in respect of the notes. Pursuant to
the current applicable Indonesian laws and regulations, failure to comply with such requirements will result in
administrative sanctions.
However, the Supreme Courts position on the impact on offshore borrowings in the event the borrower fails
to make required filings is varied. In one Supreme Court case based on a since superseded law on offshore
borrowings, the Supreme Court decided that a borrowers failure to make required filings invalidated the
borrowers obligations under the relevant loan agreement. In a separate decision, also based on the superseded
law, the Supreme Court ruled otherwise, stating that failure to file a loan agreement did not affect the validity of
the borrowers obligations under the loan agreement and that the sanction applicable to such failure is the fine
contained in the superseded law. Prior decisions of the Supreme Court are generally not considered as binding
precedents in later cases. Accordingly, although current laws and regulations only apply administrative sanctions,
courts could deem the parent guarantors failure to comply with reporting requirements as adversely affecting the
validity of the notes.
Under the terms of the coal contract of work, the property, plant and equipment Berau Coal purchases
become the legal property of the Government and the coal remains the legal property of the Government
until delivery.
Under the terms of the coal contract of work, Berau Coal only has the right to use the property, plant,
equipment and other physical assets that it purchases in connection with mining operations within its concession
areas during the term of its coal contract of work and such assets become the property of the Government when
56
acquired. In addition, a substantial part of the plant, equipment and machinery are owned by Berau Coals
contractors. Moreover, Berau Coal does not hold legal title to any coal. The Government retains title to all coal
until it is delivered to the customers of Berau Coal, which is usually deemed to occur when coal is transferred to
the customers vessels or other selected mode of transportation. Although the property, plant and equipment
purchased by Berau Coal and all coal inventories are classified as assets of Berau Coal on its balance sheet,
Berau Coal does not have legal title to any of these assets and if Berau Coal is liquidated, wound-up or declared
bankrupt in the future, none of these assets would be available to satisfy outstanding claims of its creditors.
The ratings of the notes and us may be downgraded or withdrawn.
The notes are rated B2 by Moodys and B+ by Standard & Poors. The ratings represent the opinions of
the rating agencies and their assessment of the ability of the issuer and the guarantors to perform their respective
obligations under the notes and the guarantees and credit risks in determining the likelihood that payments will
be made when due under the notes. A rating is not a recommendation to buy, sell or hold securities. The ratings
can be lowered or withdrawn at any time. We are not obligated to inform holders of the notes if the ratings are
lowered or withdrawn. A reduction or withdrawal of the ratings may adversely affect the market price of the
notes and our ability to access the debt capital markets.
There is no public market for the notes and any market that develops may not be liquid; the market price
of the notes following this offering may be volatile.
There is currently no trading market for the notes. Although the initial purchasers have advised us that they
currently intend to make a market in the notes, they are not obligated to do so, and any market-making activity
with respect to the notes, if commenced, may be discontinued at any time without notice at their sole discretion.
See Plan of Distribution.
An active trading market for the notes may not develop or be sustained. If an active trading market for the
notes does not develop or is not maintained, the market price and liquidity of the notes may be adversely
affected. If such a market develops, the notes could trade at prices that may be lower than the price at which the
notes are issued. The price at which the notes trade depends on many factors, including:
prevailing interest rates and the markets for similar securities;
our results of operations, financial condition and prospects;
political and economic developments in and affecting Indonesia and other countries in which we conduct
business;
general economic conditions domestically, regionally and globally; and
changes in the credit ratings of the notes or us.
Since 2008, the international credit markets have experienced periods of significant illiquidity and the prices
of publicly traded securities have experienced substantial volatility and declines in response to the continuing
sub-prime mortgage crisis in the United States, the bankruptcy of Lehman Brothers in September 2008, the
substantial need for government financial assistance by many major international banks and other financial
institutions in the United States and Europe, the resulting global economic downturn and financial instability and
other factors. Furthermore, historically, the market for debt by Southeast Asian issuers has been subject to
disruptions that have caused substantial volatility in the prices of such securities. The market for the notes may
be subject to similar volatility or disruptions, which may adversely affect the price of the notes or otherwise
impede a holders ability to sell the notes.
We have received approval in-principle for listing the notes on the SGX-ST. However, we may not be able
to obtain or maintain the listing. Even if listed, a trading market may not develop. We do not intend to list the
notes on any other securities exchange. Lack of a liquid, active trading market for the notes may adversely affect
the price of the notes or otherwise impede a holders ability to sell the notes.
57
The notes will initially be held in book-entry form, and therefore you must rely on the procedures of the
relevant clearing systems to exercise any rights and remedies.
The notes will initially only be issued in global certificated form and held through DTC and its participants,
including Euroclear Bank S.A./N.A. (Euroclear) and Clearstream Banking, socit anonyme, Luxembourg
(Clearstream). Interests in the global notes representing the notes will trade in book-entry form only, and notes
in definitive registered form will be issued in exchange for book-entry interests only in very limited
circumstances. Owners of book-entry interests will not be considered owners or holders of notes for purposes of
the indenture. The custodian for DTC will be the sole registered holder of the global notes. Accordingly, you
must rely on the procedures of DTC, Euroclear or Clearstream, and if you are not a participant in DTC, Euroclear
or Clearstream, on the procedures of the participant through which you own your interest, to exercise any rights
and obligations of a holder of notes under the indenture.
Upon the occurrence of an event of default under the indenture, unless and until definitive registered notes
are issued in respect of all book-entry interests, if you own a book-entry interest, you will be restricted to acting
through DTC, Euroclear and Clearstream. The procedures to be implemented through DTC, Euroclear and
Clearstream may not be adequate to ensure the timely exercise of rights under the notes. See Description of the
NotesBook Entry; Delivery and Form.
Investors may have difficulty enforcing judgments against the issuer, the guarantors or their
managements.
The issuer is a private company with limited liability established in Singapore. The parent guarantor is
established with limited liability in Indonesia. All of the commissioners, directors and executive officers, as
applicable, of the issuer and the guarantors reside outside the United States. Substantially all of the assets of the
issuer, the guarantors and these other persons are located outside the United States. As a result, it may be difficult
for investors to effect service of process upon the issuer, the guarantors or such persons within the United States
or other jurisdictions, or to enforce against the issuer, the guarantors or such persons in such jurisdiction,
judgments obtained in courts of that jurisdiction, including judgments predicated upon the civil liability
provisions of the federal securities laws of the United States or any state thereof. In particular, investors should
be aware that judgments of United States courts based upon the civil liability provisions of the federal securities
laws of the United States or any state thereof may not be enforceable in Singapore or Indonesia courts and
Singapore or Indonesia courts may not enter judgments in original actions brought in those courts based solely
upon the civil liability provisions of the securities laws of the United States or any state thereof. See
Enforceability of Foreign Judgments.
The issuer is a wholly owned financing entity of Berau Coal Energy with no operations of its own and is
dependent upon payments under the intercompany loans with Berau Coal Energy and Berau Coal to meet
its obligations under the notes.
The issuer is a financing entity wholly-owned by the parent guarantor with limited assets and has no
business operations other than issuing the notes and engaging in related transactions. The issuer will lend the
proceeds from the notes issuance to Berau Coal Energy and Seacoast Offshore Inc. through intercompany loans.
The issuers ability to make payments on the notes is dependent directly on payments to the issuer by Berau Coal
Energy and Seacoast Offshore Inc. under these intercompany loans (including similar intercompany loans it
entered into with Berau Coal Energy and Seacoast Offshore Inc. to on-lend the proceeds of the existing notes).
The ability of Berau Coal Energy and Seacoast Offshore Inc. to make payments to the issuer under these
intercompany loans will depend on a number of factors, some of which may be beyond our control, including
those identified elsewhere in this Risk Factors section. If Berau Coal Energy or Seacoast Offshore Inc. fail to
make scheduled payments under these intercompany loans, the issuer will not have any other source of funds to
meet its payment obligations under the notes.
58
The transfer of the notes and the guarantees is restricted, which may adversely affect their liquidity and
the price at which they may be sold.
The notes and the guarantees have not been registered under, and we are not obligated to register the notes
or the guarantees under, the U.S. Securities Act or the securities laws of any other jurisdiction and, unless so
registered, may not be offered or sold except pursuant to an exemption from, or a transaction not subject to, the
registration requirements of the U.S. Securities Act or the SFA and any other applicable laws. See Plan of
Distribution and Transfer Restrictions. We have not agreed to or otherwise undertaken to register the notes
(including by way of an exchange offer) with the U.S. SEC or the MAS or the securities regulatory authority of
any other jurisdiction, and the issuer has no intention of doing so.
The guarantees may be challenged under applicable financial assistance, insolvency or fraudulent transfer
laws, which could impair the enforceability of the guarantees.
Under bankruptcy laws, fraudulent transfer laws, financial assistance, insolvency or unfair preference or
similar laws in Indonesia, where Armadian, Berau Coal and Berau Coal Energy are incorporated and where all of
their significant assets are currently located (as well as under the law of certain other jurisdictions to which in
certain circumstances Armadian, Berau Coal and Berau Coal Energy may be subject), the enforceability of a
guarantee may be impaired if certain statutory conditions are met. In particular, a guarantee may be voided, or
claims in respect of a guarantee can be subordinated to all other debts of that guarantor, if the guarantor, at the
time that it incurred the indebtedness evidenced by, or when it gives its guarantee:
incurred the debt with the intent to hinder, delay or defraud creditors or was influenced by a desire to put
the beneficiary of the guarantee in a position which, in the event of the guarantors insolvency, would be
better than the position the beneficiary would have been in had the guarantee not been given;
received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee;
received no commercial benefit;
was insolvent or rendered insolvent by reason of such incurrence;
was engaged in a business or transaction for which the guarantors remaining assets constituted
unreasonably small capital; or
intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they
mature.
The test for insolvency, the other particular requirements for the enforcement of fraudulent transfer law, and
the nature of the remedy if a fraudulent transfer is found, may vary depending on which jurisdictions laws are
being applied. Under the laws of Indonesia, it would also be necessary for the directors to ensure that the
guarantor is solvent immediately after entry into, and performance of any obligation under, the transaction, that:
it will be able to satisfy its liabilities as they become due in the ordinary course of its business; and
the realizable value of the assets of the guarantor will not be less than the sum of its total liabilities other
than deferred taxes, as shown in the books of account, and its capital.
The directors are required to ensure that the issued capital of Armadian, Berau Coal and Berau Coal Energy
are maintained and that, after the giving of a guarantee, Armadian, Berau Coal and Berau Coal Energy would
have sufficient net assets to cover the nominal value of its issued share capital. If a court voided the guarantees,
or held the guarantees unenforceable for any other reason, then the holders of the notes would cease to have a
claim against Armadian, Berau Coal and Berau Coal Energy based upon such guarantees, and would solely be
creditors of Berau Coal Energy. If a court subordinated the guarantees to other indebtedness of Armadian, Berau
Coal or Berau Coal Energy, then claims under the guarantees would be subject to the prior payment of all
liabilities (including trade payables).
59
Armadian, Berau Coal and Berau Coal Energy will be providing guarantees governed by the laws of the
Republic of Indonesia in addition to the guarantees governed by the laws of the State of New York. There can be
no assurance as to whether, or how, an Indonesian court would enforce such Indonesian law guarantees.
Security interests in Indonesia might not be enforceable.
There is uncertainty as to whether the Security Documents governed by Indonesian law can be enforced in
accordance with their terms for several reasons including:
The ability of the trustee or an agent of the trustee to enforce its rights under the Indonesian law-governed
Security Documents will depend on whether an Indonesian court is willing to recognize and enforce the
principal debt obligations represented by the indenture constituting the notes. Accordingly, enforcement
of claims will be subject to an Indonesian courts acceptance of New York law as the governing law of
the notes and the indenture or, alternatively, to an Indonesian courts interpretation of the New York law
principles contained in the indenture were Indonesian law to be applied. Indonesian courts have, in
practice from time to time, disregarded the parties choice of foreign law and applied Indonesian law in
such cases, and an Indonesian court might not apply New York law in any proceedings relating to the
enforcement of the notes or the indenture.
Judgments of foreign courts, including New York courts, are not enforceable in Indonesia. As a result, the
trustee or an agent of the trustee may be required, prior to the enforcement of the Indonesian-law Security
Documents, to pursue claims based upon the notes and the indenture through the Indonesian courts.
The enforcement of the Indonesian-law Security Documents will be subject to the rules of civil
procedures and/or public auction procedures as applied by the Indonesian courts, which rules include
court and state auction agency fees being payable in respect of proceedings instituted on the basis of the
Security Documents. Specific performance may not always be available under the laws of Indonesia.
The security created by the Security Documents governed by Indonesian law will be subject to higher
ranking priority rights created by statute, including rights created pursuant to Articles 1137 and 1139 of
the Indonesian Civil Code in respect of claims made by the Government, such as tax claims of the
Indonesian State Treasury and court and other administrative costs relating to enforcement of the
Indonesian-law Security Documents and costs to safeguard the relevant secured assets.
60
USE OF PROCEEDS
We estimate that the net proceeds the issuer will receive from this offering will be approximately US$101.2
million, after deducting underwriting fees and commissions, other estimated transaction expenses and accrued
interest. The issuer will on-lend the net proceeds of this offering to Berau Coal Energy and to Seacoast Offshore
Inc. through intercompany loans.
We intend to use the net proceeds from this offering, the existing notes, the loans under the Senior Secured
Credit Facility and cash released from Berau Coals former cash and accounts management agreement as
follows:
US$314 million will be used to repay in full the total outstanding amount under a loan from our parent,
PT Bukit Mutiara, to Berau Coal Energy; PT Bukit Mutiara will in turn use the proceeds to repay in full
the total amount outstanding under a US$300 million credit facility, including make-whole premium,
accrued interest, break cost and related fees and expenses;
US$303 million will be used to repay the total outstanding amount under the US$300 million credit
facility of our finance subsidiary Empire Capital Resources Pte. Ltd., including accrued interest, break
cost and related fees and expenses;
US$175 million will be used by Seacoast Offshore Inc. for the first payment for our proposed acquisition
of Maple. See Description of Material AgreementsAgreement to Acquire Maple Holdings Limited.
PT Bukit Mutiara, as the parent of the seller of Maple, will in turn use the proceeds to repay in equal
amounts a portion of the outstanding amounts under the Vendor Notes and the Bumi Loan;
US$21.875 million will be placed into the notes interest reserve account under the new cash and accounts
management agreement in respect of the existing notes; and
US$6.25 million will be placed into the notes interest reserve account under the new cash and accounts
management agreement in respect of the notes offered hereby.
61
EXCHANGE RATES AND EXCHANGE CONTROLS

Exchange Rates
The following table sets forth, for the periods indicated, information concerning the exchange rates between
the Rupiah and U.S. dollars based on the middle exchange rates during the periods indicated. The Rupiah middle
exchange rate is calculated based on Bank Indonesias buying and selling rates. Neither we nor the initial
purchasers make any representations that the Rupiah or U.S. dollar amounts referred to in this offering circular
could have been or could be converted into U.S. dollars or Rupiah, as the case may be, at the rate indicated or
any other rate at all.
Year:
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Month:
January 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July 2010 (through July 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Low(1)
High(1)
Average(1)
Period End
9,165
8,775
8,828
9,051
9,400
10,310
9,395
9,419
12,151
11,980
9,751
9,141
9,164
9,757
10,356
9,830
9,020
9,419
10,950
9,400
9,130
9,280
9,070
9,001
9,017
9,015
9,047
9,408
9,413
9,313
9,075
9,373
9,295
9,094
9,275
9,348
9,174
9,027
9,183
9,148
9,063
9,365
9,335
9,115
9,012
9,180
9,083
9,069
Source: Statistik Ekonomi dan Keuangan Indonesia (Indonesian Financial Statistics)

published monthly by Bank Indonesia; Internet website of Bank Indonesia
(http://www.bi.go.id/web/en/Moneter/Kurs+Bank+Indonesia/Kurs+Uang+Kertas+Asing).
Note:
(1) For full years, the high and low amounts are determined, and the average shown is calculated, based upon
the middle exchange rate announced by Bank Indonesia on the last day of each month during the year
indicated. For each month, the high and low amounts are determined, and the average shown is calculated,
based on the daily middle exchange rate announced by Bank Indonesia during the month indicated.
The middle exchange rate between the Rupiah and the U.S. dollar on July 22, 2010 was Rp. 9,069 = US$1.00.
The Federal Reserve Bank of New York does not certify for customs purposes a noon buying rate for cable transfers
in Rupiah.
Exchange Controls
No exchange control restrictions exist in Indonesia. The Rupiah is, in general, freely convertible. However,
in an effort to maintain the stability of the Rupiah and to prevent non-residents from using Rupiah for speculative
purposes, a Bank Indonesia regulation restricts the movement of Rupiah from banks within Indonesia to offshore
banks or to offshore branches or offices of Indonesian banks or any investment in Rupiah by foreign parties or
Indonesian citizens domiciled or permanently residing outside Indonesia, without underlying trade or investment
reasons, thereby limiting offshore trading to existing sources of liquidity. In addition, Bank Indonesia has the
authority to request information and data concerning the foreign exchange activities of all people and legal
entities that are domiciled, or who plan to reside, in Indonesia for at least one year. Bank Indonesia regulations
also require resident banks and companies that have total assets or total annual gross revenues of at least Rp. 100
billion to report to Bank Indonesia all data concerning their foreign currency activities. The transactions that
must be reported include receipt and payment of funds through bank accounts outside of Indonesia.
62
CAPITALIZATION
The following table sets forth our consolidated cash and cash equivalents and capitalization as of March 31,
2010:
on an actual basis; and
on an as adjusted basis to give effect to (i) the issuance of US$350 million aggregate principal amount
of the existing notes on July 8, 2010, (ii) the drawdown of US$400 million under the Senior Secured
Credit Facility on July 23, 2010, (iii) the issuance of the notes being offered hereby and (iv) the use of
proceeds of the foregoing together with cash released from Berau Coals former cash and accounts
management agreement, including the repayment of debt as described under SummaryRecent
DevelopmentsRepayment of Debt and Use of Proceeds.
You should read this information together with Use of Proceeds, Selected Financial Information and
Other Data, Managements Discussion and Analysis of Financial Condition and Results of Operations and the
As of March 31, 2010
Actual
As Adjusted (Unaudited)
(Rp. in billions and US$ in millions(1))
Cash and cash equivalents(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . .

Short-term debt:
Short-term loans(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term portion of Senior Secured Credit
Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt:
Due to related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.5% Guaranteed Senior Secured Notes . . . . . . . . . . .
Senior Secured Credit Facility (excluding short-term
portion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rp.2,644.5 US$290.1 Rp. 2,900.7
US$ 318.2
Rp.2,661.6 US$292.0 Rp.
US$
2,734.5
100.2
11.0
300.0
4,004.9
439.4
3,363.5
369.0
Total debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,396.1
592.0
7,468.6
819.4
Equity:
Capital stockRp. 100 par value per share:
Authorized90 billion shares
Issued and paid-up31.5 billion shares . . . . . . .
Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,150.0
(56.5)
461.0
345.6
(6.2)
50.5
3,150.0
(56.5)
388.0
345.6
(6.2)
42.6
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,554.5
389.9
3,481.5
382.0
Rp.8,950.6 US$981.9 Rp.10,950.1
US$1,201.4
Total capitalization (excluding cash and cash

equivalents). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes:
2010.
(2) The as adjusted amount of cash and cash equivalents does not reflect any changes to the amount of cash
and cash equivalents subsequent to March 31, 2010 other than as described above.
(3) Cash and cash equivalents as of March 31, 2010 includes Rp. 683.7 billion of cash held in restricted
accounts. For a description of this restricted cash, see Note 5 to our consolidated financial statements as of
and for the three months ended March 31, 2009 and 2010 included elsewhere in this offering circular.
(4) This refers to the loans under the credit facility of our finance subsidiary Empire Capital Resources Pte. Ltd.
that we repaid (or have made arrangements to repay) in full on July 23, 2010.
Except as disclosed above, there have been no material changes in our consolidated cash and cash
equivalents and capitalization since March 31, 2010.
63
SELECTED FINANCIAL INFORMATION AND OTHER DATA

You should read the following selected financial information and other data together with the section
entitled Managements Discussion and Analysis of Financial Condition and Results of Operations and the
We have derived the following selected financial information from our financial statements as of and for the
years ended December 31, 2007, 2008 and 2009, which have been audited by KAP Tjiendradjaja and Handoko
Tomo (formerly KAP Handoko Tomo), independent public accountants, and our unaudited financial statements
as of and for the three months ended March 31, 2009 and 2010, all of which are included elsewhere in this
offering circular. Our unaudited financial statements as of and for the three months ended March 31, 2009 and
2010 have been reviewed by KAP Tjiendradjaja and Handoko Tomo and contain all adjustments that our
management believes are necessary for the fair presentation of such information. Results for interim periods are
not necessarily indicative of results for the full year.
Our financial statements as of and for the year ended December 31, 2007 have been restated. The figures
included below are the restated figures. See Note 41 to our financial statements as of and for the years ended
Our financial statements are reported in Rupiah, and our functional currency is the Rupiah. We prepare and
present our financial statements in accordance with Indonesian GAAP, which differs in certain respects from
U.S. GAAP. For a description of certain differences between Indonesian GAAP and U.S. GAAP, see Summary
of Certain Principal Differences Between Indonesian GAAP and U.S. GAAP.
2007
Statement of Income
Data:
Sales . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . .
Gross profit . . . . . . . . . . . .
Operating expenses:
General and
administrative . . .
Selling and
marketing . . . . . . .

2008
2009
2009(1)
2009
2010
2010(2)
Rp.3,445.0
2,658.4
Rp.6,110.2
4,458.8
Rp.8,318.6
4,921.4
US$885.0
523.6
Rp.1,721.1
1,036.9
Rp.2,041.8
1,473.2
US$224.0
161.6
786.6
1,651.4
3,397.2
361.4
684.2
568.6
62.4
120.3
179.4
270.2
28.7
39.5
125.3
13.8
39.1
64.0
101.4
10.8
22.2
29.0
3.2
Total operating
expenses . . . . . . . . . . . .
159.4
243.4
371.6
39.5
61.7
154.3
17.0
Operating income. . . . . . .
627.2
1,408.0
3,025.6
321.9
622.5
414.3
45.4
64
2007

Interest income . . . . . .
Foreign exchange gain
(loss) net. . . . . . . .
Realization of
difference in value
from restructuring
transactions of
entities under
common control . . .
Interest expenses. . . . .
Loss from early
redemption of
senior notes . . . . . . .
Amortization of
deferred financing
charges. . . . . . . . . . .
Amortization of
goodwill. . . . . . . . . .
Others net . . . . . . . . .
225.4
(39.1)

2008
2009
2009(1)
2009
2010
2010(2)
243.2
259.7
27.6
71.8
5.1
0.6
(155.7)
175.9
18.7
(78.6)
236.1
25.9
(300.6)
(294.4)
8.0
(280.4)
0.8
(29.8)
(81.7)
(100.9)
(11.1)
(156.3)
(16.6)
(19.9)
(21.1)
(67.6)
(7.2)
(6.3)
(34.1)
(3.7)
(49.3)
4.8
(49.3)
4.9
(38.6)
4.9
(4.1)
0.5
(12.3)
0.4
(30.7)
(0.2)
(3.4)
Other income (charges)

net . . . . . . . . . . . . . . . . . . .
(178.7)
(272.4)
(94.4)
(10.1)
(106.7)
75.3
8.3

expense . . . . . . . . . . . . . . .
Income tax expense. . . . . . .
448.5
(256.6)
2,931.2
(1,291.7)
311.8
(137.4)
515.8
(261.6)
489.6
(239.9)
53.7
(26.3)
1,639.5
174.4
254.2
249.7
27.4
(83.6)
(159.4)
(30.1)
(3.3)
Income before minority

interest in net income of
consolidated
subsidiaries . . . . . . . . . . .
subsidiaries . . . . . . . . . . .
Net income . . . . . . . . . . . . . .
Rp.
1,135.6
(597.4)
191.9
538.2
(166.3)
(368.1)
25.6
Rp. 170.1
(785.8)
Rp. 853.7
US$ 90.8
Rp. 94.8
Rp. 219.6
US$ 24.1
Notes:
December 31, 2009.
2010.
65
2007
As of December 31,
2008
2009
2009(1)
2009
As of March 31,
2010
2010(2)
Balance Sheet Data:

Total current assets . . . Rp.1,462.9 Rp.2,820.8 Rp. 4,448.2 US$ 473.2 Rp.3,336.7 Rp. 4,734.6 US$ 519.4
Total non-current
assets(3) . . . . . . . . . . .
3,378.5
4,078.6
7,832.6
833.3
4,484.4
7,618.2
835.8
Total assets . . . . . . . . . .
4,841.4
6,899.4
12,280.8
1,306.5
7,821.1
12,352.8
1,355.2
1,344.9
2,383.4
5,482.1
583.2
2,840.5
5,590.6
613.3
2,904.7
3,113.9
2,968.6
315.8
3,206.6
2,863.5
314.2
Total liabilities . . . . . . .
4,249.6
5,497.3
8,450.7
899.0
6,047.1
8,454.1
927.5

assets of
consolidated
subsidiaries . . . . . . . .
523.1
1,024.5
324.5
34.5
1,241.6
344.2
37.8
Total equity . . . . . . . . . .
68.7
377.6
3,505.6
373.0
532.4
3,554.5
389.9
Total current
liabilities(3) . . . . . . . .
Total non-current
liabilities(3) . . . . . . . .
Total liabilities and

equity . . . . . . . . . . . . . Rp.4,841.4 Rp.6,899.4 Rp.12,280.8 US$1,306.5 Rp.7,821.1 Rp.12,352.8 US$1,355.2
Notes:
December 31, 2009.
2010.
(3) Deferred financing charges were offset with short-term loan as of December 31, 2009 and senior notes as of
December 31, 2007 and 2008 to conform to the March 31, 2010 consolidated financial statements presentation.
66
2007

2008
2009
2009(1)
2009
2010
2010(2)
Statement of Cash Flow

Data:
Net cash flows from
operating activities(3) . . . . . Rp. 281.2 Rp.1,048.5 Rp. 2,372.1 US$ 252.4 Rp. 444.2 Rp. 505.9 US$ 55.5
(used in) investing
activities . . . . . . . . . . . . . . .
(264.0)
(201.4)
(3,697.7)
(393.4)
78.8
(342.9)
(37.6)
(used in) financing
activities . . . . . . . . . . . . . . .
(6.4)
(266.0)
2,115.9
225.1
(82.4)
(2.1)
(0.3)
Effect of exchange rate
changes(3) . . . . . . . . . . . . . .
1.8
(88.0)
(13.1)
(1.4)
(14.1)
(4.0)
(0.4)
Net increase in cash and
cash equivalents. . . . . . . . .
12.6
493.1
777.5
82.7
426.5
156.9
17.2
the beginning of the
period. . . . . . . . . . . . . . . . . .
520.7
533.3
1,026.4
109.2
1,026.4
1,803.9
197.9
the end of the period . . . . . Rp. 533.3 Rp.1,026.4 Rp. 1,803.9 US$ 191.9 Rp.1,452.9 Rp.1,960.8 US$215.1
Notes:
December 31, 2009.
2010.
(3) Effect of exchange rate changes on cash and cash equivalents are presented separately from cash flows from
operating activities.
2007

2008
2009
2009(1)
2009
2010
2010(2)
(Rp. in billions and US$ in millions, except for ratios)
Non-GAAP Financial
Measures:
EBITDA(3) . . . . . . . . . . . . . . . . Rp.705.3 Rp.1,484.4 Rp.3,111.9 US$331.1 Rp. 645.0 Rp. 523.0 US$ 57.3
300.6
294.4
280.4
29.8
81.7
100.9
11.1
Total debt(4) . . . . . . . . . . . . . . . 2,987.7
3,214.9
5,539.5
589.3
3,332.1
5,396.1
592.0
Total debt/EBITDA(5) . . . . . . .
4.2
2.2
1.8
1.8
1.3
2.6
2.6
EBITDA/interest expenses . .
2.3
5.0
11.1
11.1
7.9
5.2
5.2
Notes:
December 31, 2009.
2010.
(3) We calculate EBITDA by adding depreciation and amortization, foreign exchange losses, interest expense,
minority interest in the net income of subsidiaries, loss from early redemption of senior notes and income tax
expenses and subtracting interest income, foreign exchange gains, realization in value from restructuring
transactions of entities under common control, and income tax benefit from net income as calculated under
67
Indonesian GAAP for the periods presented. EBITDA is a supplemental measure of our performance that is not
required by, or presented in accordance with, Indonesian GAAP or U.S. GAAP. EBITDA is not a measurement
of financial performance or liquidity under Indonesian GAAP or U.S. GAAP and should not be considered as an
alternative to net income, operating income or any other performance measures derived in accordance with
Indonesian GAAP or U.S. GAAP or an alternative to cash flows from operating activities as a measure of
liquidity. Our presentation of EBITDA may not be comparable to similarly titled measures presented by other
companies or Consolidated EBITDA as defined in the notes or our Senior Secured Credit Facility. You should
not compare our EBITDA with EBITDA presented by other companies because not all companies use the same
definition. We have included EBITDA because we believe it is an indicative measure of our operating
performance and is used by investors and analysts to evaluate companies in our industry. See Managements
Discussion and Analysis of Financial Condition and Results of OperationsEBITDA. The following table
reconciles our net income under Indonesian GAAP to our definition of EBITDA for the periods indicated:
2007

2008
2009
2009(a)
2009
2010
2010(b)
Net income . . . . . . . . . . . . . . . . . . . . . Rp. 25.6 Rp.170.1 Rp. 853.7 US$ 90.8 Rp. 94.8 Rp. 219.6 US$ 24.1
Add:
Interest expenses (net of
interest income) . . . . . . . . . .
75.2
51.2
20.7
2.2
9.9
95.8
10.5
Income tax expense . . . . . . . . .
256.6
597.4
1,291.7
137.4
261.6
239.9
26.3
Depreciation and
amortization(c) . . . . . . . . . . . .
73.3
71.5
81.4
8.7
22.1
20.1
2.2
financing charges . . . . . . . . .
19.9
21.1
67.6
7.2
6.3
34.1
3.7
49.3
49.3
38.6
4.1
12.3
30.7
3.4
resources . . . . . . . . . . . . . . . .
88.8
9.7
Foreign exchange loss (gain)
net . . . . . . . . . . . . . . . . . . . .
39.1
155.7
(175.9)
(18.7)
78.6
(236.1)
(25.9)
Realization in value from
restructuring transactions of
entities under common
control . . . . . . . . . . . . . . . . . .
(8.0)
(0.8)

senior notes . . . . . . . . . . . . . .
156.3
16.6

subsidiaries . . . . . . . . . . . . . .
166.3
368.1
785.8
83.6
159.4
30.1
3.3
EBITDA . . . . . . . . . . . . . . . . . . . . . . . Rp.705.3 Rp.1,484.4 Rp.3,111.9 US$331.1 Rp.645.0 Rp. 523.0 US$ 57.3
(a) Converted into U.S. dollars at the rate of Rp. 9,400 = US$1.00, which was the exchange rate as of
December 31, 2009.
(b) Converted into U.S. dollars at the rate of Rp. 9,115 = US$1.00, which was the exchange rate as of
March 31, 2010.
(c) Depreciation represents depreciation of fixed assets, and amortization represents amortization of deferred
exploration and development costs.
total debt/EBITDA.
68
PT Berau Coal
We have derived the following selected financial information from Berau Coals financial statements as of
and for the year ended December 31, 2007, which have been audited by KAP Jimmy Budhi & Rekan,
independent public accountants, its financial statements as of and for the years ended December 31, 2008 and
2009, which have been audited by KAP Tjiendradjaja and Handoko Tomo (formerly KAP Handoko Tomo),
independent public accountants, and its unaudited financial statements as of and for the three months ended
March 31, 2009 and 2010, all of which have been included elsewhere in this offering circular. Berau Coals
unaudited financial statements as of and for the three months ended March 31, 2009 and 2010 have been
reviewed by KAP Tjiendradjaja and Handoko Tomo and contain all adjustments that Berau Coals management
believes are necessary for the fair presentation of such information. Results for interim periods are not
necessarily indicative of results for the full year.
Berau Coals financial statements are reported in U.S. dollars, and its functional currency is the U.S. dollar.
Berau Coal prepares and presents its financial statements in accordance with Indonesian GAAP, which differs in
certain respects from U.S. GAAP. For a description of certain differences between Indonesian GAAP and U.S.
GAAP, see Summary of Certain Principal Differences Between Indonesian GAAP and U.S. GAAP.
2007
Statement of Income Data:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . .
2008
2009
(US$ in millions)
US$384.2 US$631.2 US$ 800.0

296.1
460.6
473.3
2009
2010
US$148.0
89.2
US$220.5
149.5
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Selling and marketing . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . .
88.1
170.6
326.7
58.8
71.0
4.3
13.4
6.6
18.3
9.7
23.6
1.9
3.4
3.1
13.5
Total operating expenses . . . . . . . . . . . . . . . . . .
17.7
24.9
33.3
5.3
16.6
Operating income . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expenses):
Interest income . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on foreign exchangenet . .
charges. . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expenses . . . . . . . . . . . . . . . . . . . .
notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Othersnet . . . . . . . . . . . . . . . . . . . . . . . . .
70.4
145.7
293.4
53.5
54.4
32.1
(1.5)
30.4
(4.6)
28.7
4.3
7.3
(2.8)
7.2
4.7
(2.2)
(33.8)
(2.2)
(30.4)
(6.5)
(26.9)
(0.5)
(7.0)
(3.7)
(4.2)
0.8
0.4
(15.0)
0.4
0.0
(0.0)
Other income (charges)net . . . . . . . . . . . . . .
(4.6)
(6.4)
(15.0)
(3.0)
4.0
Income before income tax expense . . . . . . . . .

Income tax expense . . . . . . . . . . . . . . . . . . . . . .
65.8
(28.7)
139.3
(61.7)
278.4
(124.2)
50.5
(22.5)
58.4
(25.9)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US$ 37.1
69
US$ 77.6
US$ 154.2
US$ 28.0
US$ 32.5
2007
Balance Sheet Data:

Total current assets . . . . . . . . . . . . . . . . . . . . . . .
Total non-current assets(1) . . . . . . . . . . . . . . . . . .
As of December 31,
2008
2009
(US$ in millions)
US$152.8 US$255.3 US$473.2

411.0
437.7
470.8
As of March 31,
2009
2010
US$285.9
455.4
US$ 519.1
485.1
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
563.8
693.0
944.0
741.3
1,004.2
Total current liabilities(1). . . . . . . . . . . . . . . . . . .

Total non-current liabilities(1) . . . . . . . . . . . . . .
142.6
307.9
217.4
284.6
583.0
15.8
245.4
277.0
612.4
14.2
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
450.5
502.0
598.8
522.4
626.6
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
113.3
191.0
345.2
218.9
377.6
US$563.8 US$693.0 US$944.0
US$741.3
US$1,004.2
Total liabilities and equity . . . . . . . . . . . . . . . . .
Note:
presentation.
2007
2008
2009
2009
2010
(US$ in millions)
Statement of Cash Flow Data:

Net cash flows provided by operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows provided by (used in) investing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows used in financing activities . . . . .
Net increase in cash and cash equivalents. . . . . .
Cash and cash equivalents at the beginning of
the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at the end of the
period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US$ 59.7 US$ 97.8 US$249.4
US$ 30.6
US$ 74.6
(25.1)
(34.5)
0.1
(4.5)
(56.2)
37.1
(97.2)
(52.0)
100.2
8.9
(7.7)
31.8
(40.6)
(11.1)
22.9
54.5
54.6
91.7
91.7
191.9
US$ 54.6 US$ 91.7 US$191.9
US$123.5
US$214.8

2007
2008
2009
2009
2010
(US$ in millions, except for ratios)
Non-GAAP Financial Measures:

EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expenses. . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt/EBITDA(3) . . . . . . . . . . . . . . . . . . . . .
EBITDA/Interest expenses . . . . . . . . . . . . . . . . .
US$ 79.3
33.8
317.2
4.0
2.3
US$153.5 US$301.6
30.4
26.9
293.6
289.3
1.9
1.0
5.0
11.2
US$ 55.4
7.0
287.9
1.3
7.9
US$ 56.6
4.2
292.0
1.3
13.5
Notes:
(1) Berau Coal calculates EBITDA by adding depreciation and amortization, foreign exchange losses, interest
expense, loss from early redemption of senior notes and income tax expenses and subtracting interest income,
foreign exchange gains and income tax benefit from net income as calculated under Indonesian GAAP.
EBITDA is Berau Coals supplemental measure of its performance that is not required by, or presented in
accordance with, Indonesian GAAP or U.S. GAAP. EBITDA is not a measurement of financial performance
70
or liquidity under Indonesian GAAP or U.S. GAAP and should not be considered as an alternative to net
income, operating income or any other performance measures derived in accordance with Indonesian GAAP or
U.S. GAAP or an alternative to cash flows from operating activities as a measure of liquidity. Berau Coals
presentation of EBITDA may not be comparable to similarly titled measures presented by other companies or
Consolidated EBITDA as defined in the notes or our Senior Secured Credit Facility. You should not compare
Berau Coals EBITDA with EBITDA presented by other companies because not all companies use the same
definition. We have included EBITDA because we believe it is an indicative measure of Berau Coals
operating performance and is used by investors and analysts to evaluate companies in our industry. The
following table reconciles Berau Coals net income under Indonesian GAAP to its definition of EBITDA for
the periods indicated:
2007
2008
2009
2009
2010
(US$ in millions)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$37.1 US$ 77.6 US$154.2

Add:
Interest expenses (net of interest income) . .
1.7
(1.8)
Income tax expense . . . . . . . . . . . . . . . . . . . . .
28.7
61.7
124.2
Depreciation and amortization(a) . . . . . . . . . .
8.1
7.4
7.8
charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2
2.2
6.5
notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.0
Loss (gain) on foreign exchange net . . . . .
1.5
4.6
(4.3)
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$79.3 US$153.5 US$301.6
US$28.0
US$32.5
(0.3)
22.5
1.9
(3.0)
25.9
2.2
0.5
3.7
2.8
US$55.4
(4.7)
US$56.6
(a) Depreciation represents depreciation of fixed assets, and amortization represents amortization of
total debt/EBITDA.
The following table sets forth operating data of Berau Coal for the periods indicated.
2007
2008
2009
Operating Data:
Production volume (million tons) . . . . . . . . . . . . . . . . . . . . . .
Sales volume (million tons) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average selling price per ton (US$ per ton of sales)(1) . . . .
Cash cost per ton (US$)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average strip ratio(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.8
12.1
31.86
23.81
7.84
13.1
13.0
48.54
34.88
8.06
14.3
14.1
56.74
33.03
8.65

2009
2010
3.2
2.8
53.01
31.18
9.39
3.7
3.9
56.43
37.79
7.94
Notes:
decreases in coal inventories, and dividing by sales volumes for the periods presented. Although depreciation
and amortization are added to our cost of goods sold, this is not included in cash costs.
(3) The strip ratio is the number of bank cubic meters of overburden (rock and soil) that must be removed to access and
extract one ton of coal.
71
MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the financial statements and
related notes included elsewhere in this offering circular. Those financial statements and related notes have been
prepared in accordance with Indonesian GAAP, which differs in certain significant respects from U.S. GAAP.
See Summary of Certain Principal Differences Between Indonesian GAAP and U.S. GAAP. This discussion
contains forward-looking statements and reflects our current view with respect to future events and financial
performance. Actual results may differ materially from those anticipated in these forward-looking statements as
a result of factors such as those set forth under Forward-Looking Statements, Risk Factors and elsewhere
in this offering circular.
Overview
Berau Coal Energy is a holding company that indirectly owns 90% of Berau Coal, the fifth largest coal
producer in Indonesia in terms of production volume in 2009, according to the Annual Coal Production Report
dated December 2009 by the Ministry of Energy and Mineral Resources. Berau Coal engages in open-cut mining
of coal in its concession area in East Kalimantan, Indonesia, where it holds coal mining rights until April 26,
2025. Berau Coal operates three mining areas in Lati, Binungan and Sambarata, where reserves were estimated to
be 346 million tons as of December 31, 2009, of which 146 million tons are of the proved category and 200
million tons are of the probable category, according to MMC. Berau Coals concession area of approximately
118,400 hectares also contains three other reserve locations, namely Kelai, Gurimbang and Punan.
13.1 million tons, 14.3 million tons and 3.7 million tons of coal, respectively. Berau Coal subcontracts all of its
mining, barging and drilling and blasting operations, which allows it to minimize capital expenditures and
working capital requirements and focus on exploration, mine planning, supervision, and sales and marketing.
Berau Coal works closely with its mining contractors which undertake land clearing, overburden removal, coal
excavation, hauling activities and road maintenance. Berau Coal also engages different contractors for other
related operations such as barging, coal quality analysis and transshipping. Due to the new Mining Law and its
implementing regulation, by September 29, 2012, Berau Coal will need to amend its existing contracts with its
mining contractors and conduct its own coal mining and processing activities, as mining services companies will
only be allowed to perform overburden removal and transportation of coal in the mining process.
We derive all of our revenues from Berau Coals sales of coal. In recent years, approximately 60% of our
total sales revenues were from exports to customers in China, Hong Kong, India, Japan, South Korea, Taiwan
and Thailand. Berau Coals customers are mainly utility companies and coal trading companies which purchase
coal from Berau Coal for resale. In 2007, 2008, 2009 and for the three months ended March 31, 2010, our sales
totaled Rp. 3,445.0 billion, Rp. 6,110.2 billion, Rp. 8,318.6 billion and Rp. 2,041.8 billion, respectively. As of
July 1, 2010, Berau Coal had contracts with aggregate commitments to purchase coal totaling 17.0 million tons in
2010, all of which was at an agreed price. Berau Coals export sales are priced, invoiced and paid in U.S. dollars.
Berau Coals domestic sales are invoiced and paid in Rupiah based on U.S. dollar-denominated prices, converted
at the exchange rate on the date the relevant agreement is entered into. Under two of our domestic sales contracts,
the exchange rate may be adjusted periodically and under one of these contracts, the exchange rate may be
adjusted to partially take into account the exchange rate fluctuation.
Our cost of goods sold primarily comprises mining costs, freight and handling costs paid to Berau Coals
contractors and royalties paid to the Government of Indonesia.
Basis of Preparation
Our primary asset is our indirect interest in Berau Coal, held through Armadian and Aries Investments
Limited. Berau Coal Energy acquired 83.3% of the shares in Armadian in July 2006. At that time, Armadian had
a 51.0% direct interest in Berau Coal and a 5.0% indirect effective interest in Berau Coal through its 12.8%
72
interest in Rognar Holding B.V. (Rognar), which had a 39% direct interest in Berau Coal. The 39% interest
Rognar held was transferred to Aries Investments Limited in July 2010. Armadians direct and indirect interests
in Berau Coal have remained unchanged since its acquisition by Berau Coal Energy. Berau Coal Energy
subsequently acquired 16.7% of the shares in Armadian in June 2007.
Our acquisition of 83.3% of the shares in Armadian in July 2006 was accounted for using the purchase
method in accordance with Indonesian GAAP, pursuant to which the assets and liabilities of Armadian are
measured at their fair values as of the date of acquisition. Any excess over the fair values of the underlying net
assets acquired at the time of the acquisition was recognized as goodwill and is presented on our balance sheet as
a separate component in our consolidated assets.
Our subsequent acquisition of 16.7% of the shares in Armadian in June 2007 is considered to be a
restructuring of companies under common control under Indonesian GAAP and has been accounted for based on
the pooling of interests method of accounting, whereby the consolidated assets and liabilities of Armadian have
been recorded at their book values. The difference between the transfer price and Berau Coal Energys interest in
the consolidated book values of Armadians assets and liabilities have been recorded as Difference in value
from restructuring transactions of entities under common control and presented as a separate component in our
consolidated shareholders equity.
Although Armadian (and, indirectly, Berau Coal) became our subsidiaries in July 2006, and we acquired the
remaining 16.7% interest in Armadian only in June 2007, our financial statements for 2007 are presented as if we
held 100% of the shares in Armadian as of the beginning of 2007. The portion of Berau Coals net income in
2007 attributable to the acquired shares in Armadian prior to our June 2007 acquisition of those shares has been
deducted from our consolidated statements of income for 2007 as Pre-acquisition income on a net basis.
On December 29, 2009, Berau Coal Energy acquired 36,400,000 shares, representing a 45.5% interest in
Winchester Investment Holdings PLC (Winchester), from PT Bukit Mutiara. Winchester had at that time a
34% indirect ownership in Berau Coal through Aries Investments Limited and Rognar. As consideration, Berau
Coal Energy issued 6,250 new shares representing a 83.3% interest in Berau Coal Energy to PT Bukit Mutiara.
The acquisition is recorded based on the purchase method of accounting.
The difference between the par value of the 6,250 shares amounting to Rp. 6.25 billion and the fair value of
shares representing 45.5% interest in Winchester amounted to US$251.6 million (equivalent to Rp. 2,373.3
billion), based on an independent appraisal report dated December 29, 2009, and was recorded as additional
paid-in capital.
On December 29, 2009, Berau Coal Energy purchased 54.5% of total outstanding shares of Winchester for
US$300 million. Berau Coal Energy used the proceeds from an intercompany loan from PT Bukit Mutiara as the
purchase price. See Note 35a to our financial statements as of and for the years ended December 31, 2007, 2008
and 2009 included elsewhere in this offering circular.
The difference between the cost and fair value of identifiable assets and liabilities arising from the
acquisition of Winchester was allocated to the coal resources of Berau Coal and recorded as part of Deferred
Exploration and Development Cost.
On December 29, 2009, Winchester assigned its 99.99% interest in Aries Investments Limited to Danehill
Capital Ltd. (Danehill) in exchange for the assumption of a loan from Berau Coal amounting to US$296.1
million (principal amount outstanding plus interest) and payment of US$80 million. Danehill had a 34% indirect
ownership interest in Berau Coal through Rognar. The difference between the cost and fair value of identifiable
assets and liabilities was allocated to the coal resources of Berau Coal and recorded as part of Deferred
Exploration and Development Costs. See Note 12 to our financial statements as of and for the years ended
73
See Notes 3a and 3b to our financial statements included elsewhere in this offering circular for further
details.
Factors Affecting Our Business and Results of Operations
Berau Coal Energy is a holding company and, accordingly, all of our operations are conducted through
Berau Coal. For purposes of the discussion below, references to our coal production business are to the
business of Berau Coal.
Our coal production business and our results of operations are primarily affected by the following factors.
Global Economic Conditions
The credit markets and the financial services industry continue to experience a period of disruption
characterized by the bankruptcy, failure, collapse or sale of various financial institutions, increased volatility in
securities prices, severely diminished liquidity and credit availability and a significant level of intervention from
the United States and other governments. Continued concerns about the systemic impact of a potential long-term
or widespread recession, energy costs, geopolitical issues, the availability and cost of credit, the global
commercial and residential real estate markets and related mortgage markets and reduced consumer confidence
have contributed to increased market volatility and diminished expectations for most developed and emerging
economies continuing into 2010.
Forecasting the depth and length of the current cycle is challenging as it differs from past cycles due to the
overlay of the global credit crisis in combination with broad demand weakness. Continued turbulence in the
United States and international markets and economies could increase our costs of borrowing, limit our access to
capital necessary to meet our liquidity needs and materially harm our operations or our ability to implement our
business strategy.
Global and Regional Demand for and Supply of Coal and Coal Prices
Coal is a commodity product that is traded internationally in competitive markets. Long-term pricing trends
for internationally traded thermal and sub-bituminous coal are cyclical and are subject to significant fluctuations.
Global coal prices depend principally on the supply and demand dynamics of world coal markets. Increased
supply of coal and any coal supply surplus may reduce global coal prices. Furthermore, high coal prices may
encourage the development of expanded or new capacity by other coal producers.
Berau Coals customers are mainly utility companies and coal trading companies which purchase coal from
Berau Coal for resale. Coal has been the fastest growing fuel in the world for each of the last six years through
2008, according to the BP Statistical Review of World Energy for June 2009. Coal provides 41.5% of the worlds
electricity, according to a report published by the World Coal Institute in 2009. According to data reported by the
Australian Bureau of Agricultural and Resource Economics (ABARE), an Australian government economic
research agency, Asia is the worlds largest importer of internationally traded thermal coal, with 59.5% of
worldwide import demand in 2009. Asia is also the worlds largest exporter of internationally traded thermal
coal, with 49.3% of worldwide export supply in 2009.
Demand for coal affects coal prices globally and increased demand has been reflected in the increase of
steam coal contract prices (on a free on board (FOB) basis based on data from The McCloskey Group) from
US$23.30 per ton on June 11, 2000 to US$98.50 per ton on June 11, 2010. Unlike other commodities, there is no
single global market price standard for coal, the price of which fluctuates significantly in different geographical
markets and also depending on the type of coal. Berau Coal has attempted to mitigate its exposure to fluctuations
in global coal prices through long-term coal supply agreements with its customers. Berau Coals selling prices
under its coal supply agreements are generally negotiated with reference to certain international indices, and
adjusted for a number of factors, including coal specifications and quality. Coal not sold under supply
agreements is sold on a spot basis. For more information on coal market prices, see Coal Industry Overview.
74
Berau Coals selling prices are also driven by the quality of coal it sells. Higher quality coal generally
attracts higher selling prices. Berau Coal markets its coal under four brand namesMahoni, Mahoni-B, Agathis
and Sungkai. Each brand has distinctive features in terms of inherent moisture, ash content, volatile matter, fixed
carbon, total moisture, total sulfur and gross calorific (or heat and energy) values and therefore has a different
selling price to reflect the quality of coal. Berau Coal blends coal from its three mining locations in order to
adjust the overall quality grade of its coal. See BusinessCoal Products and Production. Berau Coals average
selling price per ton of coal was US$31.86, US$48.54, US$56.74 and US$56.43 in 2007, 2008, 2009 and the
three months ended March 31, 2010, respectively.
Production and Expansion
Our revenues are a function of the volume and the price of coal Berau Coal produces and sells. Coal
production volumes are dependent upon mine planning by Berau Coals management and logistics management
to extract coal and transport it from its mining concession area to ports at Lati, Suaran and Sambarata, as well as
to a coal transshipment point at Muara Pantai. Berau Coals coal production depends on the performance of its
mining contractors which undertake all of its mining activities under the supervision of Berau Coals
management.
13.1 million tons, 14.3 million tons and 3.7 million tons of coal, respectively, and sold 12.1 million tons,
13.0 million tons, 14.1 million tons and 3.9 million tons of coal, respectively, with the difference between coal
production volumes and coal sales volumes being attributable to sales from and additions to coal inventories.
Berau Coals coal mining operations are generally adversely affected by inclement weather during the rainy
season which occurs in the first and fourth quarters of each year. Berau Coal generally has higher production in
dry months to build up coal inventory levels to make up for shortfalls in production during the rainy season.
Berau Coals production and sales volumes are also affected by market demand, vessel availability and
contractor capacity and performance.
Berau Coal has a one-year mining plan for its concession area, which is constantly analyzed and updated to
take into account current and projected demand for and sales of its coal products, as well as the volume and
quality of its coal reserves. Berau Coal plans to increase its annual gross coal production from 14.3 million tons
in 2009 to approximately 17.9 million tons in 2010. See BusinessExpansion Plan and Growth Strategy.
Mining Contractors and Related Costs
Berau Coals mining and coal haulage operations, including the supply of all mining and transportation
equipment, road maintenance and the employees required to operate and maintain the equipment, are mainly
carried out by two contractors, BUMA and SIS. Berau Coal has awarded contracts to three mining contractors
for three new mines and is in the process of finalizing the agreements. These contractors carry out mining
operations based on Berau Coals instructions in accordance with its mining plan. Berau Coal has entered into
multi-year mining operations and coal haulage contracts with each of its contractors. Increases in production
volume generally increase Berau Coals mining costs as mining contractors are paid primarily based on a
pre-agreed price per ton of coal produced which is adjusted based on the distance the removed overburden is
moved. The pre-agreed contract price per ton of coal produced is adjusted annually based on the projected strip
ratio of the area in which the mining contractors have been engaged to mine, with a higher projected strip ratio
resulting in higher prices per ton. Tug and barge contractors transport coal from Berau Coals barge loading
facilities to the transshipment point at Muara Pantai or transport Berau Coals coal directly to customers in
Indonesia.
Mining costs represented 54.9%, 57.2%, 58.4% and 54.3% of our total cost of goods sold in 2007, 2008,
2009 and for the three months ended March 31, 2010, respectively. We believe that Berau Coals reliance on
contractors allows it to significantly reduce capital expenditures and working capital committed to mining
75
operations and to focus on its value-added activities such as mine planning, exploration and marketing. Berau
Coals mining contractors are responsible for providing substantially all of their own equipment, machinery,
supplies and labor necessary to mine within Berau Coals concession area. See BusinessMine Operation and
LogisticsContract Mining.
Fluctuations in Fuel Prices and Fuel Costs
The price of fuel is an important driver of our results of operations. In the past, Berau Coals contracts with
its mining contractors generally provided for the mining contractors fuel costs to be passed on to them with a
fixed formula for calculating adjustments to the fuel costs. In October 2008, Berau Coal changed its arrangement
with SIS and currently purchases fuel directly from PT Pertamina (Persero), Indonesias state-owned oil and gas
company and provides such fuel to SIS. Berau Coal intends to enter into the same arrangement with BUMA with
effect from January 1, 2010. Accordingly, we are exposed to increases in the price of fuel which increase Berau
Coals mining costs.
Any increase in the price of fuel also increases Berau Coals cost of fuel and oil used in coal processing
operations and increases the expenses incurred by its barging contractors in delivering coal, which it bears.
Following Recapitals acquisition of an effective 90% interest in Berau Coal, Berau Coal has implemented a new
fuel tender process that is based upon the industrys best practices and Berau Coal believes that this will
provide it with a reliable supply at a good price. Berau Coal does not currently engage in any hedging activities
related to the price of fuel.
Fluctuations in Foreign Exchange Rates
Berau Coals export sales, which have accounted for approximately 60% of our total sales revenues in
recent years, are priced, invoiced and paid in U.S. dollars. Berau Coals domestic sales are invoiced and paid in
Rupiah based on U.S. dollar-denominated prices, converted at the exchange rate on the date the relevant
agreement is entered into. Under two of our domestic sales contracts, the exchange rate may be adjusted
periodically and under one of these contracts, the exchange rate may be adjusted to partially take into account the
exchange rate fluctuation.
We believe we do not face significant foreign exchange transactional risks because of this effective hedge.
However, as the reporting currency of Berau Coal is in U.S. dollars, whereas our reporting currency is in Rupiah,
fluctuations in the Rupiah against the U.S. dollar may impact our results of operations. An appreciation of the
Rupiah against the U.S. dollar affects our results of operations and financial condition because, among other
things, it decreases the sales revenues and cash and cash equivalents that we record in our financial statements
compared to that recorded by Berau Coal. Conversely, a depreciation of the Rupiah against the U.S. dollar affects
our results of operations and financial condition because, among other things, it increases our sales revenues and
cost of goods sold that we record in our financial statements compared to that recorded by Berau Coal. Foreign
exchange translations of Berau Coals income statement items for purposes of consolidation are made at the
average exchange rate for the relevant period rather than at the exchange rate prevailing on the day the
transactions are made.
For example, in 2009, the Rupiah depreciated against the U.S. dollar and we had foreign exchange losses of
Rp.155.7 billion in 2008 and foreign exchange gain of Rp. 175.9 billion (US$18.7 million) in 2009. During the
same years, Berau Coal had foreign exchange losses of US$4.6 million in 2008 and foreign exchange gain of
US$4.3 million in 2009. Our cost of goods sold increased 10.4% from Rp. 4,458.8 billion in 2008 to Rp. 4,921.4
billion in 2009.
Royalties Paid to the Government of Indonesia
Under Berau Coals coal contract of work, the Ministry of Energy and Mineral Resources is entitled to
13.5% of the total coal produced by Berau Coal and available for sale each year. In September 1996, the
76
Government of Indonesia issued a Presidential Decree which provided that royalties totaling 13.5% of the
proceeds derived from the sale of final processed coal production in each year, net of certain costs and an
administration fee of 2.5% of such proceeds, may be paid to the Ministry of Energy and Mineral Resources
instead of the physical delivery of coal produced. Accordingly, Berau Coal markets and sells all of the coal it
produces, and pays to the Ministry of Energy and Mineral Resources the cash proceeds resulting from the sale of
13.5% of its final processed coal production in each year, after deducting certain costs and the abovementioned
administrative fee. In our financial statements, the cash payment made by Berau Coal to the Ministry of Energy
and Mineral Resources is included in our cost of goods sold as royalties paid to the Government of Indonesia.
We calculate the Ministry of Energy and Mineral Resources cash payment entitlement as follows: 13.5% of the
FOB invoice price for coal sales less the following costs: (i) fees paid to third-party contractors for barging
services from our ports to the transshipment point; (ii) costs of delivery via vessels from our transshipment point
to the customers, (iii) cost of marine insurance; (iv) superintending and stevedoring costs; (v) costs related to the
use of transshipment facilities; (vi) cost of equipment hire; (vii) demurrage costs; (viii) sales commissions and
(ix) shipping overheads; less an administrative fee of 2.5% of the FOB invoice price. Accordingly, the royalties
Berau Coal is required to pay to the Government of Indonesia varies, primarily based on its sales volumes, the
price at which it is able to sell its coal, and fuel costs.
Government Policies and Changes in Law
While the current policies of the Government of Indonesia toward the domestic coal mining industry are
generally market-oriented, the Government of Indonesia may, from time to time, issue new policies or laws that
affect our mining operations.
Effective from January 12, 2009, the Government of Indonesia issued the Mining Law. The Government of
Indonesia and the mining companies are currently negotiating the terms of the amendment to the coal contracts
of work. Furthermore, although the Mining Law provides that the Government of Indonesia must issue the
implementing regulations within one year, only two out of four government regulations have been passed.
Further, several of the Ministry of Energy and Mineral Resources regulations are also expected to be issued.
In 2009, the Government of Indonesia issued the new Environmental Law, which is in effect. However,
some important matters such as a new environmental permit, environmental guarantee and a possible
environmental risk analysis need to be detailed in implementing regulations.
The Government of Indonesia policies (including local government policies) that may affect our business
include policies relating to coal mining, taxes and the environment.
Trends in Mining Strip Ratios
Berau Coals costs of coal production, particularly the fees charged by its mining contractors, are affected
by the estimated strip ratios its mining contractors face in extracting coal from the mines. A strip ratio is the
number of bank cubic meters of overburden (rock and soil) that must be removed to access and extract one ton of
coal. Higher strip ratios require Berau Coals mining contractors to remove higher amounts of overburden to
access coal for mining, resulting in higher production costs. As Berau Coal mines new areas, its strip ratios will
vary depending on the geological characteristics of the coal seams mined. For the years ended December 31,
2007, 2008 and 2009 and the three months ended March 31, 2010, the estimated strip ratio at Berau Coals mines
was 7.11, 8.04, 8.33 and 8.70, respectively. The increase in the average strip ratio was because of expanded
mining areas. Berau Coal expects an estimated strip ratio of between 8 and 9 in the short to medium term. If
Berau Coals average strip ratio increases, our coal production expenses, particularly contractor fees, would
increase.
77
Marketing Commissions
Berau Coal markets its export sales of coal through international marketing agents. Under the terms of the
agreements with these agents, Berau Coal is obligated to pay the agents a marketing commission based on the
total sales proceeds (which includes freight and insurance for sales made on a cost insurance freight (CIF)
basis) on each sale. We are reconfiguring our marketing arrangements. See Description of Material
AgreementsMarketing Service Agreement with Maple Holdings Limited and Description of Material
AgreementsAgreements to Acquire of Maple Holdings Limited.
Demurrage costs
A number of Berau Coals coal supply agreements typically contain demurrage provisions requiring Berau
Coal to pay certain penalties in the event of any delay in loading vessels with coal. Berau Coal generally
maintains adequate levels of inventories. However, in the event of disruption of transportation services due to
severe weather-related problems, distribution problems, labor disputes or other events that could temporarily
restrict Berau Coals ability to supply coal to its customers, these inventories could be insufficient to meet
delivery requirements. In addition, if several customers vessels arrive at the same time, this could also result in
loading delays. Either of these could result in demurrage claims by ship owners for loading delays and increase
our operating costs.
Critical Accounting Policies
This discussion and analysis of our financial condition and results of operations is based on our financial
statements, which have been prepared in accordance with Indonesian GAAP. In the course of preparing these
financial statements, our management has made estimates based on, and assumptions that impact, the amounts
recognized in our financial statements. For a discussion of our significant accounting policies, see Note 2 to our
financial statements included elsewhere in this offering circular. We believe the critical accounting policies
described below are those that are both important to reflect our financial condition and results of operations and
require difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect
of matters that are inherently uncertain.
Revenue Recognition
Berau Coal recognizes revenues from customer sales when the significant risks and rewards of ownership of
the goods have passed to the buyer and:
coal is in a form suitable for delivery and no further processing is required;
the quantity and quality of the coal can be determined with reasonable accuracy;
the coal has been dispatched to the customer and is no longer under Berau Coals physical control; and
the selling price of the coal can be determined with reasonable accuracy.
Berau Coal, in certain circumstances, recognizes revenue during the year using provisional pricing. Under
its medium-term coal supply agreements, Berau Coal typically agrees to product delivery schedules over the term
of the agreement, but negotiates the price for the deliveries on an annual basis. In some cases, when the price
adjustment for a particular year has not been agreed with the customer at the time or prior to a delivery, Berau
Coal will continue to ship coal at the prior years price and retroactively adjust the price after reaching
agreement. In such circumstances, Berau Coal records revenue based on the previously agreed price and then
adjusts the sales amount when agreement is reached. Berau Coals sales may fluctuate from quarter to quarter, in
part, because of its provisional pricing practices.
78
Inventories
Coal inventories comprise materials, labor and directly and attributable fixed and variable overheads related
to coal mining activities. Inventories are valued at the lower of cost or net realizable value. Cost is determined
using the average method. Allowance for inventories obsolescence is provided based on a review of the condition
of inventories at the end of each year.
Ownership of Assets
Under the terms of Berau Coals coal contract of work, all of the property, plant and equipment that Berau
Coal purchases, and the inventories and other physical assets it holds for its operations, become the Government
of Indonesias property when those assets arrive in Indonesia (when imported) or at the time of purchase (when
purchased domestically). However, under its coal contract of work, Berau Coal has the right to use such assets
for the shorter of their useful lives or the remaining term of the coal contract of work. Therefore, Berau Coal
records its right to use these assets on its balance sheet as if it owns such assets.
Fixed assets are recorded at the cost of acquisition less accumulated depreciation. Depreciation is computed
using the straight-line method at a rate of 12.5% per year except for infrastructure, which is depreciated at a rate
of 5% per year.
Amortization of Deferred Exploration and Development Costs
Exploration expenditures incurred are capitalized and carried forward, on an area of interest basis, provided
one of the following conditions is met:
(i) such costs are expected to be recouped through successful development and exploitation of the area of
interest or, alternatively, by its sale; or
(ii) exploration activities in the area of interest have not yet reached the stage that permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and
significant operations in or in relation to the area are continuing.
Deferred exploration and development costs incorporate costs related to general surveys, exploration,
borrowing costs, refinancing, feasibility studies and development of mines incurred prior to the commencement
of operations. Deferred exploration and development costs are amortized using the unit of production method
from the date of commercial production over the life of the mine of the respective area of interest on the
remaining term of the coal contract of work, which is determined based on the latest estimated volume of coal
deposit according to the JORC reports.
The net carrying value of the deferred exploration and development costs of each area of interest is reviewed
regularly and to the extent this value exceeds its recoverable value, the excess is expensed or written-off in the
period the decision is made.
Deferred Stripping Costs
Stripping cost of top soil is divided into (i) initial stripping of the top soil to open the mining area before
production commences and (ii) additional stripping that is performed during the production activity. The initial
stripping costs are part of deferred development costs, while the additional stripping costs are charged to
production cost as long as the stripping ratio is close to or less than the average estimated stripping ratio.
However, when the actual stripping ratio is higher than the estimated average stripping ratio, the excess
stripping costs are to be deferred and recorded in our consolidated balance sheets as deferred stripping costs.
These deferred stripping costs are expensed as production costs in periods when the actual stripping ratio is lower
than the estimated average stripping ratio.
79
Restoration/Reclamation Expenditures
Berau Coals policy is to meet or surpass the requirements of the coal contract of work and all applicable
environmental regulations issued by the Government of Indonesia, by application of technically proven and
economically feasible measures. Environmental management at Berau Coal includes, but is not limited to, top soil
replacement, dredging of sediment ponds and dams, water quality control and waste handling, planting and seeding.
Estimated liability for restoration and rehabilitation costs are based principally on legal and regulatory
requirements. Such estimated costs as a result of production activities are charged as production cost. Estimates
are reassessed regularly and the effects of changes are recognized prospectively.
Recognition of the current portion of restoration and rehabilitation costs is based on the estimates of the
management.
Amortization of Goodwill
Acquisitions are accounted for using the purchase method in accordance with the requirements of Statement
of Financial Accounting Standard (Pernyataan Standar Akuntansi Keuangan or PSAK) No. 22, Business
Combination. On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the
date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired is recognized as goodwill and amortized using the straight-line basis over five years.
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Results of Operations and Financial Condition

The following table shows a breakdown of our results of operations and each item as a percentage of net
sales for the periods indicated:
2008
2009
2009
2010
(Rp. in billions, except for percentages)
2007(1)
Statement of Operations Data:

Sales . . . . . . . . . . . . . . . . . . . . . . . . Rp. 3,445.0 100.0% Rp. 6,110.2 100.0% Rp. 8,318.6 100.0% Rp. 1,721.1 100.0% Rp. 2,041.8 100.0%
Cost of goods sold . . . . . . . . . . . .
2,658.4 77.2
4,458.8 73.0
4,921.4 59.2
1,036.9 60.2
1,473.2 72.1
Gross profit . . . . . . . . . . . . . . . . . .
Operating expenses:
General and administrative. . .
Selling and marketing . . . . . . .
786.6
22.8
1,651.4
27.0
3,397.2
40.8
684.2
39.8
568.6
27.9
120.3
39.1
3.5
1.1
179.4
64.0
2.9
1.1
270.2
101.4
3.2
1.2
39.5
22.2
2.3
1.3
125.3
29.0
6.2
1.4
Total operating expenses. . . . . . .
159.4
4.6
243.4
4.0
371.6
4.4
61.7
3.6
154.3
7.6
Operating Income . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . .
Foreign exchange gain (loss)
net . . . . . . . . . . . . . . . . . . . .
Realization of difference in
value from restructuring
transactions of entities
under common control . . . .
senior notes . . . . . . . . . . . . . .
financing charges. . . . . . . . .
Others net . . . . . . . . . . . . . . . .
627.2
18.2
1,408.0
23.0
3,025.6
36.4
622.5
36.2
414.3
20.3
225.4
6.5
243.2
4.0
259.7
3.1
71.8
4.2
5.1
0.2
(39.1)
(1.1)
(155.7)
(2.5)
175.9
2.1
(78.6) (4.6)
236.1
11.6
(300.6)
(8.7)
(294.4)
(4.8)
8.0
(280.4)
0.1
(3.4)
(81.7) (4.7)
(156.3)
(1.9)
(19.9)
(49.3)
4.8
(0.6)
(1.4)
0.1
(21.1)
(49.3)
4.9
(0.3)
(0.8)
0.0
(67.6)
(38.6)
4.9
(0.8)
(0.4)
0.0
(6.3) (0.4)
(12.3) (0.7)
0.4 (0.0)
Other income (charges) net . . .
(178.7)
(5.2)
(272.4)
(4.4)
(94.4)
(1.2)
(106.7) (6.2)

expense . . . . . . . . . . . . . . . . . . .
Income tax expense net . . . . . .
448.5 13.0
(256.6) (7.5)
2,931.2 35.2
(1,291.7) (15.5)
515.8 30.0
(261.6) (15.2)
Income before minority interest

in net income of consolidated
subsidiaries . . . . . . . . . . . . . . . .
Minority interest in net income
of subsidiaries. . . . . . . . . . . . . .
Net income. . . . . . . . . . . . . . . . . . . Rp.
191.9
5.5
(166.3)
(4.8)
25.6
0.7
1,135.6 18.6
(597.4) (9.8)
Rp.
538.2
8.8
(368.1)
(6.0)
170.1
2.8
1,639.5
Rp.
19.7
(785.8)
(9.4)
853.7
10.3
254.2
(100.9) (4.9)
(34.1) (1.7)
(30.7) (1.5)
(0.2) (0.0)
75.3
94.8
14.8
5.5
3.7
489.6 24.0
(239.9) (11.7)
249.7
(159.4) (9.3)
Rp.
12.3
(30.1) (1.5)
Rp.
219.6
10.8
Note:
(1) Our financial statements as of and for the year ended December 31, 2007 have been restated. The figures included here are the restated
figures. See Note 41 to our financial statements as of and for the years ended December 31, 2007, 2008 and 2009 included elsewhere in
this offering circular.
81
Sales
All our sales are from sales of coal by Berau Coal. The following table sets forth information about
production volumes, sales volumes, sales (export and domestic) and average selling price per ton for Berau Coal
for the periods indicated.
2007
2008
2009
Production volume (million tons) . . . . . . . . . . . . . . . . . . . . . . .

Sales volume (million tons) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales (US$ millions):
Export . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average selling price per ton (US$ per ton of sales)(1) . . . . .
11.8
12.1
13.1
13.0

2009
2010
14.3
14.1
3.2
2.8
3.7
3.9
243.1 373.4 488.0

141.1 257.8 312.0
384.2 631.2 800.0
31.86 48.54 56.74
93.6
54.4
148.0
53.01
160.2
60.3
220.5
56.43
Note:
Cost of Goods Sold
Our cost of goods sold comprises the following items:
Mining costs. Mining costs comprise fees paid to Berau Coals mining contractors for excavating and
hauling coal and overburden from its mines and dead rent of US$1.00 per hectare paid semi-annually to
the Government of Indonesia pursuant to Berau Coals coal contract of work. Fees paid to Berau Coals
mining contractors typically increase if mining operations require greater amounts of overburden to be
removed.
Freight and handling costs. These costs relate to shipping administration costs, barging costs, demurrage
costs, port charges, transshipment costs, ocean freight costs (relating primarily to CIF sales) and other
shipping operational costs. The costs relating to transporting coal from Berau Coals port facilities to
customers under its CIF contracts are borne by Berau Coal, but the cost of any CIF sales are reflected in
the contract prices. The mode of delivery varies among Berau Coals customers and affects its freight and
handling costs for any particular period. Our freight and handling costs are affected by global transport
prices and fuel prices since Berau Coal is charged for its barging contractors fuel costs.
Royalties paid to the Government of Indonesia. As discussed under Factors Affecting Our Business
and Results of OperationsRoyalties Paid to the Government of Indonesia, Berau Coal pays to the
Ministry of Energy and Mineral Resources the cash proceeds resulting from the sale of 13.5% of its final
processed coal production in each year, after deducting certain costs and an administrative fee. This
payment is reflected under our cost of goods sold as royalties paid to the Government of Indonesia. As a
result, our gross profit does not include the proceeds of sales of the Government of Indonesias 13.5%
coal entitlement, but includes charges for expenses and administrative fees that reduce the amount of cash
payments to the Government of Indonesia.
Coal processing and other production costs. These costs include wages for our employees stationed at
our concession area, equipment hire, maintenance and fuel consumption, all associated with our coal
processing and stockpiling activities.
Depreciation and amortization. These are costs relating to the depreciation of Berau Coals fixed assets
and amortization of deferred exploration and development costs.
Restoration costs. These costs comprise mine reclamation and rehabilitation expenses based on the total
amount of coal sold each period.
82
Decreases (increase) in coal inventories. We adjust our cost of goods sold for the difference in the
weighted average cost of production of our beginning balance in coal inventory against the weighted
average cost of our ending balance of coal inventory and this adjustment will either yield an increase in
cost of goods sold and a decrease in inventories or a decrease in cost of goods sold and an increase in
inventories. This ensures that our cost of goods sold excludes the cost of producing coal that is not sold
but added to inventory and includes the cost of producing coal that is sold from inventory.
The following table sets forth the breakdown of our cost of goods sold and each item as a percentage of our
total cost of goods sold for the periods indicated:
2008
2009
2009
2010
(Rp. in billions, except for percentages)
2007
Cost of goods sold:
Mining costs . . . . . . . . . . .
Freight and handling
costs . . . . . . . . . . . . . . . .
Royalties paid to the
Government of
Indonesia . . . . . . . . . . . .
resources . . . . . . . . . . . .
Coal processing and other
production costs . . . . . .
Depreciation and
amortization . . . . . . . . .
Restoration costs . . . . . . .
Decrease (increase) in
coal inventories . . . . . .
Total. . . . . . . . . . . . . .
Rp.1,460.6
54.9% Rp.2,550.5
57.2% Rp.2,876.7
58.4%
Rp.660.2
63.7%
Rp.800.0
54.3%
553.6
20.8
973.4
21.8
817.4
16.6
179.4
17.3
213.4
14.5
376.9
14.2
677.9
15.2
957.6
19.5
202.0
19.5
258.7
17.6
88.8
6.0
163.6
6.2
230.1
5.2
256.5
5.2
57.0
5.5
63.0
4.3
71.7
7.4
2.7
0.3
69.6
8.8
1.6
0.2
78.9
17.8
1.6
0.4
21.5
4.4
2.1
0.4
19.4
4.2
1.3
0.3
24.6
0.9
(51.5)
(1.2)
(83.5)
(1.7)
(87.6)
(8.5)
25.7
1.7
Rp.2,658.4
100.0% Rp.4,458.8
100.0% Rp.4,921.4
100.0% Rp.1,036.9
100.0% Rp.1,473.2
100.0%
Operating Expenses
Our operating expenses comprise general and administrative expenses, and selling and marketing expenses.
General and administrative expenses include salaries, wages and provisions for employee benefits, community
development and donation expenses, travel expenses, professional fees, repairs and maintenance expenses, rental
equipment, office rent, expenses for fuel and lubricants, freight, office expenses for promotion and advertising,
training and education expenses, and other miscellaneous general and administrative expenses. Selling and
marketing expenses comprise commissions paid to Berau Coals marketing agents, bank charges, employee costs
and other miscellaneous selling and marketing expenses.
Other Income (Charges)
Other income (charges) comprises interest income from cash deposits and loans to certain related parties
(which are accrued), net losses or gains on foreign exchange (primarily in relation to differences in royalty
payments to the Government of Indonesia which are denominated in both U.S. dollars and Rupiah, in accordance
with our sales, and Rupiah-denominated VAT payments), amortization of deferred financing charges (relating to
fees incurred in connection with the senior notes and loans), interest expenses, amortization of goodwill on our
acquisition of shares of Armadian in 2007, loss from early redemption of senior notes in 2009 and other
miscellaneous income (charges).
Income Tax Expense
Income is taxable at the rate of 45.0% and is calculated in accordance with rules and guidelines provided in
the coal contract of work. Berau Coal is entitled to an investment allowance of 20.0% of its total investments at
the rate of 5.0% per annum from its taxable income under Indonesian tax law.
83
Minority Interest in Net Income of Subsidiaries

Minority interests are stated as the minority shareholders proportion of historical cost of net assets, which
are subsequently adjusted to take into account the minority shareholders share of movements in equity. Sojitz is
the only minority shareholder of Berau Coal. Berau Coal Energys ownership of Berau Coal increased over time,
as discussed in Basis of Preparation.
Three Months Ended March 31, 2010 Compared to the Three Months Ended March 31, 2009
Sales. Our sales increased by 18.6% from Rp. 1,721.1 billion in the three months ended March 31, 2009 to
Rp. 2,041.8 billion in the three months ended March 31, 2010. Sales increased due to increases in average selling
price and sales volumes of coal products. Our average selling price increased by 6.5% from US$53.01 per ton in
the three months ended March 31, 2009 to US$56.43 per ton in the three months ended March 31, 2010 due to
higher global coal prices. Sales volume increased by 39.3% from 2.8 million tons in the three months ended
March 31, 2009 to 3.9 million tons in the three months ended March 31, 2010 due to larger customer orders due
to increased activity within their respective markets. On the other hand, the average exchange rate decreased
from Rp. 11,631 = US$1.00 for the three months ended March 31, in 2009 to Rp. 9,261 = US$1.00 for the three
months ended March 31, 2010.
Cost of Goods Sold. Our cost of goods sold increased by 42.1% from Rp. 1,036.9 billion in the three months
ended March 31, 2009 to Rp. 1,473.2 billion in the three months ended March 31, 2010 due to the following
reasons:
Mining costs. Mining costs increased by 21.2% from Rp. 660.2 billion in the three months ended
March 31, 2009 to Rp. 800.0 billion in the three months ended March 31, 2010 primarily due to an
increase in coal production from 3.2 million tons in the three months ended March 31, 2009 to 3.7 million
tons in the three months ended March 31, 2010 and an increase in mining rates.
Freight and handling costs. Freight and handling costs increased by 18.9% from Rp. 179.4 billion in the
three months ended March 31, 2009 to Rp. 213.4 billion in the three months ended March 31, 2010. This
was primarily due to an increase in sales volumes in the three months ended March 31, 2010 as compared
to the three months ended March 31, 2009.
Royalties paid to the Government of Indonesia. Royalties paid to the Government of Indonesia increased
by 28.1% from Rp. 202.0 billion in the three months ended March 31, 2009 to Rp. 258.7 billion in the
three months ended March 31, 2010 primarily due to the increases in average selling price and sales
volumes in the three months ended March 31, 2010 as compared to the three months ended March 31,
2009.
Coal processing and other production costs. Coal processing and other production costs increased by
10.4% from Rp. 57.0 billion in the three months ended March 31, 2009 to Rp. 63.0 billion in the three
months ended March 31, 2010 primarily due to an increase in production volume.
Depreciation and amortization. Depreciation and amortization decreased by 9.4% from Rp. 21.5 billion
in the three months ended March 31, 2009 to Rp. 19.4 billion in the three months ended March 31, 2010
due primarily to the translation from U.S. Dollar to Rupiah in the consolidation of our accounts.
Restoration costs. Restoration costs decreased by 6.1% from Rp. 4.4 billion in the three months ended
March 31, 2009 to Rp. 4.2 billion in the three months ended March 31, 2010 primarily due to the
translation from U.S. Dollar to Rupiah in the consolidation of our accounts.
Decrease (increase) in coal inventories. We had an increase in coal inventories of Rp. 87.6 billion in the
three months ended March 31, 2009 as compared to a decrease in coal inventories of Rp. 25.7 billion in
the three months ended March 31, 2010. This was a result of the increase in the carrying value of the
inventories as a result of increases in coal prices and production volume.
84
Amortization of coal resources. We had amortization of coal resources of Rp. 88.8 billion in the three
months ended March 31, 2010 due to the allocation of goodwill generated by the acquisition of
Winchester and Aries Investments Limited to coal resources in the ground.
Gross Profit. Our gross profit decreased by 16.9% from Rp. 684.2 billion in the three months ended
March 31, 2009 to Rp. 568.6 billion in the three months ended March 31, 2010. Gross profit as a percentage of
sales decreased from 39.8% in the three months ended March 31, 2009 to 27.9% in the three months ended
March 31, 2010.
Operating Expenses. Our operating expenses increased by 150.4% from Rp. 61.7 billion in the three months
ended March 31, 2009 to Rp. 154.3 billion in the three months ended March 31, 2010 primarily due to the
following reasons:
General and administrative expenses. General and administrative expenses increased by 217.6% from
Rp. 39.5 billion in the three months ended March 31, 2009 to Rp. 125.3 billion in the three months ended
March 31, 2010, primarily as a result of a decrease in the discount factor used to determine our
obligations under our employee retirement plan as determined by a third party actuary and payment of
bonuses to employees in connection with the change in effective ownership of Berau Coal.
Selling and marketing expenses. Selling and marketing expenses increased 30.9% from Rp. 22.2 billion in
the three months ended March 31, 2009 to Rp. 29.0 billion in the three months ended March 31, 2010,
primarily due to an increase in commissions paid to marketing agents as a result of the higher sales
volume and an increase in Berau Coals average selling price per ton of coal.
Operating Income. Our operating income decreased by 33.5% from Rp. 622.5 billion in the three months
ended March 31, 2009 to Rp. 414.3 billion in the three months ended March 31, 2010. Operating income as a
percentage of sales decreased from 36.2% in the three months ended March 31, 2009 to 20.3% in the three
months ended March 31, 2010.
Other Income (Charges)net. We had other chargesnet of Rp. 106.7 billion in the three months ended
March 31, 2009 as compared to other incomenet of Rp. 75.3 billion in the three months ended March 31, 2010.
Foreign exchange gain (loss)net. We recorded a net foreign exchange loss of Rp. 78.6 billion in the
three months ended March 31, 2009 and a net foreign exchange gain of Rp. 236.1 billion in the three
months ended March 31, 2010. The change was primarily due to the impact of the appreciation of the
Rupiah against the U.S. dollar on the differences between Berau Coals U.S. dollar-denominated royalty
payments to the Government of Indonesia and its Rupiah-denominated VAT payments.
Interest income. Our interest income decreased by 92.9% from Rp. 71.8 billion in the three months ended
March 31, 2009 to Rp. 5.1 billion in the three months ended March 31, 2010, primarily as a result of a
decrease in current investments.
Interest expenses. Our interest expenses increased by 23.6% from Rp. 81.7 billion in the three months
ended March 31, 2009 to Rp. 100.9 billion in the three months ended March 31, 2010, primarily due to
interest expenses from a new loan related to finance the acquisition of a subsidiary.
Amortization of goodwill. Our amortization of goodwill increased by 149.2% from Rp. 12.3 billion in the
three months ended March 31, 2009 to Rp. 30.7 billion in the three months ended March 31, 2010 due to
amortization of goodwill due to acquisition of Rognar by Aries Investments Limited.
Amortization of deferred financing charges. Our amortization of deferred financing charges increased by
439.5% from Rp. 6.3 billion in the three months ended March 31, 2009 to Rp. 34.1 billion in the three
months ended March 31, 2010 due to an increase in financing charges relating to the redemption of the
senior notes issued by Empire Capital Resources Pte. Ltd. in 2006 and a credit facility that it obtained in
December 2009 and repaid in July 2010.
85
Othersnet. We recorded other income of Rp. 0.4 billion in the three months ended March 31, 2009 and
other charges of Rp. 0.2 billion in the three months ended March 31, 2010.
Income Before Income Tax Expense. Our income before income tax expense decreased by 5.1% from
Rp. 515.8 billion in the three months ended March 31, 2009 to Rp. 489.6 billion in the three months ended
March 31, 2010.
Income Tax ExpenseNet. Our net income tax expense decreased by 8.3% from Rp. 261.6 billion in the
three months ended March 31, 2009 to Rp. 239.9 billion in the three months ended March 31, 2010. The decrease
was primarily due to the decrease in our net income.
Income Before Minority Interest. As a result of the foregoing factors, our income before minority interest in
net income of consolidated subsidiaries decreased by 1.8% from Rp. 254.2 billion in the three months ended
March 31, 2009 to Rp. 249.7 billion in the three months ended March 31, 2010. Our income before minority
interest as a percentage of sales decreased from 14.8% in the three months ended March 31, 2009 to 12.2% in the
three months ended March 31, 2010.
Minority Interest in Net Income of Subsidiaries. Minority interest in net income of subsidiaries decreased by
81.1% from Rp. 159.4 billion in the three months ended March 31, 2009 to Rp. 30.1 billion in the three months
ended March 31, 2010. This was attributable to a change in our corporate structure.
Net Income. As a result of the foregoing factors, our net income increased by 131.6% from Rp. 94.8 billion
in the three months ended March 31, 2009 as compared with Rp. 219.6 billion in the three months ended
March 31, 2010.
2009 Compared to 2008
Sales. Our sales increased by 36.1% from Rp. 6,110.2 billion in 2008 to Rp. 8,318.6 billion in 2009. Sales
increased due to increases in average selling price and sales volumes of coal products and the depreciation of the
Rupiah against the U.S. dollar, which had the effect of increasing our consolidated sales when expressed in
Rupiah. Our average selling price increased by 16.9% from US$48.54 per ton in 2008 to US$56.74 per ton in
2009 due to higher global demand for coal and higher global coal prices. Sales volume increased by 8.4% from
13.0 million tons in 2008 to 14.1 million tons in 2009 due to larger customer orders as a result of higher global
demand for coal. The average exchange rate increased from Rp. 9,680 = US$1.00 in 2008 to Rp. 10,398 =
US$1.00 in 2009.
Cost of Goods Sold. Our cost of goods sold increased by 10.4% from Rp. 4,458.8 billion in 2008 to Rp.
4,921.4 billion in 2009 due to the following reasons:
Mining costs. Mining costs increased by 12.8% from Rp. 2,550.5 billion in 2008 to Rp. 2,876.7 billion in
2009, primarily due to an increase in coal production from 13.1 million tons in 2008 to 14.3 million tons
in 2009 partially offset by a decrease in fuel costs based on the formula for calculating the portion of the
mining contractors fuel costs borne by Berau Coal.
Freight and handling costs. Freight and handling costs decreased by 16.0% from Rp. 973.4 billion in
2008 to Rp. 817.4 billion in 2009, primarily due to a decrease in CIP shipments from 2.6 million tons in
2008 to 2.0 million tons in 2009.
by 41.3% from Rp. 677.9 billion in 2008 to Rp. 957.6 billion in 2009 primarily due to the increases in
average selling price and sales volumes in 2009 as compared to 2008.
11.5% from Rp. 230.1 billion in 2008 to Rp. 256.5 billion in 2009 primarily due to an increase in
production volume and also as a result of increases in fuel cost, as well as increases in the number of, and
salaries paid to, employees involved in coal processing.
86
Depreciation and amortization. Depreciation and amortization increased by 13.4% from Rp. 69.6 billion
in 2008 to Rp. 78.9 billion in 2009 due primarily to an increase in amortization for exploration costs as a
result of an increase in production volume.
Restoration costs. Restoration costs increased by 102.3% from Rp. 8.8 billion in 2008 to Rp. 17.8 billion
in 2009 primarily due to increases in provision for restoration from US$0.07 per metric ton in 2008 to
US$0.12 per metric ton in 2009 and production volume from 13.1 million tons in 2008 to 14.3 million
tons in 2009.
Decrease (increase) in coal inventories. We had an increase in coal inventories of Rp. 51.5 billion in
2008 and an increase in coal inventories of Rp. 83.5 billion in 2009. This was a result of an increase in the
carrying value of inventories at the start of the financial year compared to the carrying value of the
inventories at the end of the financial year as a result of increases in coal prices and production volume.
Gross Profit. Our gross profit increased by 105.7% from Rp. 1,651.4 billion in 2008 to Rp. 3,397.2 billion
in 2009. Gross profit as a percentage of sales increased from 27.0% in 2008 to 40.8% in 2009.
Operating Expenses. Our operating expenses increased by 52.6% from Rp. 243.4 billion in 2008 to
Rp. 371.6 billion in 2009 primarily due to the following reasons:
Rp. 179.4 billion in 2008 to Rp. 270.2 billion in 2009, primarily as a result of increases in salaries, wages
and employee benefits and, to a lesser extent, community development and donation expenses and
professional fees. Salaries, wages and employee benefits increased due to an increase in the number of
employees and an increase in projected employee benefits obligation, as we reduced the discount rate
used in calculating employee benefits obligation from 12% in 2008 to 10.5% in 2009. Community
development increased due to the depreciation of the Rupiah.
Selling and marketing expenses. Selling and marketing expenses increased 58.4% from Rp. 64.0 billion in
2008 to Rp. 101.4 billion in 2009, primarily due to an increase in commissions paid to marketing agents as a
result of the higher sales volume and an increase in Berau Coals average selling price per ton of coal.
Income from Operations. Our income from operations increased by 114.9% from Rp. 1,408.0 billion in
2008 to Rp. 3,025.6 billion in 2009. Income from operations as a percentage of sales increased from 23.0% in
2008 to 36.4% in 2009.
Other Income (Charges)net. Our other chargesnet decreased by 65.3% from charges of Rp. 272.4
billion in 2008 to Rp. 94.4 billion in 2009.
Foreign exchange gain (loss)net. We recorded a net foreign exchange loss of Rp. 155.7 billion in 2008
and a net foreign exchange gain of Rp. 175.9 billion in 2009. The change was primarily due to the impact
of the appreciation of the Rupiah against the U.S. dollar on the differences between Berau Coals U.S.
dollar-denominated royalty payments to the Government of Indonesia and its Rupiah-denominated valueadded tax payments.
Interest income. Our interest income increased by 6.7% from Rp. 243.2 billion in 2008 to Rp. 259.7
billion in 2009, primarily as a result of the depreciation of the Rupiah against the U.S. dollar.
Interest expenses. Our interest expenses decreased by 4.8% from Rp. 294.4 billion in 2008 to Rp. 280.4
billion in 2009, primarily due to the decrease in principal amount of senior notes outstanding as a result of
partial payment of US$25 million in 2008 and a decrease in the U.S. dollar London Interbank Offered
Rate (LIBOR).
Amortization of goodwill. Our amortization of goodwill decreased by 21.7% from Rp. 49.3 billion in 2008
to Rp. 38.6 billion in 2009 because the goodwill in Armadian became fully amortized in 2009.
87
220.7% from Rp. 21.1 billion in 2008 to Rp. 67.6 billion in 2009 due to the realization of deferred
charges from the senior notes that were refinanced in 2009.
Othersnet. We recorded other income of Rp. 4.9 billion in each of 2008 and 2009 related to charges to
third parties for usage of our telephone and satellite lines, materials, medical supplies and electricity.
Income Before Income Tax Expense. Our income before income tax expense increased by 158.1% from
Rp. 1,135.6 billion in 2008 to Rp. 2,931.2 billion in 2009.
Income Tax ExpenseNet. Our net income tax expense increased by 116.2% from Rp. 597.4 billion in 2008
to Rp. 1,291.7 billion in 2009. The increase was primarily due to the increase in our profits.
Income Before Minority Interest. As a result of the foregoing factors, our income before minority interest in
net income of consolidated subsidiaries increased by 204.6% from Rp. 538.2 billion in 2008 to Rp. 1,639.5
billion in 2009. Our income before minority interest as a percentage of sales increased from 8.8% in 2008 to
19.7% in 2009.
Minority Interest in Net Income of Subsidiaries. Minority interest in net income of subsidiaries increased by
113.5% from Rp. 368.1 billion in 2008 to Rp. 785.8 billion in 2009. This was attributable to the increase in net
income of Berau Coal from US$77.6 million in 2008 to US$ 154.2 million in 2009.
Net Income. As a result of the foregoing factors, our net income increased by 401.9% from Rp. 170.1 billion
in 2008 to Rp. 853.7 billion in 2009.
2008 Compared to 2007
Sales. Our sales increased by 77.4% from Rp. 3,445.0 billion in 2007 to Rp. 6,110.2 billion in 2008. Sales
increased primarily as a result of an increase in Berau Coals average selling price per ton of coal from US$31.86
per ton in 2007 to US$48.54 per ton in 2008 due to higher global demand for coal and higher global coal prices
and also a depreciation of the Rupiah against the U.S. dollar, which had the effect of increasing our consolidated
sales when expressed in Rupiah. Berau Coals sales volumes also increased from 12.1 million tons in 2007 to
13.0 million tons in 2008 due to larger customer orders as a result of higher global demand for coal.
Cost of Goods Sold. Our cost of goods sold increased by 67.7% from Rp. 2,658.4 billion in 2007 to
Rp. 4,458.8 billion in 2008 due to the following reasons:
Mining costs. Mining costs increased by 74.6% from Rp. 1,460.6 billion in 2007 to Rp. 2,550.5 billion in
2008, primarily due to an increase in fuel costs based on the formula for calculating the portion of the
mining contractors fuel costs borne by Berau Coal and an increase in coal production from 11.8 million
tons in 2007 to 13.1 million tons in 2008.
Freight and handling costs. Freight and handling costs increased by 75.8% from Rp. 553.6 billion in 2007
to Rp. 973.4 billion in 2008, primarily due to additional fuel subsidies Berau Coal advanced to its barging
subcontractors over the portion of fuel prices Berau Coal bore under such barging contracts, following
from the increase in fuel prices in Indonesia, an increase in sales volumes, an increase in the percentage
of Berau Coals sales conducted under CIF terms relative to FOB terms as well as an increase in
demurrage costs.
by 79.9% from Rp. 376.9 billion in 2007 to Rp. 677.9 billion in 2008 primarily due to the increases in
average selling price and sales volumes of coal products.
40.6% from Rp. 163.6 billion in 2007 to Rp. 230.1 billion in 2008 primarily due to an increase in
production volume and also as a result of increases in fuel cost, as well as increases in the number of, and
salaries paid to, employees involved in coal processing.
88
Depreciation and amortization. Depreciation and amortization decreased by 2.9% from Rp. 71.7 billion
in 2007 to Rp. 69.6 billion in 2008 due to a decrease in amortization for exploration costs. We amortize
deferred exploration costs using the unit-of-production method. As the estimated amount of Berau Coals
reserves increased in 2008, we re-calculated our amortization rate of our deferred exploration costs and
applied the resulting rate in 2008.
Restoration costs. Restoration costs increased by 18.9% from Rp. 7.4 billion in 2007 to Rp. 8.8 billion in
2008 primarily due to increased production volumes in 2008.
Decrease (increase) in coal inventories. We had a decrease in coal inventories of Rp. 24.6 billion in 2007
as a result of a decrease in the carrying value of inventories at the start of the financial year compared to
the carrying value of the inventories at the end of the financial year due to a decrease in the level of
inventories. We had an increase in coal inventories of Rp. 51.5 billion in 2008 as a result of an increase in
the carrying value of inventories at the start of the financial year compared to the carrying value of the
inventories at the end of the financial year due to increases in coal prices and level of inventories.
Gross Profit. Our gross profit increased by 109.9% from Rp. 786.6 billion in 2007 to Rp. 1,651.4 billion in
2008. Gross profit as a percentage of sales increased from 22.8% in 2007 to 27.0% in 2008.
Operating Expenses. Our operating expenses increased by 52.7% from Rp. 159.4 billion in 2007 to
Rp. 243.4 billion in 2008 primarily due to the following reasons:
Rp. 120.3 billion in 2007 to Rp. 179.4 billion in 2008, primarily as a result of an increase in salaries and
wages partly because Berau Coal hired new personnel in 2008, and an increase in community
development and donation expenses, in line with Berau Coals increase in production volumes. Also
contributing to the increase was an increase in professional fees as a result of Berau Coals outsourcing in
2008 of certain administrative and maintenance services, and an increase in freight costs in 2008 as a
result of an increase in fuel prices.
Selling and marketing expenses. Selling and marketing expenses increased by 63.7% from Rp. 39.1 billion
in 2007 to Rp. 64.0 billion in 2008, primarily due to increases in commissions paid to marketing agents as a
result of an increase in Berau Coals average selling price per ton of coal and higher sales volumes.
Operating Income. Our operating income increased by 124.5% from Rp. 627.2 billion in 2007 to
Rp. 1,408.0 billion in 2008. Operating income from operations as a percentage of sales increased from 18.2% in
2007 to 23.0% in 2008.
Other Income (Charges)net. Our other chargesnet increased by 52.5% from charges of Rp. 178.7
billion in 2007 to Rp. 272.4 billion in 2008.
Interest income. Our interest income increased by 7.9% from Rp. 225.4 billion in 2007 to Rp. 243.2
billion in 2008, primarily as a result of foreign exchange translation on consolidation of Berau Coals
results of operations, which are reported in U.S. dollars. Berau Coals interest income during this period
decreased from US$32.1 million in 2007 to US$30.4 million in 2008 due to reduced interest accrued on
our intercompany loans as a result of a decrease LIBOR in 2008.
Foreign exchange lossnet. We recorded net foreign exchange losses of Rp. 39.1 billion in 2007 and
Rp. 155.7 billion in 2008, primarily due to the impact of the depreciating Rupiah against the U.S. dollar
on the differences between Berau Coals U.S. dollar-denominated royalty payments to the Government of
Indonesia and its Rupiah-denominated VAT payments.
6.0% from Rp. 19.9 billion in 2007 to Rp. 21.1 billion in 2008 due to foreign exchange translation on
consolidation of Berau Coals results of operations, which are reported in U.S. dollars. Berau Coals
amortization of deferred financing charges during this period remained unchanged.
89
Amortization of goodwill. There was no change to our amortization of goodwill between 2007 and 2008.
Interest expenses. Our interest expenses decreased by 2.1% from Rp. 300.6 billion in 2007 to Rp. 294.4
billion in 2008, primarily due to the decrease in LIBOR in 2008 resulting in lower interest payments as
well as a lower amortizing principal amount on the floating rate senior notes Berau Coals wholly-owned
subsidiary, Empire Capital Resources Pte. Ltd., issued in 2006.
Othersnet. We recorded other income of Rp. 4.8 billion in 2007 primarily as a result of a correction of
an earlier overcharge to us with respect to management fees we paid in 2006, as well as charges to third
parties for usage of our telephone and satellite lines, materials, medical supplies and electricity. We
recorded other income of Rp. 4.9 billion in 2008 related to charges to third parties for usage of our
telephone and satellite lines, materials, medical supplies and electricity.
Income Before Income Tax Expense. As a result of the foregoing factors, our income before income tax
expense increased by 153.2% from Rp. 448.5 billion in 2007 to Rp. 1,135.6 billion in 2008.
Income Tax ExpenseNet. Our net income tax expense increased by 132.8% from Rp. 256.6 billion in 2007
to Rp. 597.4 billion in 2008. The increase was primarily due to the increase in our profits.
Income Before Minority Interest. As a result of the foregoing factors, our income before minority interest in net
income of consolidated subsidiaries increased by 180.4% from Rp. 191.9 billion in 2007 to Rp. 538.2 billion in
2008. Our income before minority interest as a percentage of sales increased from 5.4% in 2007 to 8.8% in 2008.
Minority Interest in Net Income of Subsidiaries. Minority interest in net income of subsidiaries increased by
121.3% from Rp. 166.3 billion in 2007 to Rp. 368.1 billion in 2008. This increase was attributable to the increase
in net income of Berau Coal from US$37.1 million in 2007 to US$77.6 million in 2008.
Net Income. As a result of the foregoing factors, our net income increased from Rp. 25.6 billion in 2007 to
Rp. 170.1 billion in 2008.
90
EBITDA
We calculate EBITDA by adding depreciation and amortization, foreign exchange losses, interest expense, loss
from early redemption of senior notes minority interest in the net income of subsidiaries and income tax expenses
and subtracting interest income, foreign exchange gains realization in value from restructuring transactions of
entities under common control and income tax benefit from net income as calculated under Indonesian GAAP. The
following table reconciles our net income under Indonesian GAAP to our definition of EBITDA for the periods
indicated:
2007
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments:
Interest expenses (net of interest
income) . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . .
Depreciation and amortization(1) . . . . . .
charges . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . .
Amortization of coal resources . . . . . . .
Foreign exchange loss (gain) net . . . .
Realization in value from restructuring
transactions of entities under
common control . . . . . . . . . . . . . . . . . .
notes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interest in net income of
consolidated subsidiaries . . . . . . . . . .
EBITDA(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2008
2009
2009
2010
(Rp. in billions)
Rp. 25.6
Rp. 170.1
Rp. 853.7
Rp. 94.8
Rp. 219.6
75.2
256.6
73.3
51.2
597.4
71.5
20.7
1,291.7
81.4
9.9
261.6
22.1
95.8
239.9
20.1
19.9
49.3
39.1
21.1
49.3
155.7
6.3
12.3
78.6
34.1
30.7
88.8
(236.1)
166.3
368.1
Rp.705.3 Rp.1,484.4
67.6
38.6
(175.9)
(8.0)
156.3
785.8
Rp.3,111.9
159.4
Rp.645.0
30.1
Rp. 523.0
Notes:
(1) Depreciation represents depreciation of fixed assets, and amortization represents amortization of deferred
exploration and development costs.
total debt/EBITDA.
We consider EBITDA to be an important indicator of our operating performance. EBITDA and the related
ratios presented in this offering circular are supplemental measures of our performance and liquidity that are not
required by, or presented in accordance with, Indonesian GAAP or U.S. GAAP and should not be considered as
an alternative to net income, operating income or any other performance measures derived in accordance with
Indonesian GAAP or U.S. GAAP or as an alternative to cash flows from operating activities as a measure of
liquidity. Funds depicted by EBITDA may not be available for debt service due to covenant restrictions, capital
expenditure requirements and other commitments. EBITDA should not be considered as a measure of
discretionary cash available to us to invest in the growth of our businesses. In addition, EBITDA is not a
standardized term. Accordingly, our EBITDA measures may not be comparable to similarly titled measures used
by other companies or Consolidated EBITDA as defined in the notes or our Senior Secured Credit Facility.
We believe that EBITDA facilitates comparisons of operating performance from period to period and
company to company by eliminating potential differences caused by variations in capital structures, tax positions
and the age and booked depreciation and amortization of assets. We present EBITDA because we believe that
securities analysts, investors and other interested parties frequently use it in evaluating similar companies, many
of which present such non-GAAP financial measures when reporting their results. Nevertheless, EBITDA has
91
limitations as an analytical tool, and you should not consider it in isolation from, or as a substitute for, analysis of
our financial condition or results of operations as reported under Indonesian GAAP.
Liquidity and Capital Resources
Our principal liquidity requirements have been to finance our operations and fund working capital, for
capital expenditures and debt service, and to maintain our cash reserves. Net cash flows from operations are the
main source of our liquidity. As of March 31, 2010, we had cash and cash equivalents of Rp. 1,960.8 billion. As
of December 31, 2009, we had cash and cash equivalents of Rp. 1,803.9 billion, compared to Rp. 1,026.4 billion
and Rp. 533.3 billion as of December 31, 2008 and 2007, respectively. In addition, as of March 31, 2010, we had
restricted cash in banks of Rp. 683.7 billion. As of December 31, 2009, we had restricted cash in banks of
Rp. 1,057.4 billion, compared to Rp. 332.9 billion and Rp. 353.3 billion as of December 31, 2008 and 2007,
respectively.
As Berau Coal engaged contractors to carry out all mining and coal haulage activities, our own capital
expenditures (which include exploration and development expenditures, and the purchase and maintenance of
fixed plant and equipment, such as crushing plants, generator sets and conveyors) have been relatively limited.
Our capital expenditures have therefore been funded mainly from our cash flows from operations and debt
financing. After funding operating expenses and working capital, our primary use of cash has been to service
long-term debt. In December 2009, we redeemed all the senior notes that Berau Coals wholly-owned subsidiary,
Empire Capital Resources Pte. Ltd., issued in 2006. Taking into consideration the financial resources available to
us, including cash generated from our operating activities and the proceeds of this offering, we believe that we
will have sufficient liquidity to meet our working capital and operating requirements for at least the next 12
months.
The following table summarizes our cash flows for the periods indicated:
2007
Cash flows from operating activities:

Cash receipts . . . . . . . . . . . . . . . . . . .
Cash payments . . . . . . . . . . . . . . . . .
Net cash flows from operating
activities . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows provided by (used in)
investing activities . . . . . . . . . . . . . . . .
Net cash flows provided by (used in)
financing activities . . . . . . . . . . . . . . . .
Effect of exchange rate changes . . . . . . .
Net increase in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . .

2008
2009
2009
2010
(Rp. in billions)
Rp. 3,348.0 Rp. 5,675.2 Rp. 8,402.5 Rp. 1,601.9

(3,066.8)
(4,626.7)
(6,030.1)
(1,157.7)
281.2
1,048.5
Rp. 2,178.8
(1,672.9)
2,372.4
444.2
505.9
(342.9)
(264.0)
(201.4)
(3,697.7)
78.8
(6.4)
1.8
(266.0)
(88.0)
2,115.9
(13.1)
(82.4)
(14.1)
12.6
493.1
777.5
426.5
(2.1)
(4.0)
156.9
Net Cash Flows From Operating Activities

Net cash flows from operating activities include funds generated from our operating activities and net cash
inflows or outflows from changes in operating assets and liabilities.
Net cash flows from operating activities were Rp. 505.9 billion for the three months ended March 31, 2010.
The increase in net cash flows from operating activities from the three months ended March 31, 2010 was
primarily on account of an increase in receipts from customers as a result of higher sales volumes and an increase
in the average selling price per ton of coal. This increase was partially offset by increases in the cash used in
operating activities during the same period, primarily consisting of increases in payments to suppliers and for
92
operating expenses, payment for employee salaries, wages and allowances, payment of royalties to the
Government of Indonesia in respect of its 13.5% entitlement under the coal contract of work, and increased
income taxes, in line with our increased production volume and higher average selling prices in the three months
ended March 31, 2010.
Net cash flows from operating activities were Rp. 281.2 billion, Rp. 1,048.5 billion and Rp. 2,372.4 billion
in 2007, 2008 and 2009, respectively. The increase in net cash flows from operating activities from 2007 to 2009
was primarily on account of an increase in receipts from customers as a result of higher sales volumes and an
increase in the average selling price per ton of coal. This increase was partially offset by increases in the cash
used in operating activities during the same period, primarily consisting of increases in payments to suppliers and
for operating expenses, payment for employee salaries, wages and allowances, payment of royalties to the
Government of Indonesia in respect of its 13.5% entitlement under the coal contract of work, payments for
environmental restoration as well as increased income taxes, in line with our increased production volume and
higher average selling prices in 2007 and 2008.
Net Cash Flows Provided by (Used in) Investing Activities
Net cash flows used in investing activities were Rp. 342.9 billion for the three months ended March 31,
2010. Net cash flows used in investing activities in the three months ended March 31, 2010 was significantly
higher primarily due to a placement in short term investment. This increase was partially offset by the withdrawal
of the cash deposits held at The Hongkong & Shanghai Banking Corporation Limited to satisfy Berau Coals
obligations under its cash and accounts management agreement entered into in connection with the issuance of
the senior notes in 2006.
Net cash flows used in investing activities were Rp. 264.0 billion, Rp. 201.4 billion and Rp. 3,697.7 billion
in 2007, 2008 and 2009, respectively.
Net cash flows used in investing activities in 2009 was significantly higher primarily due to an acquisition
of a subsidiary. Additionally, Berau Coal increased the cash deposits held at The Hongkong & Shanghai Banking
Corporation to satisfy Berau Coals obligations under its cash and accounts management agreement entered into
in connection with the issuance of the senior notes in 2006.
A significant portion of the cash used in investing activities during 2007 and 2008 was for the acquisition of
fixed assets and towards our exploration and development expenditures to develop new resources at the
exploration areas at the existing Lati, Binungan and Sambarata mines as well as in the Kelai area. The decrease in
net cash flows used in investing activities in 2008 compared to 2007 was primarily attributable to reductions in
the restricted cash deposits held at The Hongkong & Shanghai Banking Corporation Limited to satisfy Berau
Coals obligations under its cash and accounts management agreement entered into in connection with the
issuance of the senior notes in 2006, as well as in the time deposits with PT ANZ Panin Bank and PT Bank
Danamon Indonesia, Tbk. to secure Berau Coals performance bonds.
Net Cash Flows Provided by (Used in) Financing Activities
Net cash flows provided by financing activities were Rp. 2.1 billion for the three months ended March 31,
2010 as a result of amounts due from a related party. Net cash flows provided by financing activities were
Rp. 2,115.9 billion in 2009 primarily as a result of proceeds due to related parties and proceeds of a short-term
loan. The net cash flows was partially offset by cash used in the redemption of the senior notes at the end of
2009. Net cash flows used in financing activities were Rp. 6.4 billion and Rp. 266.0 billion in 2007 and 2008,
respectively. Net cash used in financing activities was significantly higher in 2008 compared to 2007 primarily as
a result of an increase in payments made under our capital leases and the repayment of principal on the
amortizing senior notes in 2008.
93
Indebtedness
As of March 31, 2010, our total indebtedness was Rp. 5,396.1 billion consisting of a loan agreement with
Credit Suisse AG, Singapore Branch dated December 23, 2009 and an intercompany loan agreement with PT
Bukit Mutiara dated December 23, 2009. As of December 31, 2009, our total indebtedness was Rp. 5,539.5
billion consisting of these loan agreements. We repaid (or arranged to repay) these loans in full on July 23, 2010.
Our current indebtedness comprises the US$350 million aggregate principal amount of existing notes we
issued on July 8, 2010 and the US$400 million of loans we drew under the Senior Secured Credit Facility on
July 23, 2010. See Description of the Notes and Description of Other Material Indebtedness.
Contractual Obligations
Our material contractual obligations are the existing notes and the loans under the Senior Secured Credit
Facility. The following table sets forth the payments due in respect of these contractual obligations during the
periods indicated.
Total
Payment Due By Period

Due
Due
Due
2010 2011-2012 2013-2015
(US$ in millions)
Contractual obligations
Long-term debt obligations(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,037.9
10.2
261.0
766.7
Note:
(1) Does not reflect the notes being offered hereby. Assumes a constant LIBOR rate of 0.50% for purposes of
the Senior Secured Credit Facility, which was the approximate three-month LIBOR rate in effect when we
drew down the loans.
Capital Expenditures
The following table shows our historical and forecast capital expenditures for the periods indicated:
2007
2008
2009
Year Ending December 31,

2010
2011
2012-2014
(Forecast)
(US$ in millions)
Capital expenditures:
Project investment . . . . . . . . . . . . . . . . . . . . . . .
Land improvement . . . . . . . . . . . . . . . . . . . . . .
Routine/ operating investment . . . . . . . . . . . .
Exploration and development . . . . . . . . . . . . .
US$ 2.9
5.0
0.3
2.6
Total capital expenditures . . . . . . . . . . . . . . . .
US$10.8 US$13.5 US$16.5 US$48.4
US$ 8.8
0.5
0.8
3.4
US$ 9.3 US$27.0 US$74.9 US$ 86.7

0.9
8.0
2.1
4.9
1.6
3.9
3.0
9.0
4.7
9.6
5.8
5.1
US$85.8 US$105.8
Our forecast capital expenditures set forth in the table above represent our current estimates. We will
reassess our capital expenditures from time to time in light of the then current circumstances, including without
limitation our operational requirements and our financial capacity, and there can be no assurance that our actual
capital expenditure will correspond to our current forecast set forth in the table above.
Historically, most of our capital expenditures were made in connection with the upgrading and development
of port facilities and stockpile and coal crushing facilities, the purchase of machinery and equipment and
vehicles. As of May 31, 2010, we had committed capital expenditures of US$19.6 million relating to the
construction of crushing, stockpiling and barge loading facilities and hauling roads and exploration and
development costs.
94
We currently expect capital expenditures of approximately US$38.8 million during 2010 for maintenance of
our existing facilities as well as the construction of crushing, stockpiling and barge loading facilities and hauling
roads and bridges at our Lati, Binungan and Sambarata mines as well as at Suaran port. We further expect to
have capital expenditures of approximately US$9.6 million during 2010 for Berau Coals exploration activities.
We expect capital expenditures to be higher for 2010 because of our expansion plans and to comply with
requirements of the Mining Law. See BusinessExpansion Plan and Growth Strategy. We intend to finance
our capital expenditures in the future through cash flow generated by our business and our proposed initial public
offering. See SummaryRecent DevelopmentsProposed Initial Public Offering.
Taxation
Under Berau Coals coal contract of work, for corporate income tax purposes, at our coal mining operations
at Berau Coal, we are permitted to apply an accelerated depreciation on property, plant and equipment we
purchase, for one year within any of the first four years of the life of the asset acquired. We can use this
accelerated depreciation in addition to straight-line depreciation of the same asset. The rates of accelerated
depreciation we are permitted to use under the coal contract of work is 10% of the cost of any building and 25%
of the cost of any other depreciable asset used in our coal operations. In addition to the right to use accelerated
depreciation, we have also been granted investment allowances under the coal contract of work. These
investment allowances permit us to deduct an additional 20% of the value of depreciable assets from our
corporate income tax upon purchase. Under the coal contract of work, tax losses at Berau Coal may be carried
forward for up to five years after the tax loss was incurred. We did not have any tax loss carry-forwards as of
March 31, 2010.
Actual and Effective Corporate Tax Rates
Under the Indonesian corporate tax system, each Indonesian company within a group of companies is taxed
individually and it is not permissible to consolidate the taxable profits and tax loss carry-forwards of the
companies on a group level for purposes of determining the Indonesian corporate taxes applicable to the
companies as a whole.
Under the terms of Berau Coals coal contract of work, Berau Coals corporate tax rate is 45.00%. The
effective corporate tax rate is different than Berau Coals corporate tax rate. The effective corporate tax rate was
46.58%, 44.96%, 44.24% and 45.00% in 2007, 2008, 2009 and the three months ended March 31, 2010,
respectively. The difference between the effective corporate tax rate and the corporate tax rate set under the coal
contract of work is due to permanent differences in calculating Berau Coals taxable income under the coal
contract of work compared to calculations of income tax expenses under Indonesian GAAP.
Deferred Income Taxes
We recognize deferred income tax assets and liabilities relating to temporary differences between the
accounting and tax treatment of certain expenses. These temporary differences relate principally to depreciation
of fixed assets and amortization of deferred exploration and development costs, environmental restoration
obligations and employee benefits obligations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements or obligations.
Quantitative and Qualitative Disclosures About Market Risk
Market Risk
Our market risk is related principally to fluctuations in commodity prices (principally coal and fuel) and, to
a lesser extent, fluctuations in exchange rates and interest rates. The following discussion constitutes forwardlooking statements which involve risk and uncertainties, and summarizes our exposure to coal prices, foreign
95
exchange rates and interest rate movements and our policies to address these risks. We have implemented risk
management methods to mitigate and control certain of these and other market risks to which we are exposed.
However, it is difficult to predict with accuracy changes in economic or market conditions and to anticipate the
effects that such changes could have on our financial performance and business operations.
Commodity Price Risk
Coal is a commodity product. Prices for coal we sell are based on global coal prices, which tend to be
cyclical and subject to significant fluctuations. As a commodity product, global coal prices are principally
dependent on the supply and demand dynamics of coal in the world export market. We do not engage in trading
of coal contracts and have not engaged in hedging activities to hedge our exposure to fluctuations in the price of
coal. However, we may do so in the future, in accordance with applicable terms of our debt.
We also face commodity price risk relating to our purchases of fuel necessary to run our operations. An
increase in fuel price will increase our costs of sales and adversely affect our gross profit. We do not engage in
any hedging activities related to the price of fuel, but may do so in the future.
Foreign Exchange Risk
All of Berau Coals export sales are priced, invoiced and paid in U.S. dollars, and Berau Coals domestic
sales are invoiced and paid in Rupiah based on U.S. dollar-denominated prices.
Our foreign currency exposures give rise to market risk associated with exchange rate movements against
the Rupiah, which is our reporting currency. For a discussion of historical fluctuations of the value of the Rupiah
against the U.S. dollar, see Exchange Rates and Exchange Controls. Gain or loss resulting from the settlement
of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are
recognized in our consolidated income statement. These balances are translated at period end exchange rates for
assets and liabilities denominated in U.S. dollars, and at the exchange rate prevailing at the date of the relevant
transaction for other currencies.
As of December 31, 2007, 2008 and 2009, we did not have, and we do not currently have, any forward
foreign currency exchange contracts outstanding.
Interest Rate Risk
We are subject to market risks due to fluctuations in interest rates, principally because our Senior Secured
Credit Facility bears interest at floating rates and exposes us to rate increases. Increases in interest rates will
increase the cost of new borrowings.
Derivative Products and Hedging Policies
We have not entered into any swaps or other derivative products, but may do so in the future in accordance
with applicable terms of our debt.
Effects of Inflation
According to the Indonesian Bureau of Statistics, Indonesias annual inflation, as measured by the consumer
price index, was 6.6% in 2007, 11.1% in 2008 and 2.8% in 2009. We do not consider inflation in Indonesia,
where all of our operations are located, to have had a material impact on our results of operations.
Seasonality
Berau Coals mine operations can be adversely impacted by inclement weather, particularly during the rainy
season between October and March when heavy rains can slow overburden removal and reduce coal production
volumes. Berau Coals mine planning function anticipates and adjusts production levels to take into account such
weather-related delays.
96
New Accounting Pronouncements

New accounting standards have been published that are mandatory for accounting periods beginning on or
after January 1, 2010 and 2011. Our assessment of those standards and interpretations that are relevant to our
consolidated financial statements is set out below:
PSAK 50 (Revised 2006)Financial Instruments: Presentation and Disclosures
PSAK 50 (Revised 2006) establishes principles for presenting financial instruments as liabilities or equity
and for offsetting financial assets and financial liabilities. It applies to the classification of financial instruments,
from the perspective of the issuer, into financial assets, financial liabilities and equity instruments; the
classification of related interest, dividends, losses and gains; and the circumstances in which financial assets and
financial liabilities should be offset. This amendment also includes new disclosure requirements with respect to
the financial instruments. Management is currently assessing the impact of the adoption of this standard on our
consolidated financial statements. Management will apply PSAK 50 (Revised 2006) to our consolidated financial
statements from reporting periods beginning January 1, 2010.
PSAK 55 (Revised 2006)Financial Instruments: Recognition and Measurement
PSAK 55 (Revised 2006) establishes principles for recognizing and measuring financial assets, financial
liabilities and some contracts to buy or sell non-financial items. Requirements for presenting information about
financial instruments are in PSAK 50 (Revised 2006)Financial Instruments: Presentation and Disclosures.
This new standard is an adoption of International Accounting Standard 30: Financial Instruments: Recognition
and Measurement (Revised 2005) whereby the previous standard is the local adoption of Financial Accounting
Standard 133Accounting for Derivative Instruments and Hedging Activities. The new standard prescribes
the recognition and measurement of financial guarantee contracts, a contract that requires the issuer to make
specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment
when due in accordance with the original or modified terms of a debt instrument. Further, the new standard may
require different disclosures than the previous disclosures. Management is currently assessing the impact of the
adoption of this standard on our consolidated financial statements. Management will apply PSAK 55 (Revised
2006) to our consolidated financial statements from reporting periods beginning January 1, 2010.
PSAK 26 (Revised 2008)Borrowing Costs
The amendment to PSAK 26 (Revised 2008)Borrowing Costs does not change the concept of
capitalizing borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset. However, the new standard prescribes the accounting treatment for borrowing costs during the
suspension of the developments of the qualifying assets whereby a company should suspend capitalization of
borrowing costs during extended periods in which it suspends active development of a qualifying asset. This
amendment does not add new disclosure requirements. Since we have adopted the accounting for borrowing
costs which are substantially comparable to the new standard, the adoption of PSAK 26 will not result in
substantial changes to our accounting policies.
The following revisions are effective for financial statements for the period commencing from, on or after
January 1, 2011:
PSAK 1 (Revised 2009) Presentation of Financial Statements, prescribes the basis for presentation of
general purpose financial statements to ensure comparability both with the entitys financial statements of
previous periods and with the financial statements of other entities.
PSAK 2 (Revised 2009) Statement of Cash Flows, requires the provision of information about the
historical changes in cash and cash equivalents by means of a statement of cash flows which classifies cash flows
during the period from operating, investing and financing activities.
97
PSAK 4 (Revised 2009) Consolidated and Separate Financial Statements, shall be applied in the
preparation and presentation of consolidated financial statements for a group of entities under the control of a
parent company and in accounting for investments in subsidiaries, jointly controlled entities and associates when
separate financial statements are presented as additional information.
PSAK 5 (Revised 2009) Operating Segments. Segment information is disclosed to enable users of
financial statements to evaluate the nature and financial effects of the business activities in which the entity
engages and the economic environments in which it operates.
PSAK 12 (Revised 2009) Interests in Joint Ventures, shall be applied in accounting for interests in joint
ventures and the reporting of joint venture assets, liabilities, income and expenses in the financial statements of
venturers and investors, regardless of the structures or forms under which the joint venture activities take place.
PSAK 15 (Revised 2009) Investments in Associates, shall be applied in accounting for investments in
associates. Supersedes PSAK 15 (1994) Accounting for Investments in Associates and PSAK 40
(1997) Accounting for Changes in Equity of Subsidiaries/Associates.
PSAK 25 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors, prescribes
the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure
of changes in accounting policies, changes in accounting estimates and corrections of errors.
PSAK 48 (Revised 2009) Impairment of Assets, prescribes the procedures to be applied to ensure that
assets are carried at no more than their recoverable amount and if the assets are impaired, an impairment loss
should be recognized.
PSAK 57 (Revised 2009) Provisions, Contingent Liabilities and Contingent Assets, aims to provide that
appropriate recognition criteria and measurement bases are applied to provisions, contingent liabilities and
contingent assets and to ensure that sufficient information is disclosed in the notes to enable users to understand
the nature, timing and amount related to the information.
PSAK 58 (Revised 2009) Non-Current Assets, Held for Sale and Discontinued Operations, aims to
specify the accounting for assets held for sale, and the presentation and disclosure of discontinued operations.
Interpretation of Financial Accounting Standards (Interpretasi Standar Akuntasi Keuanjan or ISAK) 7
(Revised 2009) Consolidation of Special Purpose Entities (SPE), provides for the consolidation of SPEs when
the substance of the relationship between an entity and the SPE indicates that the SPE is controlled by that entity.
ISAK 9 Changes in Existing Decommissioning, Restoration and Similar Liabilities, applies to changes in
the measurement of any existing decommissioning, restoration or similar liability recognized as part of the cost
of an item of property, plant and equipment in accordance with PSAK 16 and as a liability in accordance with
PSAK 57.
ISAK 11 Distributions of Non-Cash Assets to Owners, applies to types of non-reciprocal distributions of
assets by an entity to its owners acting in their capacity as owners, i.e., distributions of non-cash assets and
distributions that give owners a choice of receiving either non-cash assets or a cash alternative.
ISAK 12 Jointly Controlled Entities (JCE): Non-Monetary Contributions by Venturers, deals with the
venturers accounting for non-monetary contributions to a JCE in exchange for an equity interest in the JCE
accounted for using either the equity method or proportionate consolidation.
Management has not yet assessed the impact, if any, these will have on our financial statements.
98
COAL INDUSTRY OVERVIEW

In this section, we have included data relating to the coal industry, both internationally and within
Indonesia, and other statistics, including information relating to Berau Coal and its competitors relative
positions in the global and Indonesian coal industry. This information is based on industry publications,
published sources, other publicly available information and the beliefs of our management. We believe that the
sources used are reliable. However, we cannot ensure the accuracy of this information, and we have not
independently verified this information.
Background
Coal is primarily used in electricity generation and in steel production. Coal has been the fastest growing
fuel in the world for each of the last six years through 2008, according to the BP Statistical Review of World
Energy for June 2009. Coal provides 41.5% of the worlds electricity, according to a report published by the
World Coal Institute in 2009. We believe coals popularity as an energy source can be attributed to several
factors. Coal is cheaper than oil and natural gas on a per British thermal unit basis and is believed to provide
greater reliability of supply than wind or hydropower. Coal is also easy and safe to store and convenient to
transport by land and water. In addition, according to the World Coal Institute, proven coal reserves are estimated
to last 122 years at current production levels.
According to data reported in the BP Statistical Review of World Energy for June 2009, global coal
consumption accounted for 29.2% of the worlds primary energy consumption in 2008, representing an increase
of 3.4% in global coal consumption from 2007, compared to a decrease of 0.3% for global oil consumption and
an increase of 2.8% for global natural gas consumption. Coal represented 51.0% of primary energy consumption
in the Asia-Pacific region in 2008, according to data reported in the BP Statistical Review of World Energy for
June 2009. According to data reported by the ABARE, an Australian government economic research agency,
Asia is the worlds largest importer of internationally traded thermal coal, with 59.5% of worldwide import
demand in 2009. Asia is also the worlds largest exporter of internationally traded thermal coal, with 49.3% of
worldwide export supply in 2009.
Coal Characteristics
Coal is characterized by its use as either steam coal or metallurgical coal. Steam coal, also referred to as
steaming coal or thermal coal, is used by electricity generators and by industrial facilities to produce steam,
electricity or both. Metallurgical coal is usually refined into coking coal principally used to produce coke,
which is used as a reductant in blast furnaces for the production of steel.
There are four types of coal by geological composition: lignite, sub-bituminous, bituminous and anthracite. We
only mine bituminous and sub-bituminous coal. Each has characteristics that make it more or less suitable for
different uses. Energy content and sulfur content are the most important coal characteristics and help to determine
the best use of particular types of coal, as well as being used to determine the price of different qualities of coal.
Energy Content
The energy content of coal is commonly measured as the amount of heat released on complete combustion in
air or oxygen, expressed as the amount of heat (measured in kilocalories) per unit weight of coal (measured in
kilograms) or kcal/kg. Bituminous coal is a soft black coal with generally higher energy content and lower
moisture content than sub-bituminous coal and is the type most commonly used for electricity generation.
Bituminous coal is used for utility and industrial steam purposes, and includes metallurgical coal, a feedstock for
coke, which is used in steel production. Sub-bituminous coal is a black coal most commonly used by electricity
generators and some industrial consumers. Generally, coal with higher energy content commands a price premium.
99
Sulfur Content
Coal combustion produces sulfur dioxide, the amount of which varies depending on the chemical
composition and the concentration of sulfur in the coal. Low-sulfur coal is coal with a sulfur content of 1.0% or
less by weight. Sub-bituminous coal typically has a lower sulfur content than bituminous coal. Coal with lower
sulfur content is considered to be of a higher quality as electricity generators worldwide have increasingly
become subject to various regulatory restrictions intended to reduce sulfur dioxide emissions. However, highersulfur coal can be burned by electricity plants equipped with sulfur-reduction technology, which employs a
scrubbing process to reduce sulfur dioxide emissions.
Other Characteristics
Ash is the inorganic residue remaining after the combustion of coal. As with sulfur content, ash content
varies from seam to seam. Ash content is an important characteristic of coal because electricity-generating plants
must handle and dispose of ash following combustion. Coal with lower ash content is considered to be of a
higher quality.
The moisture content of coal varies by the type of coal, the region where it is mined and the location of coal
within a seam. In general, high moisture content decreases the energy content and increases the weight of the coal,
thereby making it more expensive to transport. Moisture content in coal, as sold, can range from approximately
5.0% to 30.0% of the coals weight. Coal with lower moisture content is considered to be of a higher quality.
Mining Methods
Coal is mined using surface and underground methods. The most appropriate mining technique is
determined by coal seam characteristics such as location and recoverable reserve base. Drill hole data is used
initially to define the size, depth and quality of the coal reserve area before committing to a specific extraction
method. It is generally easier to mine coal seams that are thick and located close to the surface than thin
underground seams. Typically, coal mining operations begin at the part of the coal seam that is easiest and most
economical to mine. In the coal industry, this characteristic is referred to as having a low strip ratio. As a seam
is mined, it becomes more difficult and expensive to mine because the seam either becomes thinner or protrudes
more deeply into the earth, requiring removal of more material over the seam, known as the overburden,
resulting in a higher strip ratio.
Once the raw coal is mined, it is often crushed, sized and washed in preparation plants where product
consistency and energy content are improved. This process involves crushing the coal to the required size,
removing impurities and, where necessary, blending it with other coal to match customer specifications.
Surface Mining
Surface mining techniques are generally used when the coal seam is less than 80 meters below the surface,
although operations of up to 250 meters below the surface have been carried out economically. During surface
mining operations, topsoil and rock overburden are removed to expose the coal and facilitate its extraction,
following which the overburden is generally replaced in the excavation. Heavy duty mechanical excavators are used
for the removal of overburden and coal, which is sometimes fractured by blasting to assist the digging process.
In a surface mine the coal is extracted from a seam that is relatively close to the surface of the ground by
removing the soil or rock that lies on top of the coal deposit. There are two main types of surface mining: strip
mining and open pit mining.
Strip mining allows miners to dig down into a coal seam and expose it while piling the overburden
alongside or backfilling it into the hole. If piles of overburden accumulate alongside, they must be carefully
100
monitored as they are susceptible to slides or movement due to settling and heavy rain. Though these piles may
be quite large, strip mines are not extremely deep and the digging moves in horizontal patterns following the coal
seam. This snake-like motion of digging may tear up many hectares of land but, as all material except the coal is
kept piled alongside, it can be filled back in after the coal has been removed. Strip mining is favored in areas
where coal seams are close to the surface.
Open pit mining is the second type of surface mining and is similar to strip mining. Strip mines are usually
in use for a short time, but pit mines may continue to extract coal for many years. A pit mine is much larger and
deeper and is usually stationary, unlike a strip mine. Pit mines are favored where a very thick seam is reachable
from the surface. Thick seams reveal more coal in one area, so the pit mine has no need to follow a seam. The pit
gets deeper as coal is removed and, in order to prevent a cave-in of the sides, it must also get wider. Pit mines
may start quite small but can grow to cover a few square kilometers after years of mining. Berau Coal uses open
pit mining in all of its mining operations.
Underground Mining
Underground mining operations are used when the coal seam is too deep to permit surface mining, or where
there are surface ownership or environmental restrictions. Access to the coal seam is achieved either through an
inclined roadway when the coal seam is relatively shallow, or by a vertical shaft for deeper mines. There are two
principal methods of underground mechanized coal mining: room-and-pillar and longwall.
In the room-and-pillar method, the coal is cut in a series of parallel roads and cross-cuts called rooms
leave columns or pillars of coal to support the roof. The coal is cut using machines called continuous miners,
which excavate a square-shaped roadway and gather the coal from within the coal seam and deliver it to a second
machine called a shuttle car which takes the coal to a belt conveyor system for transportation to the surface. As
soon as the coal has been gathered, the roof over the excavated area is reinforced for support.
The longwall method of mining involves the sequential and complete removal of rectangular shaped
panels of coal. The extraction panels are first created by excavating a pair of parallel tunnels called
gateroads, spaced 150 to 250 meters apart. When the gateroads have been driven their planned distance, for
example 1,000 to 2,500 meters, they are joined together by a cross-cut at right angles in order to block out the
panel. This cross-cut forms the new coal face, or longwall, from which the technique derives its name. Due to the
geological nature of Berau Coals mines, it does not use underground mining methods at its mines.
Coal Prices
The price of coal is primarily influenced by prevailing supply and demand and market outlook. In addition,
different qualities of thermal coal have different energy content, sulfur content and ash content, affecting the
price of internationally traded coal. Ocean freight costs also influence coal demand, with coal suppliers closer to
end-user being preferred.
The pricing of coal is complex since the price of a shipment of coal is based on the coal type (for instance,
steam, coking or metallurgical), net calorific value and the content level of impurities, such as sulfur and ash.
Additionally, the cost of transportation comprises a large proportion of the delivered price of coal.
101
Coal is typically sold under long-term contracts that set the price of coal over the term of the contract, usually
with an escalator based on inflation. There is a well-established world spot market for coal that is the source for most
quoted spot prices. The FOB price of steam coal in international trade, as quoted by Bloomberg, increased from
US$23.20 per ton in June 2000 to US$96.10 per ton in June 2010. Coal prices have historically been lower than oil
and gas prices. The following chart shows changes in the FOB price of steam coal, as quoted by Bloomberg, for sales
of 6,700 kcal/kg coal from Newcastle, Australia in the period from June 2000 to June 2010.
200
180
160
US$ / ton
140
120
100
80
60
40
20
0
Jun 2000
Jun 2001
Jun 2002
Jun 2003
Jun 2004
Jun 2005
Jun 2006
Jun 2007
Jun 2008
Jun 2009
Jun 2010
CLSPAUNE Index
Source: Bloomberg
Thermal Export Coal Market Trends
From 2005 through 2009, thermal coal exports and imports grew at an average annual compound growth rate of
6.0%, according to data reported by ABARE. Geographically, the largest growth in imports has been in Asia, with
imports increasing from 300.7 million tons in 2005 to 434.6 million tons in 2009, according to data published by ABARE.
The following tables set forth the volume of imports and exports of thermal coal by region for the periods
indicated:
Global Thermal Coal Imports
2005
2006
2007
2008
2009
(millions of tons, except percentages)
Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Union. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual increase (percentage) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Source: ABARE
102
300.7
18.2
56.8
18.2
114.3
56.2
10.0
27.0
202.6
165.5
37.0
76.4
578.0
332.5
33.6
57.5
24.0
117.8
59.6
11.3
28.7
207.7
180.9
26.8
95.0
635.2
378.1
41.4
61.3
30.7
128.3
65.8
15.8
34.9
230.5
188.3
42.2
87.9
696.5
27.6
57.2
61.3
5.0% 9.9% 9.7%
388.0
35.4
60.3
34.0
128.2
75.5
16.6
37.9
222.5
184.6
37.9
93.5
704.0
434.6
84.0
57.0
45.0
116.0
84.0
16.0
32.6
212.7
178.5
34.2
82.7
730.0
7.5
26.0
1.1% 3.7%
Global Thermal Coal Exports

2005
2006
2007
2008
2009
(millions of tons, except percentages)
Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Russian Federation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual increase (percentage) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
107.6 111.6 112.2 126.4 138.6

65.7
58.9
50.7
42.7
21.5
54.6
59.7
67.2
73.6
70.0
123.3 170.0 190.7 193.0 200.0
63.6
77.0
85.2
85.8
90.0
71.9
67.7
65.8
61.3
65.0
19.1
19.9
24.2
35.1
20.0
72.2
70.4 100.5
86.1 124.9
578.0
635.2
696.5
704.0
27.6
57.2
61.3
5.0% 9.9% 9.7%
730.0
7.5
26.0
1.1% 3.7%
Source: ABARE
According to data published by ABARE, Indonesia supplied 27.4% of internationally traded thermal coal
and ranked as the worlds largest thermal coal exporting country in 2009.
Coal Industry in Indonesia
Indonesian coal is generally low in ash and sulfur, but possesses high moisture content. The majority of
Indonesias coal resources are located in Sumatra and Kalimantan, with higher quality coal mined in Kalimantan.
According to the Ministry of Energy and Mineral Resources, approximately 208.0 million tons of coal were
produced in Indonesia in 2009, an increase of 37.0% compared to 2005. The following table sets forth the
number of tons produced in Indonesia for the periods indicated:
Production
(millions of tons)
2005
2006
2007
2008
2009
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
151.8
179.5
178.8
188.7
208.0
Source: Directorate General of Mineral, Coal and Geothermal at the Ministry of Energy and Mineral Resources
103
The six largest coal mining companies in Indonesia accounted for approximately 71.9% of total Indonesian
coal production in 2009, according to the Ministry of Energy and Mineral Resources. The following table sets
forth details of the largest coal mining companies and their percentage shares of coal production in Indonesia in
2009:
Production
(millions of tons)
Share of
Production
(percentages)
PT Adaro Indonesia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Kaltim Prima Coal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Kideco Jaya Agung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Arutmin Indonesia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Berau Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Indominco Mandiri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40.6
38.2
24.7
19.3
14.3
12.4
58.6
19.5
18.3
11.9
9.3
6.9
6.0
28.1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
208.0
100.0
Source: Directorate General of Mineral, Coal and Geothermal at the Ministry of Energy and Mineral Resources
of Indonesia
104
BUSINESS
Corporate History
Berau Coal Energy was established in September 2005 as a limited liability company incorporated in
Indonesia and is 99% effectively owned by Recapital, with the remaining interest owned by nominee
shareholders. Recapital acquired an effective interest of 99% in Berau Coal Energy from Messrs. Rizal Risjad
(65%), Handy Purnomo Soetedjo (20%) and Garibaldi Thohir (15%) in December 2009. Through intermediary
holding companies, Berau Coal Energy owns 90% of Berau Coal. Sojitz, a Japanese corporation, directly owns
the remaining 10% of Berau Coal.
Berau Coal was established in 1983 to survey, explore, develop and mine coal and to transport, store,
market, sell and export coal in the area that was to become its concession area. In 1983, Berau Coal entered into a
coal contract of work with PT Perusahaan Umum Negara Tambang Batubara (PUTB), a state-owned company
that had the authority to perform coal mining operations. PUTBs rights and obligations were subsequently
transferred to PT Perusahaan Negara Tambang Batubara. In 1997, the coal contract of work was further amended
to transfer PT Perusahaan Negara Tambang Batubaras rights and obligations to the Government of Indonesia.
See Regulation of the Indonesian Coal Mining Industry.
Pursuant to the coal contract of work, Berau Coal obtained a permit to conduct coal mining operations in a
concession area covering 487,217 hectares in East Kalimantan, Indonesia. After conducting mining feasibility
studies, Berau Coal voluntary relinquished parts of the concession area, leaving it with a 118,400-hectare
concession area for coal mining. Under the coal contract of work, Berau Coal is obligated to explore and exploit
coal resources in its concession area. Berau Coal was granted an exclusive right to mine in six exploration areas:
Lati, Binungan, Sambarata, Kelai, Gurimbang and Punan. As of March 31, 2010, Berau Coal has only used
approximately 5,196 hectares of its concession area for mining activities. See Description of Material
AgreementsCoal Contract of Work.
105
Organizational Structure
Our organizational structure is set forth in the chart below:
PT Recapital Advisors
(Indonesia)
99%(1)
PT Bentara Energi Asia Utama
(Indonesia)
99.6%(1)
<0.001%
PT Bukit Mutiara
(Indonesia)
100%
99.999%
Sojitz Corporation(2)
(Japan)
Berau Coal Energy (3)

(Indonesia)
Regulus International Pte.

Ltd.
(Singapore)
10%
100%
Maple Holdings Limited
(Labuan)
100%
0.01%
99.99%
100%
Seacoast Offshore
Inc.
(British Virgin
Islands)
0.01%
100%
Berau Capital
Resources Pte. Ltd.(4)
(Singapore)
Armadian
(Indonesia)
51%
Berau Coal
(Indonesia)
Winchester Investment
Holdings PLC
(Seychelles)
99.99%
(Malta)
87.2%
12.8% Rognar Holding B.V.

(Netherlands)
39%
100%
Empire Capital
Resources Pte. Ltd.
(Singapore)
Notes:
(1) The remaining interest is held by a nominee shareholder.
(2) Sojitz Corporation is not part of the Group.
(3) The guarantors are shaded in the chart above. Berau Coal Energy is the parent guarantor. Entities inside the
dotted lines are Restricted Subsidiaries.
(4) Issuer of the notes.
Overview
Berau Coal Energy is a holding company with an effective interest of 90% in Berau Coal, the fifth largest
coal producer in Indonesia in terms of production volume in 2009, according to the Annual Coal Production
Report dated December 2009 by the Ministry of Energy and Mineral Resources. Berau Coal is engaged in the
business of open-cut mining of coal from its concession area in East Kalimantan, Indonesia, where it holds coal
mining rights until April 26, 2025. Berau Coal currently operates three active mining areas in Lati, Binungan and
Sambarata, where reserves were estimated to be 346 million tons as of December 31, 2009, of which 146 million
tons are of the proved category and 200 million tons are of the probable category, according to MMC. Berau
Coals concession area of approximately 118,400 hectares also contains three other reserve locations, namely
Kelai, Gurimbang and Punan.
106
Berau Coal supplies coal, both directly and through marketing agents, to customers in Indonesia and
elsewhere in Asia. Its customers are mainly utility companies and coal trading companies that purchase coal from
it for resale. In recent years, Berau Coal has derived approximately 40% of its total sales revenues from domestic
sales and approximately 60% of its total sales revenues from international sales. Berau Coal exports to customers
in China, Hong Kong, India, Japan, South Korea, Taiwan and Thailand.
Berau Coal produces thermal coal at its three mining locations and blends them in order to adjust the overall
quality grade of the coal. It markets the coal under four brand namesMahoni, Mahoni-B, Agathis and
Sungkai, with calorific values ranging from 5,000 kcal/kg to 5,600 kcal/kg (on a gross as received basis) and
appropriate levels of ash and sulfur for use in coal-fired power plants in Indonesia and many other Asian
countries.
13.1 million tons, 14.3 million tons and 3.7 million tons of coal, respectively. As of July 1, 2010, Berau Coal had
contracts with aggregate commitments to purchase coal totaling 17.0 million tons in 2010, all of which was at an
agreed price.
Berau Coal began producing coal commercially from the Lati and Binungan mines in 1995 and the Sambarata
mine in 2001. Lati is the largest of its three active mining areas and accounted for 56.8% of its production in 2009.
Sambarata has the highest quality coal of all three mining areas in terms of calorific value. The three mining areas
are similar in their operations but are independent, with their own separate coal terminals and barge lines. Berau
Coal expects to commence commercial coal production in Gurimbang in 2012 and Kelai in 2013.
Berau Coal subcontracts all of its mining, barging and drilling and blasting operations, which allows it to
minimize capital expenditures and working capital requirements and focus on exploration, mine planning,
supervision and sales and marketing. Berau Coal works closely with its two mining contractors, BUMA and SIS,
each of which undertakes land clearing, overburden removal, coal excavation, hauling activities and road
maintenance. However, pursuant to Indonesias new mineral and coal mining law and its implementing
regulation, by September 29, 2012, Berau Coal will need to amend its existing contracts with its mining
contractors and conduct its own coal mining and processing activities, as mining services companies will only be
allowed to perform overburden removal and transportation of coal in the mining process.
Berau Coal uses multiple contractors for each of its other operations, such as barging, coal quality analysis
and transshipping. Once the coal is mined, crushed and stockpiled, contractors barge the loads to a transshipment
area at Muara Pantai in the Sulawesi sea located approximately 50 kilometers to 100 kilometers from the ports at
Lati, Suaran and Sambarata. Higher energy coal from the Sambarata mine is blended at Muara Pantai with coal
from the Lati or Binungan mines, depending on the quality grade requirements of the shipment.
In December 2009, PT Recapital Advisors (Recapital) acquired an effective interest of 99% in us.
Recapital has brought to Berau Coal new members for its board of commissioners, as well as a new President
Director and a new Finance Director, while maintaining the existing personnel at the operational level with an
aim to improve production levels, increase exploration activities and expand Berau Coals infrastructure. Actions
taken since the acquisition include the revision of expense policies that are in the process of being implemented,
to add discipline to how Berau Coal uses financial resources, negotiates and approves contracts, and manages
department level budgets.
Competitive Strengths
Berau Coals principal competitive strengths are the following:
Sizable and long-standing operations with a consistent track record of production growth.
Berau Coal was established in 1983 and its coal contract of work gives it a 30-year right to mine coal within
its concession area through April 26, 2025. Berau Coal was the fifth largest coal producer in Indonesia in terms
107
of production volume in 2009, according to the Annual Coal Production Report dated December 2009 by the
Ministry of Energy and Mineral Resources, with production levels of 11.8 million tons, 13.1 million tons,
14.3 million tons and 3.7 million tons of coal in 2007, 2008, 2009 and the three months ended March 31, 2010,
respectively. Between 2007 and 2009, Berau Coal increased its coal production at a compound annual growth
rate of 10.1% mainly due to the growing demand for its coal, which was in line with the increased overall global
demand for coal, and significant operational advantages of its mines, including its supporting logistics
infrastructure.
Low cost coal producer.
Due to its location, Indonesian coal producers are well-positioned to supply comparable quality coal at a
freight cost advantage to its competitors in the region. According to data published by ABARE, an Australian
government economic research agency, Indonesia supplied 27.4% of internationally traded thermal coal and
ranked as the worlds largest thermal coal exporting country in 2009. Being an Indonesian coal producer, Berau
Coal has a geographical advantage as it is located in close proximity to China, India, Japan and other key Asian
coal importers and is therefore able to supply coal to these markets at lower freight costs compared to other coal
producers in Australia and South Africa.
Berau Coals operating strategy and the characteristics and location of its mines enable it to produce coal at
attractive cash cost levels. For example, Berau Coals mines generally have seams of coal located close to the
earths surface, thereby making it less costly to extract. In addition, the three mines that Berau Coal operates are
in close proximity to the Segah and Berau rivers and the Sulawesi sea, thereby enabling it to transport coal to the
ports by trucks and to the transshipment point using barges. This allows Berau Coal to benefit from lower costs
of transportation in its operations. Berau Coals close proximity to multiple ports and barging facilities compared
to its competitors and its effective control of the supply chain from coal extraction to ship-loading have resulted
in significant supply chain flexibility and production efficiencies.
Well-positioned to capture growth opportunities in thermal coal markets in Asia.
Global thermal coal demand has been driven by industrial growth, with the growth in electricity consumption
contributing to the demand for coal-fired power generation, particularly in China, India and elsewhere in Southeast
Asia, including in Indonesia. According to data reported by ABARE, Asia is the worlds largest importer of
internationally traded thermal coal, with 59.5% of worldwide import demand in 2009. Asia is also the worlds
largest exporter of internationally traded thermal coal, with 49.3% of worldwide export supply in 2009. Global
thermal coal demand has historically been driven by coal-fired power generation. Coal has been the fastest growing
fuel in the world for each of the last six years through 2008, according to the BP Statistical Review of World Energy
for June 2009. Coal provides 41.5% of the worlds electricity, according to a report published by the World Coal
Institute in 2009.
We believe that Berau Coal is well-positioned to capitalize on the growing global demand for thermal coal
due to its significant reserves of thermal coal and its planned increase in its production levels. As of
December 31, 2009, Berau Coals reserves were estimated to be 346 million tons, of which 146 million tons are
of the proved category and 200 million tons are of the probable category, according to the Reserve Statement
reported by MMC included in Appendix A to this offering circular. In addition, coal produced by Berau Coal
contains comparable levels of ash, sulfur and other trace materials of other coal traded in the global markets and
produces relatively low levels of nitrogen during combustion. The sulfur level of its coal is close to 0.9% which
is comparable to competing coal from Australia and China.
Strong customer relationships and a high quality customer base.
Berau Coal has established strong positions in the markets for its products with a long history of relationship
with its top ten customers averaging more than seven years. As of July 1, 2010, Berau Coal had contracts with
aggregate commitments to purchase coal totaling 17.0 million tons in 2010, all of which was at an agreed price.
108
Berau Coal is well positioned as a supplier of coal products for established utility companies both in Indonesia
and other Asian countries. As of December 31, 2009, Berau Coal had 22 customers located in China, Hong
Kong, India, Indonesia, Japan, South Korea, Taiwan and Thailand. 63.3%, 59.2%, 61.0% and 72.7% of Berau
Coals total revenues were from exports sales to customers in Asia in 2007, 2008, 2009 and the three months
ended March 31, 2010, respectively. Most of Berau Coals coal exports are sold, both directly and indirectly
through marketing agents, to utility companies, and the rest are sold through trading companies. Because Berau
Coal supplies coal to customers located in diverse geographic locations, it has been able to diversify the sources
of its revenue stream and reduce country and region specific macro-economic risks.
We believe Berau Coals products are well suited to the needs of domestic customers and hence receive
significant domestic demand. Berau Coal derived 36.7%, 40.8%, 39.0% and 27.3% of its total revenue from
domestic customers in 2007, 2008, 2009 and the three months ended March 31, 2010, respectively. We believe
the significant domestic sales would help mitigate risks from the imposition of any new laws requiring
Indonesian coal producers to sell a higher percentage of their production in the domestic market. See Risk
FactorsRisks Relating to Berau Coals BusinessIndonesias new mining law and other laws and regulations
could increase Berau Coals costs and adversely affect its operations.
Experienced management team.
Berau Coals management team has demonstrated a successful track record of expanding its operations and
increasing sales revenues, and has built Berau Coals mining and exploration business to its current status as the
fifth largest coal producer in Indonesia by production volume in 2009, according to the Annual Coal Production
Report dated December 2009 by the Ministry of Energy and Mineral Resources. Berau Coals senior management is
able to draw on its years of experience in the coal industry to improve Berau Coals products and sales. The team
also has long-standing relationships with many of its major customers and third-party contractors.
Strategy
The main elements of Berau Coals business strategy are the following:
Increase coal production at an accelerating rate by expanding infrastructure while managing costs.
Berau Coal has steadily increased production, with annual production levels of 11.8 million tons, 13.1 million
tons, 14.3 million tons and 3.7 million tons of coal in 2007, 2008, 2009 and the three months ended March 31, 2010,
respectively. It has also been able to expand its production capacity while keeping costs low. In 2007, Berau Coal
completed the most recent phase of the expansion of its mining and logistics operations and increased its capacity to
process, handle and transport coal, or production capacity, to 16.5 million tons per annum by upgrading its crushers
at the Lati and Binungan coal handling facilities to increase their speed. In 2008, Berau Coal further increased its
production capacity to 20.0 million tons per annum by further increasing the speed of the existing crushers and by
re-assembling and activating a previously unutilized crusher that had been dismantled at the Binungan coal handling
facilities. Berau Coal plans to increase its production to 30.0 million tons per annum by 2014.
Berau Coal plans to enhance its collaborative relationships with its mining, transportation and barging
contractors to achieve scheduled production targets and reduce costs. By using contract mining services, Berau
Coal benefits from its contractors experience and know-how, encourages cost competition among its contractors
and reduces the need to fund significant capital expenditures. Berau Coal will seek to continue to increase
production levels and reduce production costs, including through greater use of its handling and coal crushing
facilities and increasing output from its contractors.
To reach its target of 30.0 million tons of coal per annum by 2014, Berau Coal has planned total capital
expenditures of US$240.1 million to expand its infrastructure to support such a production level. As of
December 31, 2009, Berau Coals mining infrastructure supported a production capacity of 20.0 million tons of
109
coal per annum. While such capacity is sufficient to support its target production until 2011, Berau Coal has
planned capital expenditures of approximately US$48.4 million in 2010, for maintenance as well as to increase
its production capacity to 22.0 million tons per annum by the end of 2010 in order to support additional coal
production at its existing mines. These capital expenditures are expected to be made for operational
improvements, including the upgrading of existing coal handling facilities such as its barge loaders and crushers
at the Lati coal handling facilities, and the construction of additional infrastructure, including a new stockpile and
a new crushing line which Berau Coal expects to complete in May 2011. See Expansion Plan and Growth
Strategy. Berau Coal expects to work closely with its mining contractors to ensure that its production capacity
will be increased in line with its plans to expand production levels at its existing mines and to begin commercial
operations at the Gurimbang and Kelai mines by 2012 and 2013, respectively, and to continue exploration
activities in other parts of Kelai.
Increase coal reserves by using internally generated cash flows from existing mines to explore for new
reserves and enhance exploration efforts.
Berau Coal also intends to use cash generated internally from existing mines to fund intensive exploration
efforts and mine development activities in its concession area and develop new mines. Berau Coal intends to
intensify exploration activities in its existing mines and other areas in its concession area. Currently, Berau Coal
has commenced exploration activities in the eastern area of Sambarata Block B, new seams in Binungan Block 7,
Binungan Block Parapatan and Binungan Block 8. In addition, Berau Coal has commenced exploration activities
at new seams in the northern part of the Lati mine and Binungan Block 9 in July 2009 and plans to commence
exploration of Sambarata Block BC in 2011. Berau Coal is targeting to complete all exploration activities of its
concession area by 2011 as it believes that this will enable it to plan its mining operations more efficiently to
achieve its target production and to achieve high sustainable coal production volumes and growth. Further, it is
planning to commence commercial coal production in Gurimbang and Kelai in 2012 and 2013, respectively. See
Mine Operation and LogisticsExploration.
Maintain core customers in Berau Coals domestic and export markets and secure orders from long-term
customers for the majority of Berau Coals production.
Berau Coal has strong relationships with its existing customers, particularly well-established independent
power producers and PT Perusahaan Listrik Negara (Persero) (PT PLN), Indonesias state-owned utility
company. Berau Coal aims to identify and target customers who will benefit most from its products advantages
to achieve a strategic mix of long-term and short-term contracts generally with fixed-priced structures with a
good balance between customers in the domestic and export markets. Berau Coal reviews the cost and revenue
structures of each of its customers, taking into account the customers procurement policy, logistics management
and sensitivity to coal price. Its management and dedicated sales team also focus on customers whom it believes
have good prospects for generating growth and profitability, such as existing customers whose purchases from
Berau Coal represent only a small percentage of the customers total requirements. Berau Coal intends to build
on existing relationships with long-term customers such that orders from long-term customers form the basis for
the majority of Berau Coals production.
Consider strategic alliances with companies serving the Indonesian mining sector.
Berau Coal intends to consider strategic alliances with mining services companies and enhance its collaboration
with marketing agents such as Maple to improve access to quality customers and to increase its scale of operations
and cost efficiency. Berau Coal may also collaborate with other mining companies to improve its product portfolio
by blending coal to adjust the overall heating values and sulfur levels to meet the needs of its customers.
Continue to strengthen relationships with local communities through development and environmental
rehabilitation programs.
Berau Coal operates in an area that covers 118,400 hectares, with villages located near the mines and the
haul roads to the ports at Lati and Suaran. For the sustainability and long-term success of its operations, Berau
110
Coal believes that it is important to maintain strong relationships with and benefit local communities. Berau Coal
has and will continue to work towards fostering community ties through development programs focusing on
health, education and technical assistance as well as job creation for these communities as it believes that these
efforts are integral to the stability and development of its business and operations.
Berau Coal has implemented a number of programs as part of its Community Development Programs and
has encouraged its mining contractors to contribute to the programs. In 2000, Berau Coal established a trust
called Yayasan Dharma Bhakti Berau Coal in order to help develop local communities more effectively in
conjunction with local governments. The main goal of the program is to implement community development
programs in cooperation with the local communities and work together to formulate and implement plans to
conserve the environment while helping the local communities in their development projects and business
initiatives. See Community Development Programs.
Concession Area
Berau Coals concession area covers approximately 118,400 hectares in the Berau Regency of East
Kalimantan Province, Indonesia, approximately 300 kilometers north of the provincial capital of Samarinda. It
surrounds Tanjung Redeb, the principal town in the Berau Regency. Parts of the concession area are production
forest areas where open-cut mining is not permitted unless a borrow-use agreement is entered into with the
Ministry of Forestry of Indonesia. The entire Kelai mine, and Binungan Block 7 are located on such production
forest areas. Berau Coal has obtained the exploration permits for these mines as well as the borrow-use permit for
Binungan Block 7, and plans to apply for the in-principle borrow-use license in respect of the Kelai mine as it
currently expects to commence mining activities in parts of these production forest areas in the next three to four
years. See Regulation of the Indonesian Coal Mining IndustryForestry Regulation. The Berau Regency has
an estimated population of approximately 185,000 people in 2009. The Kelai, Segah and Berau rivers are the
major rivers in the area and are navigable to the furthest inland points of the concession area. A highway also
connects Tanjung Redeb to other major cities.
111
The following map illustrates the coal deposits located in Berau Coals concession area as of December 31,
2009:
Lati
N
0
Sambarata
10
20
KILOMETRES
Sambarata B1
Lati Port
Punan
Tanjung
Redeb
Sambarata Port
Gurimbang
Binungan Block 1-7
Transhipment Area
Suaran Port
Binungan Block 8-10
LEGEND
Transhipment
Rivers
Coal Boundary
Road
Town
PT Berau Coal Concession Area
Coal Reserves
Berau Coals coal reserves are contained in separate coal deposits at Lati, Binungan, Sambarata, Kelai,
Gurimbang and Punan. As of December 31, 2009, there were coal reserves of 346 million tons in Lati, Binungan
and Sambarata, of which 146 million tons are of the proved category and 200 million tons are of the probable
category, based on the Reserve Statement.
112
The following table sets forth the coal reserves for Berau Coal as of December 31, 2009, according to the
Reserve Statement:
Proved Reserves
Lati:
Seam PQRT . . . . . .
Seams A to O . . . . .
Subtotal . . . . . . . . . .
Binungan:
Blocks 1 to 2. . . . . .
Blocks 3 to 4. . . . . .
Blocks 5 to 6. . . . . .
Block 7 East . . . . . .
Block 7 West . . . . .
Parapatan . . . . . . . . .
Block 8 (Kelai). . . .
Subtotal . . . . . . . . . .
Sambarata:
Block A . . . . . . . . . .
Block B East . . . . . .
Block B West . . . . .
Block B1 . . . . . . . . .
Subtotal . . . . . . . . . .
Total . . . . . . . . . . . . . . . . .
Total Proved and

Probable Reserves
Probable Reserves
(million tons)
52
7
59
81
11
91
133
18
150
5
1
1
28
5
12
0
52
2
0
0
33
4
7
45
90
7
1
1
61
9
19
45
142
0
5
10
20
35
146
0
3
2
13
19
200
0
8
12
33
54
346
Exploration
Berau Coal conducts exploration activities at its existing mines on an ongoing basis. To support its planned
production growth, Berau Coal intends to continue exploration activities in its existing mines and has begun
exploring other areas in its concession area for additional coal reserves. Berau Coal has commenced exploration
activities at the eastern area of Sambarata Block B, new seams in Binungan Block 7, Binungan Block Parapatan
and Binungan Block 8. In addition, Berau Coal has commenced exploration activities at new seams in the
northern part of the Lati mine and Binungan Block 9 in July 2009 and plans to commence exploration of
Sambarata Block BC in 2011. Berau Coal is targeting to complete all exploration activities of its concession area
by 2011 as it believes that it will be able to plan its mining operations more efficiently to achieve its target
production if it has a complete knowledge of the coal reserves in its concession area. In order to do this, Berau
Coal has increased the manpower and drilling equipment used in exploration activities and has engaged an
additional drilling contractor.
Berau Coals exploration activities include data collection, geological modeling and financial evaluation.
Data collection is the process of identifying the location, layout and quality of a coal deposit. It is based on
field mapping, which is a survey of surface features, and borehole drilling, the depth of which varies between
deposits depending on the depth and configuration of the coal seams. Field mapping and borehole drilling are
typically supplemented by a geophysical survey.
Geological modeling is the process of transferring the data from each observation point into a threedimensional representation of the coal seam. This is required to estimate the quantity of the coal in a particular
seam and impacts Berau Coals selection of a mining method. The geological model also provides coal quality
data. Berau Coal commissioned an MMC independent estimate of its open-cut coal resources and reserves at
each of its mines, which complies with the reporting guidelines of the 2004 JORC Code. MMC classified the
113
reserves at each mine as measured, indicated and inferred, reflecting their level of confidence in the data. This
data was then translated into proved and probable reserves which is defined as coal that can be economically
mined. For all of Berau Coals mines, data collection and geological modeling is ongoing to improve its level of
confidence in its reserves.
To determine whether the commencement of mining is economically viable at a particular area, we conduct
a financial evaluation. This evaluation considers coal price, demand for the product, capital investment, mining,
processing and transportation costs and defines the shape and size of the excavation. This is done by using
manual pit designs and the Mincom MineScape pit design software.
Berau Coal engages third party contractors for the provision of drilling services for its exploration activities.
Drilling activities have commenced at the eastern area of Sambarata Block B, new seams in Binungan Block 7,
Binungan Block Parapatan, Binungan Blocks 8 and 9. New seams at the northern part of the Lati mine have also
been explored and drilling activities commenced in July 2009. Berau Coal has also engaged a third party
contractor to conduct geophysical logging at the exploration areas.
In 2007, 2008, 2009 and the three months ended March 31, 2010, Berau Coal incurred US$2.6 million,
US$3.4 million, US$4.7 million and US$1.7 million, respectively, in exploration capital expenditures. Berau
Coal has planned capital expenditures relating to exploration activities of US$9.6 million in 2010.
Coal Products and Production
Berau Coal produces thermal coal with calorific value between 5,000 kcal/kg to 6,170 kcal/kg on an as
received basis with low ash and sulfur levels close to 0.9%. Such low sulfur level is comparable to competing
coals from Australia and China. The coal is suitable for use as a base load fuel for domestic utility companies and
as a blending coal for major export utility customers. Berau Coal markets several different types of coal which
target different market segments domestically and abroad.
Coal from the Lati mine has a low calorific value between 5,000 kcal/kg to 5,200 kcal/kg. Coal from the
Binungan mine has a medium calorific value between 5,200 kcal/kg to 5,900 kcal/kg. To achieve different levels of
coal quality specifications, Berau Coal blends coals from the three locations in order to adjust the overall heating
values and sulfur levels, which in turn enhances the overall competitiveness of Lati and Binungan coal in the Asian
coal market. Coal from the Sambarata mine has a higher calorific value (between 5,400 kcal/kg to 6,170 kcal/kg)
than the Lati and Binungan coal and is used for blending to increase the calorific value of the Lati and Binungan
coal. Binungan coal has lower sulfur levels than coal from the Lati and Sambarata mines and is used for blending to
lower the sulfur level of Lati coal. Berau Coal markets its coal products under four brand namesMahoni,
Mahoni-B, Agathis and Sungkaiin order to indicate the quality grade rather than the source mines.
Mahoni and Mahoni-B are appropriate as blending coals for utilities in the North Asian utility markets.
Agathis and Sungkai coal attract substantial demand from Indonesian coal-fired utilities as well as utility
companies in China, India and Thailand. Most of the coal Berau Coal sells is under the Agathis and Sungkai
brand names.
114
The following table sets forth the typical marketing coal specifications for each brand of coal Berau Coal
produces and blends according to the Reserve Statement:
Coal Data
Proximate Analysis
Total moisture (%) (gar)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inherent moisture (%) (ad)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calorific value (kcal/kg) (gar)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calorific value (kcal/kg) (ad)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ash content (%) (ad)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total sulfur (%) (ad)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatile matter (%) (ad)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed carbon (%) (ad)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grindability (HGI)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ash fusion temperature (reducing)
Initial deformation (C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Softening (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hemispherical (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fluid/flow (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mahoni
Mahoni-B
Agathis
Sungkai
18.0
13.5
5,600
5,900
5.1
0.70
39.3
42.1
45.0
22.5
16.0
5,300
5,740
4.5
0.87
38.5
41.0
45.0
26.0
18.0
5,100
5,650
4.8
0.89
38.2
39.0
46.0
26.0
18.0
5,000
5,500
5.0
0.99
38.0
39.0
47.0
1,150
1,180
1,230
1,280
1,100
1,130
1,230
1,260
1,080
1,140
1,190
1,230
1,050
1,110
1,125
1,150
Notes:
(1) gar: gross as received basis.
(2) ad: air dried basis.
(3) HGI: Hardgrove Grindability Index. The HGI was developed to determine the relative difficulty of reducing
various coals to a particle size required for efficient combustion in pulverized coal boiler furnaces. In
general, the higher the HGI value, the more readily the coal can be reduced to smaller particle sizes.
The table below sets forth Berau Coals sales for each brand of coal for the periods indicated:
Three Months
Year Ended December 31, Ended March 31,
2007
2008
2009
2010
(million tons)
Brand:
Mahoni . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mahoni-B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agathis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sungkai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.9
0.8
6.9
3.5
0.6
1.1
6.7
4.7
0.3
1.1
6.4
6.3
0.2
0.3
1.4
2.0
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.1
13.0
14.1
3.9
The table below sets forth Berau Coals coal production for each of its mine areas for the periods indicated:
Three Months
Year Ended December 31, Ended March 31,
2007
2008
2009
2010
(million tons)
Mine:
Lati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.2
3.3
1.3
7.6
4.1
1.4
8.1
4.3
1.9
2.2
1.0
0.5
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.8
13.1
14.3
3.7
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The following table sets forth Berau Coals production volume, sales volume, average selling price per ton,
cash cost per ton and average strip ratio for the periods indicated:
Production volume (million tons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sales volume (million tons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average selling price per ton (US$ per ton of sales)(1) . . . . . . . . . . . . . . . .
Cash cost per ton (US$)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average strip ratio(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2007
2008
2009
Three Months
Ended March 31,
2010
11.8
13.1
14.3
12.1
13.0
14.1
31.86 48.54 56.74
23.81 34.88 33.03
7.84
8.06
8.65
3.7
3.9
56.43
37.79
7.94
Notes:
(1) Average selling price per ton is calculated by dividing sales by sales volume for the period presented.
decreases in coal inventories, and dividing by sales volumes for the periods presented. Although
depreciation and amortization are added to our cost of goods sold, this is not included in cash costs.
(3) The strip ratio is the number of bank cubic meters of overburden (rock and soil) that must be removed to
access and extract one ton of coal.
Mine Operation and Logistics
All of Berau Coals coal is currently mined at the Lati, Binungan and Sambarata deposits which feature a
large number of coal seams. The coal seams are of variable thickness and seam splitting is common. Typical
seam thicknesses are in the range of 1.0 meter to 3.0 meters. Coal is mined from the three deposits using
open-cut mining methods with primary overburden stripping and coal mining being handled by hydraulic
excavators and trucks.
Mine Planning
With information collected through its exploration activities, Berau Coal prepares mine plans in relation to
further exploration and operation of each pit within its mines. Berau Coal begins with a conceptual life-of-mine
plan and determines the potential production profiles for a particular mine throughout its life. With a view on
production levels within the short to mid-term, Berau Coal then begins discussions with its mining contractors to
agree on optimal fleet sizes and annual production levels necessary to reach a certain production profile. Berau
Coal also accounts for surface features such as topography, position of rivers and creeks, local villages and
associated infrastructure, and begins planning for rehabilitation of disturbed areas. As more exploration data is
collected, the geological model is revised, which necessitates revisions to mine plans. Mine plans for 12-month
periods are prepared by Berau Coal in cooperation with its mining contractors on an ongoing basis alongside
three-month and monthly rolling mine plans which are intended to capture differences in the anticipated strip
ratio, the configuration of the coal seam, equipment failures and malfunctions, changes in operating costs and
weather conditions.
Excavating Coal
In its natural state, the land in Berau Coals mining concession area is covered with primary and secondary
rainforest. To get to the coal seam, the land has to be cleared of rainforest. The marketable timber is recovered
and all other vegetation is pushed into piles by bulldozer. Top soil is then removed and transported directly to
reclamation areas or stockpiled until required. To shatter the overburden layer, drilling, blasting and dozer
ripping are performed to fragment the layer. Waste is then removed using typical hydraulic shovel and truck
configuration. Waste is typically removed to a level slightly above the coal seam.
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Once the coal is exposed, it is mined using hydraulic backhoe and transported by rear dump trucks. Coal is
dumped directly into either a crusher surge bin hopper or delivered to a stockpile. This is then transported to the
crushing plants located at Binungan or the Lati or Sambarata ports.
In common with other Indonesian coal producers, Berau Coal has adopted an operating strategy of
contracting out all of its mining activities with a view to maximizing efficiency while minimizing costs. All of
Berau Coals mining activities are conducted by two mining contractors, BUMA and SIS. These mining
contractors supply all mining and transportation equipment and the personnel required to operate and maintain
the equipment. See Contract Mining. Other related activities, such as stevedoring, coal quality analysis and
barging are also outsourced to other contractors. However, pursuant to the Mining Law, Berau Coal will need to
conduct its own coal mining, processing and refining activities as mining services companies are only allowed to
perform overburden removal and to transport coal. See Regulation of the Indonesian Coal Mining Industry
Mining RegulationMining Law.
The coal mining process is similar for the Lati, Binungan and Sambarata mines. However, the process is
more efficient for the Lati mine due to its parallel seam structure, making its stripping ratio the lowest among the
three mines. Strip ratios, which is a measure of the amount of overburden that needs to be dug or removed in
order to extract a quantity of coal, at the Binungan mine, except Block 7, and at the Sambarata mine are slightly
higher due to their more inclined seam structures. A higher strip ratio is a result of operators having to dig longer
and deeper to extract the same quantity of coal. Different equipment and procedures have to be adopted
depending on the angle of the seam structure, which also affects the strip ratios and mining costs. Higher strip
ratios are general indicators of high mining costs.
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The illustrations below generally demonstrates the impact that the incline of a seam has on the mining
process:
Illustration of a mine with a parallel seam structure
Illustration of a mine with a more inclined seam structure
Berau Coals mine operations can be impacted by adverse weather conditions, particularly during the rainy
season between October and March when heavy rains can slow down overburden removal and reduce coal
production volumes. Berau Coals mine planning function anticipates and adjusts production levels to take into
account such weather-related delays.
Contract Mining
All of Berau Coals mining and coal haulage operations, including the supply of all mining and
transportation equipment, road maintenance, as well as the personnel required to operate and maintain the
equipment, are carried out by two contractors, BUMA and SIS. Berau Coals contractors carry out mining
operations based on instructions given by Berau Coal in accordance with its mining plans. Berau Coal works
very closely with its contractors, specifying details such as the capacity of equipment to be used, and conducting
daily, weekly and monthly meetings with the contractors, including monthly safety checks. All mining support
operations are performed by the contractors while supervised by Berau Coal personnel. These include fleet
maintenance, equipment repairs and haul road maintenance. In the past, Berau Coals contractors have generally
been able to maintain an effective fleet or mobilize additional equipment as necessary.
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Berau Coal has entered into term contracts with its mining contractors, with prices fixed for total tonnage of
coal produced and for other services, such as overburden removal. Prices per ton of coal produced are generally
fixed based on the location and terrain of the mine, the estimated strip ratio, the distances that the coal and
overburden are to be transported and other factors affecting the mining contractors operating costs except fuel
costs. In the past, Berau Coals contracts with its mining contractors generally provided for the mining
contractors fuel costs to be passed on to Berau Coal with a fixed formula for calculating adjustments to the fuel
costs. However, in October 2008, Berau Coal changed its arrangement with SIS and currently purchases fuel
directly from PT Pertamina (Persero) and provides such fuel to SIS. Berau Coal intends to enter into the same
arrangement with BUMA with effect from January 1, 2010. In addition, Berau Coals contracts with SIS for
Binungan Blocks 1 to 4, Pit H3, Pit H4 and Sambarata Block A provide for a reduction of 5% of the contract
price in the event that the production output is less than 95% of its targets or, if the production output exceeds
such targets, subject to Berau Coals consent, Berau Coal will pay a bonus to SIS equal to the excess production
multiplied by 105% of the contract price. Further, Berau Coals contracts with SIS provide that liquidated
damages equal to 125% of the contract price are payable by SIS in the event of coal losses due to poor mining
practices or spillages. Berau Coals contractors usually invoice for completion of mining operations on a monthly
basis and Berau Coal generally pays its contractors within 30 to 75 days of such invoices. 60% of the fees paid to
the mining contractors are paid in U.S. dollars, with the remaining 40% being paid in Rupiah.
Berau Coals contracts with its mining contractors may generally be terminated by either party in the event
of an insolvency or a force majeure event persisting for more than a month. In addition, Berau Coal is entitled to
terminate the contract with notice if the mining contractor fails to (i) achieve certain key performance
requirements such as the achievement of target coal quantities and qualities, and overburden removal on a
monthly and annual basis; (ii) perform material obligations under the mining contract; or (iii) comply with
applicable law. In addition, Berau Coals agreement with SIS relating to the Sambarata mine may be terminated
by either party with 90 days written notice. While Berau Coal may be able to find other contractors if any of
these contracts are terminated, mining operations at that mine will be disrupted for a period of at least one year to
allow the contractor to remove its equipment and the new contractor to install its equipment.
The following table sets forth Berau Coals contracts with its mining contractors for the provision of coal
mining operations, coal haulage and road maintenance, and the expiration dates of each contract:
Contractor
BUMA . . . . . . . . . . . . . . . . . . . . . . . . .
BUMA . . . . . . . . . . . . . . . . . . . . . . . . .
BUMA . . . . . . . . . . . . . . . . . . . . . . . . .
SIS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Area
Expiration Date
Lati mine
Binungan mineBlock 7
Binungan mine to Suaran port
Binungan mineBlocks 1 to 4
Binungan minePit H3
Binungan minePit H4
Sambarata mineBlock A
Sambarata mineBlock B1
December 31, 2018

December 31, 2018
December 31, 2018
December 31, 2010
December 31, 2010
December 31, 2010
December 31, 2011
July 14, 2012
Berau Coal typically selects its mining contractors through direct negotiations with existing contractors or
by way of a competitive open tender, with potential contractors submitting their bids based on the requirements
specified by Berau Coal. Berau Coal selects its mining contractors after considering various factors such as price,
equipment, experience and previous track record in its mining operations.
BUMA is the principal mining contractor for the Lati mine and Binungan Block 7. Berau Coal started
contracting its mining operations at the Lati mine in 1998 to PT Mentari Bukit Makmur, which then transferred
the mining contract to its affiliated company, BUMA, with effect from January 1, 2007. The Binungan mine has
more inclined seam structures and higher strip ratios than the Lati mine, making mining more difficult. Berau
Coals management has worked closely with BUMA, including its subsidiaries, in the strategic planning of its
mine operations for over ten years. BUMA performs the entire mining process for Berau Coal, which includes
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land clearing, top soil and overburden removal, coal mining, coal hauling, road maintenance and equipment
mobilization. In addition, Berau Coal has entered into a coal haulage and road maintenance contract with BUMA
for the maintenance of the hauling road between the Binungan mine and Suaran port that commenced on
January 1, 2003 and will expire in December 2018. BUMAs other customers include major mining companies in
Indonesia, such as PT Adaro Indonesia, PT Kaltim Prima Coal, PT Kideco Jaya Agung.
SIS is the principal mining contractor for the mining operations at the Binungan Blocks 1 to 4, Pit H3, Pit
H4 and the Sambarata Blocks A and B1. Like BUMA, SIS performs the entire mining process at the mines it
operates. Berau Coal started contracting its mining operations at the Binungan mine in 1999 and at the Sambarata
mine in 2004 to PT Dianlia Setyamukti, which subsequently transferred the mining contracts to its affiliated
company, SIS. SIS other customers include major mining companies such as PT Interex Sacra Raya and
PT Adaro Indonesia.
Following Recapitals acquisition of an effective 99% interest in Berau Coal Energy, Berau Coal has
undertaken a deliberate effort to diversify its mining contractor base and had released new tenders for the
opening of three new mine pits as part of its plan to achieve increased production levels. This will reduce Berau
Coals reliance on just two mining contractors. Berau Coal has awarded contracts to three mining contractors and
is in the process of finalizing the agreements. Berau Coal plans to undertake its own coal mining and processing
activities for new mining locations as required by the Mining Law. See Regulation of the Indonesian Coal
Mining IndustryMining RegulationMining Law.
Coal Hauling, Processing and Delivery
Berau Coal provides two delivery alternatives for its coal: delivery through the transshipment point at
Muara Pantai where barge unloading and vessel loading services are carried out in open water, or direct barging
to customers from its Lati, Suaran and Sambarata ports.
Coal from the Lati mine is transported by front end loaders and trucks operated by BUMA from the pits at
the mine to the Lati coal handling facilities located at the Lati port on the Berau river approximately 15
kilometers away. The Lati coal handling facilities comprise of ROM coal handling and stockpiles, crushed coal
handling and stockpiles and barge loading facilities. Coal is received into a 100-ton hopper/feeder and conveyed
to a 200,000-ton stockpile via an overhead skyline conveyor tripper system for placement on discreet stockpiles.
The coal is then reclaimed from the stockpiles via two underground feeders, conveyed overland, and transferred
to the barge loader at the Lati port. The reclaimed coal is sampled by an automatic, mechanical sampling system
installed ahead of the barge loader before being loaded onto barges to be transported down the Berau river to the
offshore transshipment point at Muara Pantai in the Sulawesi sea which is located approximately 75 kilometers
from the Lati port. The Lati coal handling facilities have a crushing and stockpiling capacity of 10.2 million tons
per annum and a barge loading capacity of 10.5 million tons per annum. The Lati port has a berthing capacity for
7,500-ton barges. Its barge loader has a loading capacity of 1,500 tons per hour. The Lati coal handling facilities
are maintained and operated by Berau Coals personnel.
Coal from the Binungan mine is also transported by front end loaders and trucks operated by BUMA and
SIS from the pits at the mine to the Binungan coal handling facilities located approximately ten kilometers away.
The Binungan coal handling facilities comprise of ROM coal handling and stockpiles, crushed coal handling and
stockpiles, and truck loading facilities and have a crushing, stockpiling and truck loading capacity of 5.25 million
tons per annum. There, it is crushed and then transported approximately 30 kilometers by trucks to the Suaran
coal handling facilities located at the Suaran port on the Berau river.
The Suaran coal handling facilities cover an area of approximately 40 hectares and comprise of processed
product coal inloading and stockpiling, stockpiled product coal reclaiming and barge loading with a coal
crushing, stockpiling and barge loading capacity of 10.5 million tons per annum. Coal at the Suaran coal
handling facilities go through a process similar to that at the Lati coal handling facilities. The offshore
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transshipment point at Muara Pantai is located approximately 50 kilometers away from the Suaran port. The
Suaran port has a berthing capacity for 10,000 ton barges with mean low tide water depth in excess of 11 meters.
Its barge loader has a loading capacity of 1,500 tons per hour. The Suaran coal handling facilities are maintained
and operated by Berau Coals personnel.
Coal from the Sambarata mine is transported by front end loaders and trucks operated by SIS from the pits
at the mine to the Sambarata coal handling facilities located at the Sambarata port on the Segah river
approximately five kilometers away. The Sambarata coal handling facilities comprise of ROM coal handling and
stockpiles, crushed coal handling and stockpiling, and barge loading facilities. The Sambarata coal handling
facilities have a coal crushing and stockpiling capacity of 3.5 million tons per annum and a barge loading
capacity of 7.0 million tons per annum. There, it is crushed and loaded onto barges to be transported down the
Segah and Berau rivers to the offshore transshipment point at Muara Pantai located approximately 100
kilometers away from the Sambarata port. The Sambarata port has a berthing capacity for smaller 5,000-ton
barges. Berau Coal is planning to increase its barge inloading, barge loading and trucking loading capacities at
the Suaran coal handling facilities by 2012 so that it will be able to receive up to 70% of the coal barged from the
Sambarata mines to the Suaran port where it will be loaded onto larger barges and barged to the transshipment
point, instead of barging the coal from the Sambarata port directly to the transshipment point, as well inload
trucked ROM coal production from the Binungan coal handling facilities and the Kelai mine. The Sambarata coal
handling facilities are maintained and operated by Berau Coals personnel.
Due to its width and depth, the Berau river provides a reliable route for the transportation of coal shipments
and the delivery of heavy equipment to Berau Coals concession area. At the Muara Pantai transshipment location,
barges are unloaded onto geared bulk carriers, floating crane loading non-geared vessels, a semi-submersible
transshipper or a floating offshore transfer platform. Coal is loaded directly from the barges onto ships using geared
bulk carriers at a loading rate of approximately 12,000 tons per day. In the case of non-geared vessels, the coal is
transferred from the barges using the semi-submersible transshipper, SST Berau, and a floating crane, the Princess
Abby. The SST Berau transfers the coal from the barge onto the ship using small dozers to push the coal onto an
elevating conveyor system whereas the floating crane does so by using cranes and grabs. The SST Beraus designed
loading rate is 20,000 tons per day and it is designed to load large ocean bulk carriers including capesize vessels
between 100,000 dwt and to 150,000 dwt. The SST Berau is owned and operated by Lati Transhippers Inc. and
leased to Berau Coal pursuant to a lease which expires in September 2015. The Princess Abby has a designed
loading rate of 18,000 tons per day and is designed to load large ocean bulk carriers up to 150,000 dwt. The Princess
Abby is operated by PT Mitra Swire CTM on behalf of Berau Coal pursuant to a lease which expires in
December 31, 2011. In addition, Berau Coal has entered into an agreement to lease a floating offshore transfer
platform, the FOTP Derawan, from FOTP Transshippers Inc., which was novated to PT Lintas Wahana Indonesia
on May 27, 2009, for a term of ten years commencing from July 30, 2009. The FOTP Derawan was delivered in
June 2009. The FOTP Derawans designed loading rate is 24,000 tons per day and it is designed to load large ocean
bulk carriers including capesize vessels between 100,000 dwt and 150,000 dwt.
At the transshipment point at Muara Pantai, the high energy coal from the Sambarata mine is used for
blending with coal from the Lati or Binungan mines, depending on the quality grade requirements of the
shipment, before delivery to Berau Coals customers.
Berau Coal contracts out some of its operations such as barging, stevedoring, coal quality analysis and
transshipping to third party contractors. PT Kartika Samudra Adijaya (KSA) and PT Trada Tug and Barge
(Trada) are its principal barging contractors under term contracts of five years. As of December 31, 2009, the
remaining terms of the barging contracts are approximately four years. KSA has a dedicated fleet of 18 barges
with capacities ranging from 5,000 tons to 8,000 tons. Trada has a dedicated fleet of ten barges, each with a
capacity of 8,000 tons. Accordingly, Berau Coal maintains a fleet of 28 sets of tug and barges with varying
horsepower. Larger barges are used at the deeper Suaran port and the Lati port while smaller barges are used to
navigate the shallower waters at the Sambarata port as barging is sometimes tidally restricted at a river bend near
Sukan and larger barges must wait for tides to create navigable depth.
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Berau Coal has also entered into contracts with PT Arpeni Pratama Ocean Line Tbk., PT Andhika Lines and
PT Jaya Samudra Karunia Shipping for the transshipment of coal from Muara Pantai to its customers nominated
port of discharge. As of December 31, 2009, these contracts have remaining terms of approximately four years.
In addition, Berau Coal currently has contracts with its contractors, PT Tirta Sarana Borneo, PT Dharma
Lautan Nusantara, PT Budi Harta Lestari and PT Aneka Cahaya Karunia for the provision of stevedoring services at
the transshipment point at Muara Pantai, which have remaining terms of approximately one year as of
December 31, 2009. Berau Coal also contracts with BUMA, PT Roda Teknik, and PT Sentra Baruna Hijau for the
rental of heavy equipment required for stockpiling and other transportation activities.
Quality Control
The quality control process occurs during all stages of Berau Coals mining and logistics operations to
ensure that the product delivered to its customers satisfies the minimum quality requirements specified in its
sales contracts. This process primarily starts with the geological modeling and the detailed scheduling included in
the various mine plans.
Quality control begins during exploration drilling where coal samples taken from the cores of boreholes are
analyzed to assess the quality of such coal. The next phase of quality control is during production coal quality
drilling. During this stage, the in situ coal quality of a particular coal block or seam is confirmed for consistency.
Coal from different blocks or seams and separate pits is then scheduled and mined in accordance with the
detailed mine plan in order to meet marketing requirements. The coal is separately stockpiled according to its
quality classification and additional testing is conducted on samples from each stockpile to ensure consistency.
During the barge loading stage, coal loaded on each barge is sampled and analyzed by an independent
laboratory, operated by either PT Geoservices or PT Sucofindo, before the barge is sent to the transshipment
point or to the customers vessels. In the process of loading coal on vessels, coal samples are again taken before
the vessels leave the port and coal quality is certified by an independent laboratory.
Since it commenced commercial operations in 1995, Berau Coal has not experienced any occasion when
coal it delivered was rejected by a customer.
Reclamation
Reclamation is part of the ongoing mining activities and Berau Coal carries out the reclamation process on
the previous digging area while mining in other areas. The revegetation is done by Berau Coal, using local
resources. Pursuant to Minister of Energy and Mineral Resources Regulation No. 18 of 2008 on Reclamation and
Closing of Mines, Berau Coal must also provide a reclamation and closing of mines guarantee. See Regulation
of the Indonesian Coal Mining IndustryEnvironmental Regulation.
Expansion Plan and Growth Strategy
Berau Coal plans to increase its annual gross coal production from 14.3 million tons in 2009 to 17.9 million
tons in 2010 by commencing operations at new areas within its existing mines, such as at Binungan Blocks 1, 2
and Parapatan, which are expected to commence operations by the end of 2010. Berau Coal also intends to
further increase its production by developing additional areas in its existing mines as well as in Gurimbang and
Kelai in 2012 and 2013, respectively so as to achieve coal production of 30.0 million tons by 2014. See Mine
Operation and LogisticsExploration.
As of December 31, 2009, Berau Coals mining infrastructure supported a production capacity of
20.0 million tons of coal per annum. It intends to upgrade and expand its coal mining infrastructure and coal
handling facilities to support its planned increase in production levels. Berau Coal has planned capital
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expenditures of approximately US$48.4 million in 2010, US$85.8 million in 2011 and US$105.8 million
between 2012 and 2014 to maintain its existing facilities and operations as well as to upgrade, construct and
acquire new infrastructure or equipment to increase its production capacity to approximately 22.0 million tons
per annum by the end of 2010, approximately 24 million tons per annum by the end of 2011 and approximately
30.0 million tons by 2014 in order to support additional coal production expected from its existing mines. These
capital expenditures include:
Lati coal handling facilitiesupgrading of existing coal handling facilities such as barge loaders and the
construction of additional infrastructure, including a new stockpile and a new crushing line which Berau
Coal expects to complete in May 2011, upgrading of the Lati coal hauling road in 2012 where
approximately 10 kilometers will be hard surfaced for all weather utilization and also dredging for along
1 kilometer of the Berau River to increase capacity of barges. With the expansions and upgrading
expected at the Lati coal handling facilities by May 2011, the coal crushing and stockpiling capacity is
expected to increase from the current 10.2 million tons per annum to approximately 13.6 million tons per
annum and the barge loading capacity is expected to increase from the current 10.5 million tons per
annum to approximately 15.3 million tons per annum;
Suaran coal handling facilitiesupgrading of existing coal handling facilities such as its barge loading
conveyor which Berau Coal expects to complete by the end of 2010 and its coal receiving and stockyard
facility, and the construction of additional infrastructure such as a new barge inloading facility and a new
coal receiving, stockyard and stacking facility from barge inloading and the construction of a new
crushing plant, stockpile, conveyor line and new hauling road of approximately 20 kilometers that
connects to the existing hauling road of Binungan to support the new pit at Kelai Block 1 which is
scheduled to open in 2013. With the expansion and upgrading expected at the Suaran coal handling
facilities by the end of 2010, the inloading capacity, the truck loading capacity and the barge loading
capacity are expected to increase from the current 4.6 million tons per annum, 6.8 million tons per annum
and 5.1 million tons per annum, respectively, to approximately 6.9 million tons per annum, 7.9 million
tons per annum and 6.8 million tons per annum, respectively; and
Sambarata coal handling facilitiesupgrading of existing crushers and barge loading conveyor which
Berau Coal expects to complete by the end of 2010, and the construction of additional infrastructure such
as a new coal receival and stockpiling facility which Berau Coal expects to complete by end of 2011.
With the expansion and upgrading expected at the Sambarata port by the end of 2010, coal crushing and
stockpiling capacity is expected to increase from the current 2.5 million tons per annum to approximately
3.7 million tons per annum and the barge loading capacity is expected to increase from the current
3.4 million tons per annum to approximately 5.1 million tons per annum. With the construction of
additional infrastructure such as a new coal receival at the Sambarata port by the end of 2011, the coal
crushing and stockpiling capacity is expected to increase from the current 3.7 million tons per annum to
approximately 6.2 million tons per annum.
Gurimbang coal handling facilitiesto support the new block in Gurimbang that is scheduled to open in
2013, construction of new infrastructure such as a coal preparation plant consisting of crusher, stockpile,
stacking facility, reclaim system, a new port and barge loading system.
Further, Berau Coal expects additional coal production from Binungan and Sambarata mines to be barged
from Suaran port directly to customers or to the transshipment area beginning in 2011, particularly with the
commencement of mining at Binungan Blocks 1, 2 and Parapatan expected by the end of 2010. Currently, as the
Sambarata port has berthing capacity only for smaller 5,000-ton barges, coal from the Sambarata mine is barged
onto these smaller barges and transported approximately 100 kilometers to the transshipment point at Muara
Pantai. As production is expected to increase at Sambarata, Berau Coal intends to barge up to 70% of the coal
from Sambarata to Suaran port where it can be loaded onto larger barges and transported to the transshipment
point, thereby shortening delivery time and lowering transportation costs. In order to support this plan, Berau
Coal intends to build new stockpiles and a new unloading facility at the Suaran coal handling facilities.
123
In order to accommodate the additional coal production expected from its Binungan and Sambarata mines,
Berau Coal plans to upgrade its existing coal handling facilities at the Suaran port in 2011 and to construct a new
loading facility and increase its stockpile capacity to 400,000 tons to further increase its coal handling capacity at
the Suaran port to approximately 17.0 million tons per annum by the end of 2012. Among its plans for expansion
is also the construction of an additional haul road and bridge in 2011 to transport coal from the new pit at Block
Parapatan to the Binungan coal handling facilities for processing. Prior to the completion of such construction,
barges will be used to transport coal from the pit at Block Parapatan to Binungan mine. Berau Coal expects to
work closely with its mining contractors to ensure that its production capacity will be increased in line with its
targeted increased production levels.
See also Mine Operation and LogisticsCoal Hauling, Processing and Delivery.
Sales and Marketing
Berau Coal handles its sales and marketing in-house with assistance from marketing agents in select overseas
markets, namely, China, Hong Kong, India, Japan, South Korea, Taiwan and Thailand. Berau Coals strategy for
sales and marketing is diversification with a focus on selling different grades of coal to specific markets.
Prior to commencing a business relationship with a potential customer, Berau Coal examines the potential
customer and assesses its creditworthiness. If the potential customer satisfactorily meets Berau Coals credit
criteria, a trial shipment is sent to such potential customer to ensure that its coal products comply with the
customers product specifications. Since the implementation of a new regulation in Indonesia which requires all
sales to export markets to be on letter of credit terms, from April 1, 2009, all of Berau Coals sales contracts with
its international customers have been on letter of credit terms. In addition, other than PT PLN and its affiliates,
from 2009, most of Berau Coals sales contracts with its domestic customers have also been on letter of credit
terms. This reduces Berau Coals exposure to credit risk. As of March 31, 2010, Berau Coal had outstanding
accounts receivable of US$81.2 million. Berau Coal has not experienced a payment default by any of its
customers to date.
In 2009, Berau Coal sold 39.0% of its coal products by revenue domestically and exported the remaining
61.0% of its coal products to customers elsewhere in Asia. Berau Coal uses two methods to sell its coal:
direct sales to customers, including coal trading companies which buy coal products from Berau Coal for
resale to their own customers; and
sales to customers through marketing agents who receive commissions based on the tonnage of coal sold
by Berau Coal to the customer.
A portion of Berau Coals coal product sales are sold through marketing agents based in the country where
the customer is located. Appointing a marketing agent who is located near to Berau Coals customers allows for
better service and access and the marketing agent will be able to facilitate communications to build better
relationships with its customers. Berau Coal has entered into five marketing agency agreements, namely with Kin
Rich International Enterprises, Ltd., Sojitz, NC Korea Co., Honson International Corporation and Maple, an
affiliate of ours. Sojitz, through which 2.5%, 7.1%, 4.8% and 6.5% of Berau Coals total coal sales were sold in
2007, 2008, 2009 and the three months ended March 31, 2010, respectively, owns a 10% direct equity interest in
Berau Coal. See Related Party Transactions. The marketing agency agreements are for terms ranging between
one to four years with automatic renewal clauses to extend the term of the agreements unless either party
provides prior notice of termination. On December 30, 2009 Berau Coal also entered into a 10-year marketing
service agreement with our affiliate Maple, which is 99% indirectly owned by Recapital, for the exclusive
marketing of coal outside Japan, subject to the existing marketing agreements (which will continue until their
expiry dates).
124
Except for its agreement with Sojitz, which is on an exclusive basis for Japan, and its agreement with
Maple, all of Berau Coals marketing agency agreements are on an exclusive basis with respect to a particular
customer or group of customers. Berau Coal relies on these agents for all its export coal sales to single customers
in China, Hong Kong, India, Taiwan and Thailand, various customers in South Korea, and to Japan. Pursuant to
the standard terms of these agreements, the marketing agents are required to use their best efforts to promote,
market and seek orders for Berau Coals coal, maintain good relations with customers, and keep Berau Coal
informed of any developments in marketing. The marketing agency agreements have similar fee structures and
the marketing agents receive commissions of between 1.0% to 4.0% of the FOB price based on the tonnage of
coal that is actually delivered to and accepted by the customers and fully paid for at Berau Coals invoice price.
To maximize its resources and provide a consistently broad range of products, Berau Coal has adopted a
single mine marketing concept. This concept allows Berau Coal to be recognized in the market under the
different brand names of its coal, which indicate quality grade rather than source mines. Accordingly, Berau Coal
has introduced its unique brand namesMahoni, Mahoni-B, Agathis and Sungkai. Each brand of coal
has distinctive features that differentiate itself by inherent moisture, ash content, volatile matter, fixed carbon,
total moisture, total sulfur and gross calorific value. The Mahoni brand is considered a premium brand
compared to Agathis and Sungkai because it has a higher calorific value and a slightly higher price.
Coal Supply Agreements; Pricing and Payment Terms
The majority of Berau Coals coal supply agreements, as measured by volume of coal supplied, are for one
year or longer. As of December 31, 2009, Berau Coals coal supply agreements had remaining terms ranging
from approximately one month to ten years.
Many of Berau Coals coal supply agreements specify a quantity of coal that must be delivered each year
and include an option for the customer to request for a 10% to 20% increase or decrease in the agreed contractual
quantities or additional shipments of coal. Most of Berau Coals coal supply agreements allow an independent
inspection agency to inspect, sample and test coal prior to delivery to Berau Coals customers to ensure that the
coal complies with contract specifications. Most agreements also provide for price adjustments where the coal
supplied does not comply with contract specifications.
Prices are generally negotiated at the time the agreement is entered into, with reference to certain
international indices, such as Newcastle Index, the ACR Asian Index and the Barlow Jonker Index, and adjusted
taking into account various other factors, such as the heat and energy value of the coal sold, potential boiler
efficiency, ash, sulfur and nitrogen levels, handling costs, freight differentials and payment terms. The prices are
further negotiated or adjusted annually or after shorter periods. All of Berau Coals export sales are invoiced and
paid in U.S. dollars, and Berau Coals domestic sales are invoiced and paid in Rupiah based on U.S. dollardenominated prices. Payments are made by wire transfers or letters of credit from reputable financial institutions.
PT PLN-related domestic customers have terms requiring payment within 15 to 60 days. A number of Berau
Coals coal supply agreements also require Berau Coal to provide a performance bond.
Almost all of Berau Coals export sales and the majority of its domestic sales are made on FOB terms,
meaning that insurance and freight are arranged by the customer, while the balance of Berau Coals sales are
made on CIF terms, meaning that insurance and freight are arranged by Berau Coal on behalf of the customer.
Berau Coal seeks to maximize its FOB sales and minimize CIF sales as it is of the view that its customers are
better able to manage their own insurance and freight costs. For its CIF term sales, the price of insurance and
freight in CIF term sales are built into Berau Coals selling price to its customers.
Berau Coals coal supply agreements generally permit early termination based on force majeure, which
includes events such as natural disasters, war, acts of government, riots and accidents of navigation. A number of
Berau Coals coal supply agreements also contain liquidated damages provisions for delays and quality
shortages, and the agreements typically contain demurrage provisions requiring Berau Coal to pay certain
penalties in the event of any delay in loading vessels with coal.
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Customer Base
As of December 31, 2009, Berau Coal had 22 customers, all of whom were located in China, Hong Kong,
India, Indonesia, Japan, South Korea, Taiwan and Thailand. Berau Coals ten largest customers represented
approximately 86.1%, 87.9%, 82.5% and 75.2% of its total revenues in 2007, 2008, 2009 and the three months
ended March 31, 2010, respectively.
The following tables sets forth Berau Coals ten largest customers in terms of revenues for the periods
indicated and the three months ended March 31, 2010:
Customer
Country
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Indonesia
Indonesia
Taiwan
Hong Kong
Indonesia
China
India
South Korea
South Korea
Thailand
Customer 1
Customer 2
Customer 3
Customer 4
Customer 5
Customer 6(1)
Customer 7(1)
Customer 8
Customer 9
Customer 10(1)
Year Ended December 31, 2007

Revenues
Percentage of Total Revenues
(US$ in millions)
%
59.8
49.8
44.8
37.2
31.6
30.7
21.9
20.4
17.4
17.1
Total
330.7
Customer
Country
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Indonesia
Indonesia
Taiwan
India
China
South Korea
South Korea
Indonesia
Thailand
Japan
Customer 1
Customer 2
Customer 3
Customer 4(1)
Customer 5(1)
Customer 6
Customer 7
Customer 8
Customer 9(1)
Customer 10
15.6
13.0
11.7
9.7
8.2
8.0
5.7
5.3
4.5
4.4
86.1%

Revenues
(US$ in millions)
%
Total
126
128.1
89.5
82.9
53.3
44.6
36.9
35.5
29.5
29.3
25.4
20.3
14.2
13.1
8.5
7.1
5.8
5.6
4.7
4.6
4.0
555.0
87.9%

Revenues
(US$ in millions)
%
Customer
Country
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Indonesia
Indonesia
Taiwan
India
Korea
Indonesia
Korea
Korea
China
China
Customer 1
Customer 2
Customer 3
Customer 4(1)
Customer 5
Customer 6
Customer 7
Customer 8
Customer 9
Customer 10
Total
18.2
12.0
10.7
9.8
8.2
6.4
5.9
4.9
3.4
3.0
659.9
82.5%
Three Months Ended March 31, 2010

Revenues
(US$ in millions)
%
Customer
Country
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Taiwan
Indonesia
Indonesia
India
China
Korea
Indonesia
Korea
China
China
Customer 1
Customer 2
Customer 3
Customer 4(1)
Customer 5(1)
Customer 6
Customer 7
Customer 8
Customer 9
Customer 10(1)
145.8
95.7
85.8
78.3
65.5
51.7
47.1
38.9
27.4
23.7
Total
25.6
23.7
22.0
19.5
17.5
13.2
11.3
11.3
11.1
10.5
11.6
10.8
10.0
8.8
7.9
6.0
5.1
5.1
5.1
4.8
165.7
75.2
Note:
(1) Coal trading companies.
The following table sets forth Berau Coals total revenues by country for the periods indicated:
%
Total Revenues
%
Total Revenues
(US$ in millions except percentages)
Three Months Ended

March 31,
2010
Total
Revenues
%
8.0
9.7
11.2
36.7
2.4
12.9
13.7
5.3
11.8
2.2
10.1
39.0
3.5
18.9
10.7
3.7
US$ 63.5
0
21.8
60.3
7.5
39.0
25.6
2.7

2008
2007
Country
Total Revenues
China. . . . . . . . . . . . . .
Hong Kong. . . . . . . . .
India . . . . . . . . . . . . . .
Indonesia . . . . . . . . . .
Japan . . . . . . . . . . . . . .
South Korea . . . . . . . .
Taiwan . . . . . . . . . . . .
Thailand . . . . . . . . . . .
US$ 30.7
37.2
43.2
141.1
9.4
49.7
52.6
20.3
Total. . . . . . . . . .
US$384.2
US$ 44.6
15.4
53.3
257.8
44.9
90.0
82.9
42.3
100.0% US$631.2
127
7.1
2.4
8.4
40.8
7.1
14.2
13.1
6.7
2009
US$ 94.1
18.0
80.5
312.0
28.3
151.5
85.8
29.8
100.0% US$800.0
28.8
0
9.9
27.3
3.4
17.7
11.6
1.2
100.0%US$220.5 100.0%
Competition
Berau Coal competes in the domestic and international coal markets with other coal producers. Competition
is primarily based on coal quality, price, reliability of delivery and the ability to supply coal as and when required
by customers. Berau Coal believes that it has strong competitive advantages over its competitors derived from its
product portfolio, consistent product quality, reliable delivery, cost efficient coal transportation and shipping
from its three mines to its customers, strong relationships with its mining contractors and a proven track record of
supplying quality coal to its customers. Berau Coal believes that it holds a competitive advantage over its
Australian and South African competitors when selling coal to customers in Asia given its relative geographic
proximity to such customers and relatively low cost of production. Berau Coal competes with a significant
number of large Indonesian coal producers, including PT Kaltim Prima Coal, PT Adaro Indonesia, PT Kideco
Jaya Agung, PT Arutmin Indonesia and PT Indominco Mandiri and other large coal producers from Australia,
South Africa and China, such as Rio Tinto Ltd, BHP Billiton Limited, Anglo American plc, Xstrata plc, Shenhua
Coal Trading Co. and China National Coal Industry Import and Export (Group) Corporation. Berau Coal also
faces competition in all markets in which it operates from providers of alternative sources of energy to coal, most
significantly natural gas.
Property, Plant and Equipment
Pursuant to its coal contract of work, all property, plant and equipment Berau Coal purchases becomes the
property of the Government of Indonesia at the time the asset is imported or when purchased domestically. Berau
Coal does, however, retain exclusive rights to use any such assets in its mining operations for the shorter of their
useful lives or for the remaining term of the coal contract of work. Berau Coals contractors retain title to all
property, machinery and equipment that they purchase and use in the process of providing services to Berau
Coal. The contractors are also responsible for the maintenance and replacement of any such assets.
Berau Coals mining, transportation and barging contractors provide all necessary equipment to undertake
mining operations. Such equipment is not affected by the provision of the coal contract of work that transfers
ownership of assets to the Government of Indonesia; assets Berau Coals contractors purchase remain their
property. Notwithstanding the effect of the coal contract of work, Berau Coal has developed significant
infrastructure within its concession area and the Suaran coal handling facilities. As of March 31, 2010, the book
value of Berau Coals total net fixed assets was US$40.1 million.
Berau Coal also remains responsible, under the terms of the coal contract of work, for the maintenance of all
property, plant and equipment used in its operations. Berau Coals two mining contractors are contractually
responsible for maintenance of the hauling road, with each contractor allocated a portion and barge loading of the
road that is used for the coal from the mine it is operating. Berau Coals personnel maintain and operate the
Suaran coal handling facilities.
Safety and Environmental Matters
Berau Coal applies international standards of industrial health and safety. Berau Coals mining contractors
are required to comply with such safety standards. Berau Coal has not experienced any serious accidents or
fatalities in its mining operations since 2003 except for one fatality resulting from an accident between two
trucks along the haul road leading to the Lati mine in 2008. In 2008, Berau Coal was awarded both the
International Standards Organization (ISO) 14001 and Occupational Health and Safety Assessment Series
(OHSAS) 18001 certifications, which are internationally recognized environmental and occupational health and
safety management systems certifications.
Berau Coal complies with Indonesian environmental standards. Berau Coal engages service companies from
local cooperatives to reclaim mined land. As part of community programs, Berau Coal hands back reclaimed land
to the local communities for ongoing development. Post-reclamation uses for land include planting of
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commercial crops, creating fish farms and developing recreational areas. Berau Coal closely monitors and treats
water run-off from disturbed areas in settlement ponds before it is used to develop irrigated areas for more
intensive farming. In addition, Berau Coal attempts to keep disturbed areas to a minimum. Berau Coal plans
out-of-pit waste dumps, with the waste being deposited in mounds up to six meters high. The final dump forms
are contoured, covered with topsoil and planted with various fast-growing local grasses and trees. Berau Coal
implements rehabilitation of the land in consultation with the Department of Energy and Mineral Resources of
Indonesia which, in turn, consults with the local government.
Waste management principally involves the disposal of used oils, grease and other hydrocarbon products
from equipment maintenance and overhaul workshops. Each of Berau Coals workshops contains drainage
systems for holding waste oils before disposal. Waste oils are disposed of through government-licensed disposal
companies.
Berau Coal monitors air quality by undertaking continuous air monitoring in its concession area and at
intervals along the haul roads to the Lati, Suaran and Sambarata ports to ensure that dust levels comply with
international standards and to minimize impact on local communities. In addition, Berau Coal has engaged a
contractor to surface the haul roads from Binungan mine to the Suaran port with chip seal to reduce the amount
of dust produced.
Coal dust is controlled by fixed water sprays placed at intervals around the coal stockpiles. Water run-off
from stock piles is channeled through a drainage system to settling ponds for settlement of all solids, including
coal dust. Berau Coal closely monitors water released from these settling ponds.
Berau Coal must prepare and submit a quarterly report on environmental performance to the Government of
Indonesia. The Ministry of Energy and Mineral Resources, in conjunction with the Environmental Ministry,
oversees Berau Coals compliance with environmental laws and regulations in Indonesia. Berau Coal has, in
general, complied with relevant environmental laws and regulations and no significant environmental incident
has been noted.
The Government of Indonesia introduced an environmental evaluation program of selected companies in
2002, referred to as PROPER. The Government of Indonesia selects some, but not all, sites for annual evaluation
for the PROPER Report. Our mines at Lati, Binungan and Sambarata received a Green Rating (indicating
satisfactory environmental controls and standards) in the 2008 PROPER Report.
Employees
As a holding company, substantially all of Berau Coal Energys employees work at Berau Coal.
The following table sets forth the number of employees of Berau Coal as of March 31, 2010:
As of March 31, 2010
Board of directors and assistants to board of directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance and administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transportation and sales administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Human resources and general administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
279
59
181
8
42
83
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
660
129
The employees are located in East Kalimantan and Jakarta. Berau Coals employees regularly attend various
in-house training programs. Berau Coals commitment to training helps better position employees for promotions
and helps to maintain high employee retention rates. Berau Coals employee compensation packages include
sponsored health coverage, accident insurance and enrollment in the government-sponsored pension scheme.
There are no pending labor disputes.
Berau Coals employees have established the Labor Union of Chemistry Energy and Mining of Berau Coal,
which has entered into a collective labor agreement with Berau Coal. We believe that Berau Coals relations with
its employees and union are good.
The total workforce of the mining contractors that Berau Coal used as of March 31, 2010 was 5,909
personnel.
Insurance
Berau Coal maintains insurance coverage for its employees and board of directors, gensets, crushing plant
and truck crane at the Lati site, a forklift, vehicles and coal delivery through marine cargo insurance through
policies issued by Indonesian insurers which include PT Asuransi Jiwa Recapital, PT Asuransi Astra Buana and
PT Kurnia Insurance Indonesia.
The insurance coverage for Berau Coal includes the following insurance policies:
comprehensive heavy equipment insurance for third party liability as well as for loss, damage, destruction
or breakage caused by, among other things, labor dispute and earthquake;
property all risks and earthquake insurance for Berau Coals coal crushing plants and gensets;
marine cargo insurance for its coal delivery;
vehicle insurance for vehicles owned by Berau Coal; and
life and group personal accidents insurance for all of Berau Coals employees and directors.
The insurance policies arranged by Berau Coal do not cover liability or damage arising from acts of war and
terrorism, and other customary exclusions from coverage.
Under Berau Coals operating agreements with its mining contractors, the contractors are responsible for
their own employees and they and their employees must also be covered by appropriate insurance including
insurance for property and vehicles, loss and damage and third party claims. Neither Berau Coal nor its
contractors carry any business interruption coverage.
Community Development Programs
Berau Coal operates in an area that covers 118,400 hectares with villages located near the mines and haul
roads leading to the ports. Berau Coal is sensitive to the needs of these local communities and it aims to
minimize the adverse impact such activities may have on them. For the sustainability and long-term success of its
operations, Berau Coal believes that it is important to maintain strong relationships with and benefit local
communities.
Berau Coal actively supports programs to enhance the health, education, social and economic well-being of
these communities. A proactive community development program is in place providing schooling, employment,
health services, produce farming, electricity and water supplies, religious institutions and other needs. In 2000,
Berau Coal established a trust called the Yayasan Dharma Bhakti Berau Coal to help develop local
communities more effectively with local governments. The main goal of the trust is to implement community
130
rehabilitation programs in cooperation with local communities and work together with the local governments to
formulate and implement plans to conserve the environment while helping the local communities in their
development projects and business initiatives. For example, the trust works with local non-governmental
organizations to develop farming and fishing industries, which provide economic independence to the local
communities. The trust also supports infrastructure programs, including building roads, bridges, schools, health
clinics, water and electricity facilities and mosques and churches near its mines and supports a number of
medical programs for the eradication of tropical diseases, such as malaria and dengue fever. Through its
education programs, the trust also provides scholarships to deserving students and teachers from the local
communities and schools.
Berau Coal intends to continue fostering community ties through development programs focusing on health,
education and technical assistance as well as job creation for these communities as it believes that these efforts
are integral to the stability and development of its business.
Litigation
Except as disclosed below, we are not involved, and have not recently been involved, in any material legal
dispute.
In 2008 and 2009, Berau Coal and BUMA had a difference in calculation of the fuel price adjustment in
their mining contracts. As of December 31, 2009, we had US$68.8 million in payables to BUMA, a portion of
which represented the difference in calculation. Berau Coal and BUMA are currently in discussion to finalize the
reconciliation of such portion.
From time to time, Berau Coal may be involved in legal proceedings concerning matters that arise in its
day-to-day operations. Berau Coal is in an arbitration proceeding against Lati Transhipper Inc., one of its
contractors for coal transshipment, at the Singapore International Arbitration Center. Lati Transhipper Inc. claims
that Berau Coal should pay the amount of US$1.2 million (Rp. 14.2 billion) relating to the payment of valueadded tax under the coal transshipment agreement.
Berau Coal is also involved in a legal dispute with the Commission on State Claims on whether the
Government of Indonesia may recover the royalties payable by Berau Coal which have been set off against Berau
Coals VAT payments. The Supreme Courts online case tracking system shows that the Supreme Court has
denied our cassation petition in a decision dated March 22, 2010, although its orders are not specified and we
have not received any formal document evidencing such decision and its detailed orders. See Risk Factors
Risks Relating to Berau Coals BusinessBerau Coal could incur costs or be subject to penalties in connection
with a dispute with the Ministry of Energy and Mineral Resources over value-added taxes.
On May 18, 2010, a writ of summons issued out of the High Court of Singapore by Montelena Capital
Limited (Montelena) named Armadian, an intermediate holding company in our Group that directly owns 51%
of Berau Coal, as a defendant in connection with an option agreement that Armadian entered into in June
2004. Armadian and Montelena entered into a settlement agreement with respect to this matter on June 30,
2010. In accordance with the settlement agreement, on July 23, 2010 Armadian paid US$20 million to Montelena
as full and final settlement of Montelenas claims against Armadian in connection with the option agreement.
131
DESCRIPTION OF MATERIAL AGREEMENTS

Coal Contract of Work
In 1983, Berau Coal entered into a coal contract of work with PUTB, a state-owned company that had the
authority to grant coal mining concessions. PUTBs rights and obligations were subsequently transferred to PT
Perusahaan Negara Tambang Batubara. In 1997, the coal contract of work was further amended to transfer PT
Perusahaan Negara Tambang Batubaras rights and obligations to the Government of Indonesia.
Concession Area
Pursuant to the coal contract of work, Berau Coal obtained a permit to conduct coal mining operations in a
concession area covering 487,217 hectares in East Kalimantan, Indonesia. After conducting mining feasibility
studies, Berau Coal voluntary relinquished parts of the concession area, leaving it with a 118,400 hectare
concession area for coal mining. Under the coal contract of work, Berau Coal is obligated to explore and exploit
coal resources in its concession area. Berau Coal was granted an exclusive right to mine in six exploration areas:
Lati, Binungan, Sambarata, Kelai, Gurimbang and Punan.
Term and Operating Period
Berau Coals coal contract of work is effective for a 30-year period after the commencement of the last
commercial operation of a mining area unless extended pursuant to a request made to the Ministry of Energy and
Mineral Resources. The expiry date of the coal contract of work is April 26, 2025 pursuant to Decree No. 858
K/20.01/DJP/2000 dated December 29, 2000. The decree suggests that the permit for the commencement of
mining operations and the concession of the mining area consisting of Lati, Binungan, Sambarata, Teluk Bayur,
Kelai, Punan and Gurimbang with total covering area of 121,589.1 hectares is retroactively valid for 30 years
from April 27, 1995. The coal contract of work provides that the ownership of the coal deposits remains with the
Government of Indonesia until the coal is mined and delivered to customers. Berau Coal may request an
extension of the operating period of a particular mine site if it is considered necessary; however the discretion to
approve such request lies solely with the Minister of Energy and Mineral Resources.
Production
The coal contract of work also provides that the Ministry of Energy and Mineral Resources is entitled to
receive 13.5% of the total coal produced and available for sale each year. In September 1996, the Government of
Indonesia issued Decree 75 which provides that royalties totaling 13.5% of the proceeds of sale derived from the
final processed coal production in each year, net of certain costs and an administration fee of 2.5%, may be paid
to the Ministry of Energy and Mineral Resources instead of the physical delivery of coal produced. Accordingly,
Berau Coal markets and sells all of the coal it produces, and pays to the Ministry of Energy and Mineral
Resources the cash proceeds resulting from the sale of 13.5% of its final processed coal production in each year,
after deducting certain costs and the abovementioned administrative fee. The Ministry of Energy and Mineral
Resources may also require Berau Coal to sell all or part of its coal domestically to meet local demands. Such
mandatory domestic sales must be on mutually agreed terms and must not result in Berau Coal defaulting on any
existing coal supply agreements with third parties. Berau Coal is entitled to the proceeds of 86.5% of its final
processed coal, free of royalty payment to the Government of Indonesia. For information regarding Berau Coals
request for reimbursement of VAT paid and the offsetting of such VAT amounts against its coal entitlement
payments to the Government of Indonesia, see Risk FactorsRisks Relating to Berau Coals BusinessBerau
Coal could incur costs or be subject to penalties in connection with a dispute with the Ministry of Energy and
Mineral Resources over value-added taxes.
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Payment of Taxes
Berau Coals coal contract of work requires payment of the following taxes:
corporation taxes of 35.0% of the taxable income of Berau Coal during the first full 10 years after the
commencement of the operating period (which ended as of 2004), and 45.0% of the taxable income of
Berau Coal thereafter;
withholding taxes on:
dividends, interest and royalties on patents at a rate of 10.0%;
remuneration of Berau Coals employees, which is based on the applicable personal income tax rates in
Indonesia for expatriate individuals who are engaged by Berau Coal or its contractors or affiliates and
who remain in Indonesia for more than 90 days during any calendar year;
other payments made by Berau Coal (including fees for technical services based on prevailing laws and
regulations in Indonesia at a rate of 10.0%);
a regional development tax of US$100,000 per annum;
sales tax on services rendered to Berau Coal in Indonesia at a rate not exceeding 5.0% of the assessable
basis of the services which is the percentage approved by the Indonesian Minister of Finance of the total
contract sum;
stamp duty on loan agreements between Berau Coal and financial institutions, for use in Indonesia, up to
a maximum rate of 0.1% of the total amount of the loan referred to in the loan agreement; and
sales tax on goods purchased by Berau Coal in Indonesia.
In addition, Berau Coal has a right to an investment allowance of 20.0% of its total investment (at a rate of
5.0% per year) from taxable income.
With the exception of the taxes specified above, the Government of Indonesia has agreed to hold Berau Coal
harmless from all present and future Indonesian taxes, duties, rentals and royalties levied by the Government of
Indonesia (including provincial and regency governments), including transfer taxes, import and/or export duties
on materials, equipment and supplies brought into or taken out of Indonesia, exactions on property, capital, net
worth, operations, remittances or transactions (including any tax or levy on or in connection with coal operations
performed by Berau Coal or its contractors).
In the event that Berau Coal (or another person on its behalf) pays any taxes from which Berau Coal is
exempt under its coal contract of work, the Government of Indonesia is obligated to reimburse Berau Coal (or
another person on its behalf) within 60 days after receipt of the invoice. In a practice that we believe to be
consistent with this indemnification provision, Berau Coal has been setting off its entitlement payments to the
Government of Indonesia by certain VAT payments that Berau Coal has been required to make since 2001. See
Risk FactorsRisks Relating to Berau Coals BusinessBerau Coal could incur costs or be subject to penalties
in connection with a dispute with the Ministry of Energy and Mineral Resources over value-added taxes.
Default, Settlement of Disputes and Termination
Under the coal contract of work, if Berau Coal is in default or in breach of any material terms, the Ministry
of Energy and Mineral Resources may deliver a notice to Berau Coal requiring Berau Coal to correct the default
within a period of not less than 60 days. However, if Berau Coal defaults on any of its payment obligations, it
only has a 30-day cure period after it receives a default notice from Ministry of Energy and Mineral Resources.
Both parties are entitled to terminate the coal contract of work by giving 90 days written notice if the other party
fails to correct a major breach or default within the cure period. The coal contract of work is governed by the
laws of Indonesia and any disputes except for tax disputes shall be resolved by arbitration at the International
Centre for Settlement of Investment Disputes.
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Sale of Government of Indonesias Coal Portion

On November 23, 2001, Berau Coal entered into the Coal Sale Agreement with the Government of
Indonesia, effective for five years as of the signing date, pursuant to which the Government of Indonesia has
appointed Berau Coal to sell the Government of Indonesias allocation of 13.5% of coal under Article 12.1 the
coal contract of work. The Government of Indonesia will pay 13.5% of all shipping and land transportation costs
and 2.5% for administration cost of every ton of the Government of Indonesias coal portion from each shipping
in FOB price at Jetty Lati and/or Jetty Suaran. Discussion between Berau Coal and the Government of Indonesia
for the extension of the Coal Sale Agreement is still on-going, particularly in relation to the cost payable by the
Government of Indonesia. In the absence of an effective agreement, both parties continue to perform their
obligations under the Coal Sale Agreement.
Cash and Accounts Management Agreement
Under the cash and accounts management agreement, we have established a series of domestic and offshore
bank accounts with designated account banks. With certain limited exceptions, all of the cash receipts of Berau
Coal Energy and the Subsidiary Guarantors, including all the coal sales revenues of Berau Coal, will be deposited
into designated accounts and applied to fund payment of operating expenses, taxes and capital expenditures of
Berau Coal Energy and the Subsidiary Guarantors, to fund amounts payable to Sojitz as the 10% shareholder of
Berau Coal, and to debt service and required debt service reserves under the notes and the Senior Secured Credit
Facility. After required amounts for debt service and debt service reserves for the notes and the loans under the
Senior Secured Credit Facility are funded, 50% of the remaining funds will be deposited in a lender reserve
account from which funds may only be applied to payment, redemption or repurchase of Secured Obligations (as
defined below), and the other 50% of such remaining funds will be deposited in a reserve account from which we
will be required first to fund certain expenses in excess of our budgets, administration expenses of Group
companies and shortfalls in other accounts, and will be free to apply remaining funds at our discretion, subject to
applicable covenants in our indebtedness.
The accounts under the cash and accounts management agreement, including the holding accounts and the
collection accounts, will be subject to charges in favor of the Common Security Agent under the intercreditor
agreement. These accounts will form part of the Common Security (as defined in Description of the Notes) for
the notes and the loans under our Senior Secured Credit Facility, except that the sub-accounts for payment of
debt service and debt service reserves for the notes and the loans under the Senior Secured Credit Facility will be
pledged as security solely for the notes and such loans, respectively.
Under the cash and accounts management agreement, Berau Coals annual budgets for operating expenses
and capital expenditures will be submitted to the Common Security Agent before the beginning of each year.
Until the Senior Secured Credit Facility is fully repaid, the Majority Lenders (as defined in the Senior Secured
Credit Facility) with have the right to approve these budgets.
134
The following chart summarizes the series of accounts under the cash and accounts management agreement
and the order of priority in which cash receipts deposited into those accounts will be allocated and applied to
designated costs and expenses of the group.
Revenues and other cash of
Berau Coal excluding certain cash
Revenues and other cash of the Group

(other than Berau Coal) excluding certain cash
Holding accounts
Within two business
days of receipt
Collection accounts
Bi-weekly
Tax reserve account
Collection accounts
Bi-weekly
Payment of administrative costs
Bi-weekly
Payment of annual
corporate income tax if necessary
Bi-weekly
Payment of operating expenses
and capital expenditures(1)
Monthly(2)
Berau Coal asset sale proceeds account(3)
Operating expenses reserve account

Bi-weekly
Replacement of disposed assets

90%
Prepayment, early redemption or
repurchase of Secured Obligations
Distribution account
Bi-weekly
10%
10%
Sojitz reserve account
90%
Berau Coal Energy debt service account
Quarterly payment of fees, costs and expenses
Quarterly interest payments(4)
Quaterly amortization
Quaterly deposit of shortfall in debt

reserve accounts for Secured Obligations(5)
50%(6)
Berau Coal Energy lender reserve account
Prepayment, early redemption or

repurchase of Secured Obligations
50%(6)
Berau Coal Energy reserve account
To fund 90% of amount in excess of budgeted

capital expenditure and operating costs
To fund shortfalls in the collection accounts, the
debt service accounts and the debt reserve accounts
To fund administrative costs of any Group company
to the extent not funded by the collection accounts
Any other purpose determined by Berau Coal Energy
Notes:
(1) Subject to exercise by Berau Coal of flex for additional operating expenses up to 10% of the then-current annual operating expense budget, additional
expenses due to increases in production and increases in capital expenditures up to 15% of the then-current annual capital expense budget.
(2) Only at Berau Coals request. Amount of aggregate monthly top-ups not to exceed US$15 million per financial year.
(3) A relevant sale of assets by Berau Coal Energy or a Subsidiary Guarantor other than Berau Coal will be subject to similar provisions.
(4) In the case of the notes, 50% of the next interest payment on the then-outstanding principal amount of the notes.
(5) In the case of the notes, the reserve will be one full semi-annual interest payment on the then-outstanding principal amount of the notes.
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(6) After the Senior Secured Credit Facility is fully repaid, 100% of cash remaining after funding debt service and debt service reserve accounts for the Secured
Obligations will be deposited in the Berau Coal Energy reserve account.
Berau Coals Collection Accounts

Berau Coal will be obligated to send irrevocable notices of assignment to its customers instructing them to
continue to deposit all payments on their purchases of Berau Coals coal products into holding accounts with PT
ANZ Panin Bank. Berau Coal will also be obligated to use reasonable efforts to procure acknowledgements of
these notices from its customers. In addition, all other cash with certain exceptions will also be deposited into the
holding accounts with PT ANZ Panin Bank. PT ANZ Bank will be required to ensure that all amounts deposited
into the holding accounts, within two business days of receipt, are deposited into collection accounts under the
cash and accounts management agreement.
On bi-weekly distribution dates, funds will be transferred from the collection accounts of Berau Coal:
First, to the tax reserve account to fund corporate taxes, based on a bi-weekly allocation of Berau Coals
anticipated annual corporate income tax liability.
Second, if additional funds are required for an imminent annual corporate income tax payment, such
amounts as are necessary to provide for payment of such tax.
Third, to certain operating accounts for payment of budgeted operating costs and capital expenditures,
based on a bi-weekly allocation of Berau Coals budgeted operating expenses and capital expenditures for
the calendar year, plus certain additional amounts that Berau Coal may designate due to differences in
timing of incurrence of such expenses during the course of a year and increased expenses that were not
included in Berau Coals operating expense and capital expenditure budgets.
Fourth, on alternate bi-weekly distribution dates at Berau Coals written request, to the operating reserve
accounts up to an aggregate amount not exceeding US$15 million per year.
Fifth, to Berau Coals distribution account.
Berau Coal Distribution Account
On a bi-weekly basis, funds will be transferred from Berau Coals distribution account as follows:
10% of the funds to the Sojitz reserve account; and
90% of the funds to the Berau Coal Energy debt service account.
Collection Accounts of Berau Coal Energy and the Subsidiary Guarantors
Berau Coal Energy and its subsidiaries (other than Berau Coal) that are party to the cash and accounts
management agreement (initially, the initial Subsidiary Guarantors other than Berau Coal) will deposit all
revenues and any other cash they receive from time to time (subject to certain exceptions) into collection
accounts. Notices will be sent out to the principal debtors of each Group company (other than Berau Coal)
requiring them to deposit all payments into the collection accounts.
On bi-weekly distribution dates, funds will be transferred from these collection accounts:
First, to pay any administrative costs of the relevant Group company (if any); and
Second, the remainder to the Berau Coal Energy debt service account.
Berau Coal Energy Operating Reserve Accounts
Berau Coal Energy will deposit cash proceeds from additional debt it receives into operating reserve
accounts.
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Berau Coal Energy Debt Service Account

On a quarterly basis, funds in the amounts as set out below will be transferred from the Berau Coal Energy
debt service account into the corresponding debt service account and debt service reserve account:
in respect of the Senior Secured Credit Facility, the aggregate of fees, costs and expenses, interest,
amount of principal and reserve payments due and payable on a quarterly basis;
in respect of the notes, guarantees and the security documents, the aggregate of fees, costs and expenses
and interest on the notes accrued on a quarterly basis (such that by each semi-annual interest payment
date on the notes the required fees, costs and expenses under the indenture and the amount of semi-annual
interest payable on the notes has been deposited into this account) and amounts required to maintain a
debt service reserve of one full semi-annual interest payment on the then outstanding principal amount of
the notes;
in respect of the hedging agreements, the aggregate of all scheduled amounts and any amount due and
payable under the hedging agreements as a result of the termination; and
in the case of any additional debt, the aggregate of fees, costs and expenses, interest, amount of principal
and reserve payments due and payable on a quarterly basis.
If the aggregate amount in the Berau Coal Energy debt service account on any transfer date is less than the
aggregate of the amounts required to be transferred to all the debt service accounts and debt reserve accounts
respectively on that date, the amounts in the Berau Coal Energy debt service account will be applied in the
following order of priority:
First, towards payment of all fees, costs and expenses due and payable on a quarterly basis on that
transfer date;
Second, towards payment of all interest and all quarterly hedging scheduled payments on that transfer
date;
Third, towards payment of all quarterly principal payments and all quarterly hedging termination
payments on that transfer date; and
Fourth, towards payment of all quarterly reserve payments on that transfer date.
On each quarterly transfer date, after all the transfers to the relevant debt service accounts and debt service
reserve accounts have been made in full, the funds in the Berau Coal Energy debt service account will be
transferred as follows:
50% of the remaining amounts to the lender reserve account; and
50% of the remaining amounts to the Berau Coal Energy reserve account.
If either (i) the amount in the lender reserve account on the date falling one business day before such
transfer date equals or exceeds 50% of the principal amount of the liabilities under the intercreditor agreement,
the Senior Secured Credit Facility, the notes, the guarantees, the security documents, the hedging agreements and
any additional debt agreements (Secured Obligations) on that date; or (ii) on such transfer date, there are no
amounts outstanding under the Senior Secured Credit Facility, then the entire amount in the Berau Coal Energy
debt service account will be transferred solely to the Berau Coal Energy reserve account.
If there are no amounts outstanding under the Senior Secured Credit Facility, Berau Coal Energy may
request that all amounts then held in the lender reserve account be transferred into the Berau Coal Energy reserve
account.
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Berau Coal Energy Lender Reserve Account

On any business day, Berau Coal Energy may request that all or a part of the amounts in the lender reserve
account be applied towards the voluntary prepayment, early redemption or repurchase of any Secured
Obligations, provided that such prepayment, redemption or repurchase will be effected on a pro rata basis to the
extent required by the relevant Secured Obligations.
Berau Coal Energy Reserve Account
On each transfer date or each distribution date, in each case, only after the relevant transfers as described
above have been effected, amounts from the Berau Coal Energy reserve account may be transferred in the
following order of priority:
First, an amount equal to 90% of the amount in excess of the budgeted capital expenditure and operating
costs to any Berau Coal collection account for application in accordance with the cash and accounts
management agreement;
Second, an amount necessary to cover any shortfall in:
(A) either of Berau Coals collection accounts to make any payment to the tax reserve account, the
operating accounts, the operating reserve accounts and Berau Coals distribution account; or
(B) the Berau Coal Energy debt service account to make any payment to the debt service accounts and
the debt reserve accounts;
Third, an amount required to pay any administrative cost of any Group company (to the extent such
administrative costs have not been funded by the amounts in the collection account of that Group
company); and
Fourth, amounts for any other purpose required by Berau Coal Energy,
provided, that other than pursuant to paragraph (B) above, in each case, no default has occurred and is continuing
or will occur as a result of such withdrawal.
Assets Sale Proceeds Accounts
Berau Coal will be required to deposit must ensure that all its net cash proceeds from the disposal of certain
assets are deposited into the Berau Coal asset sale proceeds account within five business days of completion of
the relevant disposal.
The amounts in the Berau Coal asset sale proceeds account may be applied towards the purchase or
acquisition of replacement assets that are comparable or superior as to type, value or quality to the asset that was
the subject of the disposal. If not so applied within 360 days after the deposit of such net proceeds, any remaining
proceeds will be applied as follows:
10% of such remaining proceeds to the Sojitz reserve account; and
90% of such remaining proceeds towards the prepayment, early redemption or repurchase of any Secured
Obligations, provided that such prepayment, redemption or repurchase will be effected on a pro rata basis
to the extent required by the relevant Secured Obligations.
To the extent the application of the net cash proceeds of certain sales of assets by Berau Coal Energy or any
Subsidiary Guarantors other than Berau Coal is subject to requirements or restrictions under any Secured
Obligations, such net cash proceeds will be deposited into a comparable asset sale proceeds account for the
relevant company and will be subject to the foregoing requirements with respect to the application of such
proceeds.
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Governing Law; Amendments

The cash and accounts management agreement is governed by and construed in accordance with English
law. The cash and accounts management agreement can only be amended in accordance with the terms of the
Intercreditor Agreement.
Coal Sales Contract with PT Indonesia Power
On August 27, 2008, Berau Coal entered into a 10-year sales contract effective from January 2009 to
December 2018 with PT Indonesia Power. The quantity of coal to be delivered by Berau Coal is 3,000,000 tons
per year, subject to adjustment of up to plus or minus 5% at the buyers option. The selling price is determined
on a yearly basis. PT Indonesia Power may terminate the agreement with 14 days prior written notice if (i) the
coal delivered in three consecutive shipments does not meet the specification stated in the agreement and is
rejected by PT Indonesia Power or (ii) Berau Coal fails to deliver the coal within the agreed schedule for more
than two months for reasons which are not acceptable by PT Indonesia Power.
Coal Supply Agreement with PT Jawa Power
Berau Coal entered into a coal supply agreement with PT Jawa Power in December 1995. The initial term of
this agreement was until November 2010. In January 2009, the term of contract was extended by five years to
November 2015. The quantity of coal to be delivered by the Company is 2,000,000 tons per year, subject to
adjustment of up to plus or minus 20% at the buyers option. The buyer may extend the term by five years on up
to three more occasions. The selling price is determined on a yearly basis. If the ownership or control of Berau
Coal passes to a third party which is unacceptable to PT Jawa Power, this constitutes an event of default. Either
party may terminate the agreement by giving 30 days notice upon the occurrence of certain events, including an
event of default.
Sales Contracts with Taiwan Power Company
On November 7, 2008, Berau Coal entered into two long-term contracts with Taiwan Power Company with
terms ending in 2014 and 2016, respectively. The quantity of coal to be delivered is 500,000 tons annually for
each contract, subject to adjustment of up to plus or minus 20% at the buyers option. Berau Coal is liable to the
buyer for any and all losses, damages and costs (including third party claims against buyer) caused by or related
to Berau Coals failure to perform in accordance with the representations and warranties. The selling price is
determined on a yearly basis. Taiwan Power Company has the right to rescind, cancel or terminate without
liability by notice to Berau Coal if a certain number of shipments of coal fail to meet the required specifications.
If delays caused by force majeure declared by Berau Coal persist for more than 300 days in any 365-day period,
Taiwan Power Company may terminate the contract by giving no less than 60 days prior notice to Berau Coal.
Marketing Service Agreement with Maple Holdings Limited
On December 30, 2009 Berau Coal entered into a 10-year marketing service agreement with our affiliate
Maple, which is 99% indirectly owned by Recapital. Under the agreement, as recently amended, Berau Coal
appointed Maple as its exclusive agent for the purposes of providing marketing, pricing and sales agency services
on a worldwide basis, excluding Japan. Each existing marketing agreement with other marketing agents will
continue until its expiry date and shall not be renewed (provided that if an existing marketing agreement expires
within 12 months from December 30, 2009, Berau Coal may extend the agreement for a further term but such
term shall not exceed such 12 month period). Maple will receive a fee of 2% (increasing to 4% beginning
January 1, 2011) of the proceeds Berau Coal receives for the sale of coal outside of Japan where Maple acts as
the agent. Beginning on December 31, 2010, Maple has the right to purchase coal from Berau Coal for a period
of ten years. The agreement may be terminated by either party with 30 days prior notice if the other party fails to
comply with a material obligation and such failure is not remedied within 30 days. As discussed below, we have
also entered into an agreement to acquire Maple.
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Agreement to Acquire Maple Holdings Limited

On May 21, 2010, Seacoast Offshore Inc., a wholly-owned special purpose subsidiary of Berau Coal
Energy, entered into a conditional share sale and purchase agreement with Regulus International Pte. Ltd., a
wholly-owned subsidiary of our parent, PT Bukit Mutiara, to acquire Maple, one of Berau Coals marketing
agents, for US$200 million. The payment will be made in two tranches: (i) a payment of US$175 million using a
portion of the proceeds from the issuance of the notes, the existing notes and the loans under the Senior Secured
Credit Facility and (ii) a payment of US$25 million using a portion of the proceeds from a contemplated initial
public offering of Berau Coal Energy. Conditions precedent include the closing of the offering of the existing
notes, the payment of US$175 million, and the completion of the contemplated initial public offering of Berau
Coal Energy. If the conditions precedent are not waived or fulfilled by a certain date, the shares of Maple will not
be transferred and the portion of purchase consideration paid will be refunded by Regulus International Pte. Ltd.
Berau Coal Energy will not own any shares of Maple until the closing of the share sale and purchase agreement,
which will follow the contemplated initial public offering of Berau Coal Energy. See Risk FactorsWe might
not be able to complete our proposed acquisition of Maple Holding Limited.
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DESCRIPTION OF OTHER MATERIAL INDEBTEDNESS

On July 23, 2010, we entered into a US$400 million senior secured credit facility (the Senior Secured
Credit Facility) with Credit Suisse AG, Singapore Branch as lead arranger, facility agent and security agent and
the financial institutions listed therein as lenders. We drew down the entire US$400 million available under this
facility on July 23, 2010. The facility comprises two tranches: (i) tranche A in a principal amount of US$300
million and (ii) tranche B in a principal amount of US$100 million. Interest for the tranche A loans is payable
quarterly and accrues at the rate of LIBOR plus a margin of 4.75% per annum. The tranche A loans amortize in
14 installments on the last day of each calendar quarter from March 31, 2011 through March 31, 2014 and a final
installment on July 23, 2014. The repayment amount of each installment varies and is set forth in the facility
agreement. Interest for tranche B loans is payable quarterly and accrues at the rate of LIBOR plus a margin of
5.75% per annum. The tranche B loans amortize in three equal installments on September 30, 2014,
December 31, 2014 and April 23, 2015. The lenders also have the right to require us to prepay the loans in full
immediately following a change of control of Berau Coal Energy or Berau Coal.
Berau Coal Energy is the borrower under this facility and its obligations under this facility rank pari passu
with its obligations under its guarantee of the notes. The facility has the benefit of guarantees from Berau Coal
and the other subsidiaries of Berau Coal Energy (other than Rognar) that rank pari passu with the guarantees by
such entities in favor of the notes and shares with the notes on a pari passu basis in the Common Security (as
defined in Description of the Notes). In addition, Maple must become a guarantor within one business day after
we acquire it.
The facility contains financial and other covenants that impose significant restrictions on us. Berau Coal
Energy must ensure that the ratio of consolidated total borrowings as of the last day of its most recent fiscal
quarter to adjusted consolidated EBITDA for the 12 months ended on the last day of its most recent fiscal quarter
does not exceed 3.25:1 in the first year of the facility and 2.75:1 thereafter, the ratio of consolidated EBITDA to
interest costs is not less than 3.75:1 and the debt service cover ratio is not less than 1.3:1. Subject to certain
exceptions, none of the members of the Group may (i) create or allow to exist any security interest over its assets;
(ii) dispose of its assets; (iii) incur or permit to be outstanding any financial indebtedness; (iv) enter into any
derivative transaction; (v) be the creditor in respect of any financial indebtedness or guarantee any obligation;
(vi) open or maintain any bank accounts; (vii) issue any shares; (viii) acquire any business, shares or other
ownership interests of any entity; (ix) enter into any material contract; (x) pay any dividend or make any other
distribution in respect of its capital stock (other than as permitted by the cash and accounts management
agreement); or (xi) in the case of Berau Coal, incur operating costs or capital expenditures in excess of its budget
and certain flex amounts as permitted by the cash and accounts management agreement.
Events of default under the facility include non-payment, breach of other obligations by any member of the
Group or PT Bukit Mutiara, misrepresentation by any member of the Group or PT Bukit Mutiara, cross-default to
other indebtedness of any member of the Group or PT Bukit Mutiara, insolvency of any member of the Group or
PT Bukit Mutiara, cessation of business, expropriation, the abandonment of all or a substantial part of the
operation or production activities of Berau Coal, repudiation or rescission of Berau Coals coal contract of work,
the commencement of significant litigation, any member of the Group (other than Berau Coal Energy and Berau
Coal) ceasing to be a wholly-owned subsidiary of Berau Coal Energy, Berau Coal Energy ceasing to hold,
directly or indirectly, 90% of the shares in the capital of Berau Coal, the principal amount outstanding under the
loan agreement between PT Bumi Resources Tbk and PT Bukit Mutiara decreasing to less than US$150 million,
or the occurrence of any event reasonably likely to have a material adverse effect on the business, prospects or
financial condition of any obligor under the facility or the Group as a whole.
141
MANAGEMENT
In accordance with Indonesian law, we have both a board of commissioners and a board of directors. The
two boards are separate and no individual may serve as a member on both boards. The rights and obligations of
each member on the board of commissioners and the board of directors are regulated by our Articles of
Association, the decisions of our shareholders in general meeting and the 2007 Company Law.
Our board of directors, under the supervision of the board of commissioners, is responsible for our
management and day-to-day operations. The members of our board of directors and our board of commissioners
are appointed by our shareholders at a general meeting of shareholders. Under our Articles of Association,
members of our board of directors and our board of commissioners each serve for a term of five years.
Our board of commissioners acts as the overall supervisory and monitoring body. Decisions involving
transactions above certain monetary thresholds must be referred to the board of directors, the board of
commissioners or shareholders for their review and approval, depending on the threshold.
Under our Articles of Association, our board of directors must consist of at least one director, and if more
than one director is appointed, one of them shall be the President Director who shall be entitled and authorized to
act for and on behalf of the board of directors to represent us. The board of commissioners must have at least one
member. If there is more than one commissioner, one of the commissioners must be appointed a President
Commissioner. In addition, under the terms of the Vendor Notes, for so long as Montrose or any of its affiliates
holds 51% or more of the Vendor Notes outstanding, Montrose has the right to appoint one director of Berau
Coal and one commissioner of Berau Coal. See Risk FactorsRisks Relating to Berau Coal Energy and Third
Party Interests in Berau CoalThe rights of the Vendors under the Vendor Notes could adversely impact us.
Our Board of Commissioners
The following table sets forth certain information regarding the board of commissioners of Berau Coal
Energy:
Name
Age
Title
Sofyan Abdul Djalil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rosan Perkasa Roeslani . . . . . . . . . . . . . . . . . . . . . . . . . .
Sandiaga Salahuddin Uno . . . . . . . . . . . . . . . . . . . . . . . .
Erry Firmansyah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andi Achmad Dara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
41
40
54
50
President Commissioner
Commissioner
Commissioner
Commissioner
Commissioner
Set forth below is a short biography of each of the commissioners of Berau Coal Energy:
Sofyan Abdul Djalil. Mr. Djalil was appointed to the board of commissioners of Berau Coal Energy in
March 2010. He was the former State Owned Enterprises Minister and former Information and Communications
Minister. He has held various positions in the academe and was an expert staff at the Ministry of Justice.
Mr. Djalil was a commissioner with several enterprises, including PT Pelabuhan Indonesia III and PT PLN.
Mr. Djalil obtained his Master of Arts in Law and Diplomacy and Doctor of Philosophy from The Fletcher
School of Law and Diplomacy, Tufts University in Medford, Massachusetts in 1991 and 1993, respectively.
Rosan Perkasa Roeslani. Mr. Roeslani was appointed to the board of commissioners of Berau Coal Energy
in April 2010 and Berau Coal in December 2009. He was an independent a commissioner of PT Kaltim Prima
Coal and PT Arutmin Indonesia, both of which are subsidiaries of PT Bumi Resources Tbk. At present,
Mr. Roeslani is also the president commissioner of PT Dwimitra Brawisa Sejahtera, PT Restyle Concept and PT
Lupita Amanda, a commissioner at PT Kemang Jaya Raya, PT Redal Semesta and PT Selaras Indah Sejati, and a
director at PT Alberta Capital. Mr. Roeslani is a founder and the current chairman of Recapital. Mr. Roeslani
graduated with a Bachelor of Science in Business Administration from Oklahoma State University in the United
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States in 1992. He received his Master of Business Administration in International Business Management (cum
laude) and Master of Arts in Business Communication and Public Relations (cum laude) from Antwerpen
European University in Belgium.
Sandiaga Salahuddin Uno. Mr. Uno was appointed to the board of commissioners of Berau Coal Energy in
April 2010. Mr. Uno is a founder and shareholder of Recapital. Mr. Uno serves as either a commissioner or a
director of various other entities, most notably PT Adaro Energy Tbk (Adaro). Mr. Uno is a substantial
shareholder in Adaro. He is also a co-investor in and chief executive officer of PT Saratoga Capital (Saratoga),
through which distressed assets were acquired during the financial turmoil in the late 1990s. Mr. Uno is the vice
president of various small and medium enterprises and is the deputy chairman of the permanent committee on
alternative finance of the Indonesian Chamber of Commerce and Industry. Mr. Uno holds a Masters of Business
Administration from George Washington University, United States, majoring in international business and
finance.
Erry Firmansyah. Mr. Firmansyah was appointed to the board of commissioners of Berau Coal Energy in
April 2010. He is currently a commissioner of various other entities, most notably, PT Perusahaan Pengelola Aset
(Persero), PT Kustodian Sentral Efek Indonesia, PT Unilever Indonesia Tbk and Benakat Petroleum Energy and
Delta. Mr. Firmansyah was previously the president director of the Indonesia Stock Exchange (IDX), PT Bursa
Efek Indonesia and Indonesia Central Securities & Depository. Mr. Firmansyah graduated with a Bachelor of
Accountancy from the Universitas Indonesia in 1981.
Andi Achmad Dara. Mr. Dara was appointed to the board of commissioners of Berau Coal Energy in April
2010. He is currently the president director of PT. Anugerah Bumi Wadah Abadi, a commissioner of PT. Sarana
Bali Ventura and vice president of the mining committee on the Indonesian Chamber of Commerce and Industry.
Mr. Dara graduated with a Bachelor of Arts, majoring in economics, from the Universitas Sumatera Utara,
Medan, Indonesia.
The business address of our commissioners is the address of our registered office.
Our Board of Directors
The following table sets forth certain information regarding the board of directors of Berau Coal Energy:
Name
Age
Title
Raden Curt Eko Santoso Budianto . . . . . . . . . . . . . . . . .

John Joseph Ramos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ferial Martifauzi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thomas Warren Shreve . . . . . . . . . . . . . . . . . . . . . . . . . .
Arief Wiedhartono. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
45
48
50
40
President Director
Director
Director
Director
Deputy DirectorOperations
Set forth below is a short biography of each of the directors of Berau Coal Energy:
Raden Curt Eko Santoso Budianto. Mr. Budianto was appointed to the board of directors in April 2010. He
was the president director of PT. Buana Finance Tbk, PT. Austindo Nusantara Jaya Finance and PT. AAJ Batavia
and the Deputy Chairman of the Indonesian Bank Restructuring Agency (IBRA). Mr. Budianto has 24 years of
experience in the banking and finance industry, including serving as the managing director, for Corporate and
Merchant banking with Bank PDFCI, Tbk. Mr. Budianto started his professional career with the Chase
Manhattan Bank N.A., Jakarta Branch. Mr. Budianto graduated with a Bachelor of Science from the University
of Northern Colorado in 1984, majoring in finance and a Master of Business Administration from the Golden
Gate University, Nagel T. Miner Business School in 1985.
John Joseph Ramos. Mr. Ramos is the Finance Director of Berau Coal and was appointed to the board of
directors in April 2010. He started his career as a financial analyst at Jones Intercable, Inc. in 1993 and in 1994,
143
he joined Media One International, Inc., where he worked as a Manager, Strategic Modeling at US West Mrg,
Inc. from 1994 to 1996 and as a Director, Financial Planning & Analysis at PT. Ariawest. From 2000 to 2003,
Mr. Ramos was the Chief Financial Officer of Gameone Systems, Ltd. He joined PT. Recapital Securities in
2003 as Senior Vice President, Advisory until 2005 and was a Principal at Centennial Business Solutions from
2006 to 2008. Mr. Ramos was the Chief Financial Officer at Capsource Financial, Inc. from 2008 to 2009. Prior
to joining Berau Coal, he was a Principal at Vanguard Financial. Mr. Ramos graduated with a Bachelor of Arts
and a Master of Science from the University of Colorado in the United States in 1988 and 1993 respectively.
Ferial Martifauzi. Mr. Martifauzi is the Vice President of Berau Coal and was appointed to the board of
directors in April 2010. Prior to Mr. Martifauzis current position, he also served as Director of PT Sari Melati
Kencana (Pizza Hut franchise in Indonesia), Deputy Director - Finance and Administration of PT Sriboga
Raturaya, Finance and Administration Director of PT. Dani Prisma Mitra, General Manager (Treasury) of PT.
Indocitra Finance Tbk, Project Officer at PT. Griyadani Mandiri and Treasury & Funding Officer at PT. Indocitra
Leasing Corporation. Mr. Martifauzi graduated from Universitas Indonesia in 1987, majoring in Marketing and
minoring in Finance and Transportation Management, and from Golden Gate University in San Francisco, United
States with a Master of Business Administration (Finance and Banking) in 1991.
Thomas Warren Shreve. Mr. Shreve was appointed to the board of directors of Berau Coal Energy in April
2010. Mr. Shreve is chief executive officer of the Recapital Investment Group. Mr. Shreve moved from Los
Angeles to Indonesia in 1991, and over the next 19 years has held several Jakarta-based positions in the finance
and consulting sectors. His previous position was as president director of PT Glendale Partners, a consulting and
project development company based in Jakarta. Prior to founding PT Glendale Partners in 2004, he served as a
senior technical advisor to PT Trimegah Securities Tbk, where he was responsible for advisory work for the
Government of Indonesia pertaining to the disposal of troubled assets, including Bank Niaga. He has ten years of
investment banking experience in Jakarta, from 1994 to 2004, and ten years of experience as a transactional
attorney, from 1984 to 1994. As an attorney, he worked at two major U.S. law firms, Milbank, Tweed, Hadley &
McCloy LLP and Latham & Watkins LLP. He remains a licensed member of the California State Bar.
Mr. Shreve graduated from the Northwestern University School of Law in Chicago in 1983.
Arief Wiedhartono. Mr. Wiedhartono was appointed to the board of directors of Berau Coal Energy in June
2010. Mr. Wiedhartono is the Deputy Director of the Operations Division of Berau Coal and is responsible for
the day to day management and operations of its mines. He joined Berau Coal in September 1995 upon
graduating from the Bandung Institute of Technology, Indonesia, with a Bachelor of General Mining.
The business address of our directors is the address of our registered office.
Commissioners, Directors and Senior Management of Berau Coal
Board of Commissioners
The following table sets forth certain information regarding the board of commissioners of Berau Coal:
Name
Age
Title
Muhammad Luthfi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Erick Thohir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rosan Perkasa Roeslani . . . . . . . . . . . . . . . . . . . . . . . . . .
Bernardi Djumiril. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bob Kamandanu. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subagyo Hadi Siswoyo. . . . . . . . . . . . . . . . . . . . . . . . . . .
41
40
41
40
50
64
Vice President Commissioner
Commissioner
Commissioner
Commissioner
Commissioner
Set forth below is a short biography of each of the commissioners of Berau Coal:
Muhammad Luthfi. Mr. Luthfi was appointed to the board of commissioners of Berau Coal in December
2009. He was recently the Chairman of Indonesias Investment Coordinating Board (Badan Koordinasi
Penanaman ModalBKPM). Mr. Luthfi previously held the post of Chairman, President and Chief Executive
144
Officer of the Mahaka Group, Chairman of Indonesia Young Entrepreneur (HIPMI) and Chairman of Indonesia
Young Entrepreneurs Organization Jakarta Region (HIPMI-JAYA). Mr. Luthfi holds a Bachelors degree in
Economics from Purdue University, United States.
Erick Thohir. Mr. Thohir was appointed to the board of commissioners of Berau Coal in 2009. He is also the
President Director of PT Beyond Media, PT Abdi Bangsa Tbk and PT Lativi Media Karya. Mr. Thohir graduated
with a Master of Business Administration from the National University, California, in the United States in 1993.
For a short biography of Rosan Perkasa Roeslani, please see Our Board of Commissioners.
Bernardi Djumiril. Mr. Djumiril was appointed to the board of commissioners of Berau Coal in December
2009. He is also the Senior Vice President of Corporate Finance and Investment Bank of PT Recapital Advisors
since 2004, a member of the board of commissioners of PT Retower Asia since 2007 and a member of the audit
committee of PT Capitalinc Investment Tbk and PT Aetra Air Jakarta since 2007 and 2009, respectively. He also
held various positions such as Manager of Corporate Finance in Siddharta Consulting, a member of KPMG in
Jakarta from 2001 to 2004, Manager of Local Recovery Unit in Bank Credit Lyonnais Indonesia from 1999 to
2001 and Business Manager of Corporate Banking Division in Bank BIRA, Jakarta, from 1996 to 1999.
Mr. Djumiril graduated from Trisakti University, Jakarta, Indonesia, majoring in economics in 1993 and from
Oklahoma City University in the United States in 1995 with a Master of Business Administration in Finance.
Bob Kamandanu. Mr. Kamandanu was appointed to the board of commissioners of Berau Coal in December
2009. Prior to his appointment as commissioner, he was the President Director and Corporate Support Director of
Berau Coal from 2006. He has extensive finance and accounting experience, having held positions such as Chief
Financial Officer of PT Asuransi Cigna Indonesia from 1993 to 1994, Deputy Director of Finance and
Administration of PT Chandra Asri Petrochemical Center from 1994 to 1998, Chief Financial Officer of PT
Pirelli Cables & Systems from 1998 to 2000, Senior Corporate Advisor of PT Andalan Artha Advisindo
Sekuritas from 2000 to 2002 and President and Chief Executive Officer of PT Valuta Pos from 2002 to 2006.
Mr. Kamandanu graduated with a Bachelor of Business Administration and a Master of Business Administration
from the University of Oklahoma in the United States in 1986 and 1987, respectively.
Subagyo Hadi Siswoyo. Mr. Siswoyo was appointed to the board of commissioners of Berau Coal in 2005.
He retired from the Indonesian Military Force after serving it for approximately 30 years. His last held position
was the Chief of Army of Indonesia. Throughout his military career, he participated in special military operations
including in Kalimantan and East Timor. From 1997 to 2001, he was the Chief Executive Officer of the
Indonesian Badminton Association. Mr. Siswoyo also serves on the board of commissioners of PT Bank
Kesawan Tbk. Mr. Siswoyo graduated with a Bachelor of Political Science from the Open University in
Indonesia in 1996 and from the Military Academy in 1997.
The business address of each of the commissioners of Berau Coal is Menara Karya, 11th Floor, Jl. H.R.
Rasuna Said Block X-5, Kav. 1-2, Jakarta 12950, Indonesia.
Board of Directors
The following table sets forth certain information regarding the board of directors of Berau Coal:
Name
Age
Title
Yoseph Anastasins Didik Cahyanto . . . . . . . . . . . . . . . .

Julianto Halim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John Joseph Ramos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michiaki Furusho. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42
47
45
57
President Director
Vice President Director
Finance Director
Director
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Set forth below is a short biography of each of the directors of Berau Coal:
Yoseph Anastasins Didik Cahyanto. Mr. Cahyanto is the President Director of Berau Coal and was
appointed to the board of directors in 2009. He has extensive corporate finance experience and began his career
in 1993 with PT Nikko Securities Indonesia as a research analyst and then a Manager, Corporate Finance.
Mr. Cahyanto joined PT BNI Securities in 1995 as a Senior Manager, Corporate Finance. From 1999 to 2000, he
was the Assistant Vice President, Corporate Finance of Recapital. He was also the President Director of PT
Recapital Asset Manager from 2001 to 2009. Mr. Cahyanto is on the Board of Commissioners of PT Asuransi
Jiwa Recapital since 2006 and the Board of Commissioners of PT Asuransi Recapital since 2008. Mr. Cahyanto
graduated with a Bachelor of Economics from the Indonesia University in 1993. He also obtained a Magister
Management Accounting degree from Indonesia University in 2003.
Julianto Halim. Mr. Halim is the Vice President Director of Berau Coal and was appointed to the board of
directors in 2009. He has extensive banking experience and began his career in 1986 with PT Bank Central Asia
in New York as the Head of the Credit Review Department. Mr. Halim joined PT Bank Niaga in Los Angeles in
1991 and was later assigned to the syndicated loan projects department of the PT Bank Niaga Merchant Banking
Group. From 1996 until he joined Berau Coal, he was with PT Bank Panin and was most recently their Director
of Corporate Banking. Mr. Halim graduated with a Bachelor of Science from the University of Southern
California in the United States in 1984.
For a short biography of John Joseph Ramos, please see Our Directors.
Michiaki Furusho. Mr. Furusho is the Marketing Director of Berau Coal and was appointed to the board of
directors in 2009. Prior to joining Berau Coal, he was working at Nissho Iwai Corporation (now known as Sojitz)
for 27 years where he held various positions, most recently as the Deputy General Manager of the Coal
Department. Mr. Furusho graduated from the Kobe University with a Bachelor of Economics in 1975.
The business address of each of the directors of Berau Coal is Menara Karya, 11th Floor, Jl. H.R. Rasuna
Said Block X-5, Kav. 1-2, Jakarta 12950, Indonesia.
Senior Management
The following table sets forth certain information regarding the members of principal senior management of
Berau Coal:
Name
Age
Title
Rusli Fachruddin . . . . . . . . . . . . . . . . . . . . . . .
Arief Wiedhartono. . . . . . . . . . . . . . . . . . . . . .
I Made Seroja . . . . . . . . . . . . . . . . . . . . . . . . . .
Eko Budi Fergaus Natalina . . . . . . . . . . . . . .
Rudi A.R. Hernawan. . . . . . . . . . . . . . . . . . . .
54
40
40
43
54
General ManagerFinance and Administration

Deputy DirectorOperations
Deputy DirectorCorporate Support
General ManagerSales and Marketing
General ManagerTransport and Sales Administration
Set forth below is a short biography of each of the members of principal senior management of Berau Coal:
Rusli Fachruddin. Mr. Fachruddin is the General Manager of the Finance and Administration Division of
Berau Coal and is responsible for its financial matters including finance and accounting, treasury, budgeting,
procurement, information technology and legal and regulatory compliance. He joined Berau Coal in January
1991. Prior to that, he worked at PT United Tractors Tbk for over ten years, most recently as their Accounting
Senior Supervisor.
For a short biography of Arief Wiedhartono, please see Our Board of Directors.
I Made Seroja. Mr. Seroja is the Deputy Director of the Corporate Support Division of Berau Coal and is
responsible for operations support and corporate communications. He joined Berau Coal in November 1996.
146
Prior to that, he was a project engineer with PT Indonesian Marine Corp. Ltd. from 1992 to 1996. Mr. Seroja
obtained a Bachelor of Mechanical Engineering from the Institute of Technology Sepuluh Nopember, Surabaya,
in Indonesia in 1992.
Eko Budi Fergaus Natalina. Mr. Natalina is the General Manager of the Sales and Marketing Division of
Berau Coal and is responsible for marketing and selling its coal products in Indonesia and overseas. He joined
Berau Coal in April 2000. Prior to that, he worked at PT Astra Agro Lestari Tbk from 1997 to 2000, most
recently as Manager of the Procurement Department. From 1990 to 1997, he worked at PT United Tractors Tbk
where he was the Manager of the Procurement and Import Department. Mr. Natalina obtained a Bachelor of Civil
Engineering from the Gadjah Mada University in Indonesia in 1990.
Rudi A.R. Hernawan. Mr. Hernawan is the General Manager of the Transport and Sales Administration
Division of Berau Coal and is responsible for transport procurement and sales administration. He joined Berau
Coal in October 1998. Prior to that, he worked at PT United Tractors Tbk from 1983 to 1998, most recently as
Deputy Manager of the Parts Department. Mr. Hernawan obtained a Diploma in Industrial Engineering from the
National Technology Academy, Bandung, in Indonesia, in 1982.
Compensation
We did not provide remuneration to our commissioners and directors in 2009. No other payments are
payable by us to our commissioners and directors for 2009. Except for Berau Coals defined contribution
retirement plan to which it makes contributions computed at between 1.0% to 2.0% of the entitled employees
monthly salaries, we did not provide pension retirement or similar benefits for members of our principal senior
management and other employees in 2009. We have not extended any loans or guaranteed any personal liabilities
of any commissioner, director or member of principal senior management. We do not have an employee stock
option plan.
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PRINCIPAL SHAREHOLDERS
Principal Shareholders of Berau Coal Energy
Berau Coal Energy is 99.999% owned by PT Bukit Mutiara and less than 0.001% owned by a nominee
shareholder. PT Bukit Mutiara in turn is 99% beneficially owned by Recapital, with the remainder owned by
nominee shareholders.
Recapital was founded in 1996, as an investment group company, and has expanded its scope to include
direct investments in select businesses. Recapital currently has investments in various business lines and its
interests range from securities trading, asset management, banking, insurance and water treatment to commercial
properties.
PT Bukit Mutiara has a significant amount of indebtedness arising from its acquisition of us in December
2009. A summary of certain terms of such indebtedness is below. PT Bukit Mutiara intends to use a portion of
the proceeds from this offering to repay a portion of the Bumi Loan and the Vendor Notes. See Use of
Proceeds.
Berau Coal Energy is preparing to conduct an initial public offering in Indonesia. As a result of the initial
public offering, we expect that Recapital will beneficially own at least 80.4% of our issued and outstanding
shares (subject to any sales of our shares that PT Bukit Mutiara makes prior to the closing of the initial public
offering) and investors in the initial public offering will own up to 18.2%, with the remaining 1.4% being held by
nominee shareholders. The initial public offering is subject to various factors, including regulatory approvals and
market conditions. Accordingly, we do not know when or if we will be able to complete the initial public
offering. See SummaryRecent DevelopmentsProposed Initial Public Offering.
Bumi Loan
In November 2009, PT Bukit Mutiara received a US$300 million unsecured subordinated loan from PT
Bumi Resources Tbk (Bumi), one of Indonesias largest coal mining companies. The loan matures in
November 2015. Bumi can also require repayment in full of all amounts due under the loan following any event
of default under the loan. Interest on the loan accrues at the rate of 12% per year and is payable quarterly. In
addition, when the loan is repaid in full, PT Bukit Mutiara must pay a premium such that Bumi receives an
internal rate of return of 19%. PT Bukit Mutiara must obtain the consent of Bumi before proceeding with certain
matters, including increasing its authorized share capital, the approval of its annual budget, the exercise of its
borrowing powers other than as approved in the annual budget, the creation of any lien over its property, the
exercise of its powers to provide guarantees or indemnities, and the incurrence of capital expenditure. PT Bukit
Mutiara has also undertaken not to create or have outstanding any security over its assets, subject to certain
exceptions, and also not to dispose of its assets without the consent of Bumi. On July 23, 2010, PT Bukit Mutiara
arranged to repay US$52 million under this loan. It also intends to make additional partial repayments in the
aggregate amount of approximately US$48 million on or around the closing of this offering.
Vendor Notes
PT Bukit Mutiara issued US$580 million in principal amount of notes (the Vendor Notes) to the selling
shareholders of Berau Coal Energy (the Vendors) pursuant to a trust deed dated December 29, 2009. The
Vendor Notes mature on December 30, 2010 and are secured by a pledge over 50% of the shares in PT Bukit
Mutiara. Interest accrues on the Vendor Notes at a rate of 8% per year. Under the terms of the Vendor Notes, for
so long as Montrose International Trading Limited (Montrose) or any of its affiliates holds 51% or more of the
Vendor Notes outstanding, Montrose has the right to appoint one director of Berau Coal and one commissioner
of Berau Coal. Any amendments to Berau Coals coal contract of work (other than as required by law) will
require the approval of the holders of the Vendor Notes or the approval of the director of Berau Coal appointed
by Montrose.
148
The Vendor Notes contain covenants that restrict PT Bukit Mutiara and certain of its subsidiaries, including
us and our subsidiaries, from engaging in various transactions, such as incurring indebtedness; paying dividends,
purchasing capital stock or making investments or other restricted payments; entering into agreements that
restrict the ability to pay dividends, pay indebtedness, make loans or sell assets, in each case to PT Bukit Mutiara
or its subsidiaries; selling and issuing capital stock; issuing guarantees; entering into transactions with
shareholders and affiliates; creating liens; entering into sale and leaseback transactions; selling assets; effecting a
consolidation or merger; and entering into new lines of businesses.
Upon the occurrence of an event of default under the Vendor Notes, PT Bukit Mutiara must transfer to the
security trustee for the Vendor Notes, Berau Coal Energy shares representing 66 2 3% of the issued share capital
of Berau Coal Energy at such time, together with an irrevocable assignment in favor of the security trustee of
voting rights in respect of such shares representing 8 1 3% of the issued share capital of Berau Coal Energy. Upon
the occurrence of an event of default under the Vendor Notes, the marketing services agreement between Berau
Coal and Maple and the related coal off-take arrangements shall immediately terminate.
PT Bukit Mutiara and the Vendors intend to amend the Vendor Notes such that upon the closing of our
proposed initial public offering, the Vendor Notes will no longer be secured by a pledge of 50% of the shares of
PT Bukit Mutiara. Instead, the Vendor Notes will be secured by a pledge of such number of our shares owned by
PT Bukit Mutiara that at all times after the initial public offering have a fair market value equal to at least 150%
of the aggregate principal amount of the Vendor Notes then outstanding together with accrued interest.
PT Bukit Mutiara has informed us that it is exploring various alternatives for the settlement of the Vendor
Notes, including (i) exchanging the Vendor Notes, in whole or in part, for shares in us, (ii) selling a portion of the
shares that PT Bukit Mutiara holds in us for cash to a strategic or financial investor in order to raise funds for a
cash payment to the Vendors, (iii) obtaining alternative financing for a cash payment to the Vendors or (iv)
renegotiating the terms of the Vendor Notes with the Vendors.
In connection with our proposed initial public offering, PT Bukit Mutiara and the Vendors intend to amend
the Vendor Notes to give the Vendors an option, at the maturity of the Vendor Notes, to require PT Bukit
Mutiara to settle up to US$280 million of the Vendor Notes by the delivery of our ordinary shares. The terms of
the Vendor Notes permit PT Bukit Mutiara to redeem the Vendor Notes at its option for cash. If we consummate
our proposed initial public offering, PT Bukit Mutiara will be subject to an eight month lock-up that would
prevent it from delivering our shares to the Vendors and would require it to negotiate a resolution with the
Vendors.
PT Bukit Mutiara has requested the consent of the Vendors to amend certain terms of the Vendor Notes to
facilitate this offering of the notes, and expects to receive such consent prior to the closing of this offering.
On July 23, 2010, PT Bukit Mutiara arranged to pay US$52 million as a partial repayment of the Vendor
Notes. It also intends to use make additional partial repayments of the Vendor Notes in the aggregate amount of
approximately US$48 million on or around the closing of this offering. Following these payments, the aggregate
principal amount of the Vendor Notes outstanding will be approximately US$484 million.
Principal Shareholders of Berau Coal
Through intermediary holding companies, Berau Coal Energy owns 90% of Berau Coal. Sojitz, a public
Japanese corporation, directly owns the remaining 10% of Berau Coal.
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RELATED PARTY TRANSACTIONS

The following is a summary of material transactions we have engaged in with our direct and indirect
shareholders, affiliates of our shareholders and other related parties, including those in which we or our
management have a significant equity interest. We believe each of these arrangements as described below have
been entered into on arms length terms or on terms that we believe have been at least as favorable to us as
similar transactions with non-related parties. For a further discussion of related party transactions, see Note 35 to
our financial statements as of and for the years ended December 31, 2007, 2008 and 2009 included elsewhere in
this offering circular and Note 34 to our financial statements as of and for the three months ended March 31,
2009 and 2010 included elsewhere in this offering circular.
Marketing Agency AgreementBerau Coal and Sojitz
Berau Coal entered into a marketing agency agreement dated October 1, 2001 with Sojitz which owns a
10% direct equity interest in Berau Coal. The marketing agency agreement is renewable on a yearly basis as long
as Berau Coal continues to supply coal to the Japanese market. Under this agreement, Sojitz is required to use its
best efforts to promote, market and seek orders for Berau Coals coal and maintain good relations with customers
as well as keep Berau Coal informed of any developments in the Japanese market. Sojitz receives a commission
which ranges from 1.5% to 2.0% of the sale proceeds of coal that is delivered to and accepted by customers and
fully paid for at Berau Coals invoiced price. In 2007, 2008, 2009 and the three months ended March 31, 2010,
Berau Coals sales to or via Sojitz under the marketing agency agreement amounted to US$9.4 million, US$44.9
million, US$38.1 million and US$14.4 million, respectively.
Marketing Service AgreementBerau Coal and Maple
See Description of Material Agreements for a description of this agreement.
Loan to AffiliateBerau Coal and Winchester
On December 15, 2006, Berau Coal made a loan of US$224.9 million to Begarion Capital Limited
(Begarion), a company which at that time was under common control with us. Begarion used the proceeds to
satisfy obligations due to its related parties. On December 29, 2009, Begarion transferred the loan to Danehill
Capital Ltd., which in turn on the same day transferred the loan to Winchester.
Interest on the loan accrues at the rate of 10.375% per annum and has been capitalized. As of December 31,
2007, 2008, 2009 and March 31, 2010, the outstanding amount under the loan including accrued interest was
US$249.4 million, US$272.7 million, US$296.0 million and US$301.9 million, respectively. The loan matures
on December 15, 2011. On July 23, 2010, Winchester arranged to repay US$300 million under this loan.
150
THE ISSUER
The issuer, Berau Capital Resources Pte. Ltd., was incorporated as a private company limited by shares
under the laws of Singapore on February 9, 2010. The registered office of the issuer is located at 10 Anson Road,
#03-05 International Plaza, Singapore 079903. The issuer is a wholly-owned subsidiary of Berau Coal Energy.
The principal activities of the issuer are to issue the notes, lend the proceeds of that issuance to companies in the
Group and undertake administrative functions associated with servicing the notes. The issued share capital of the
issuer is S$2 comprising two ordinary shares issued to Berau Coal Energy. The directors of the issuer are
Arnanto and Andy Pe Yong Woon. Since its incorporation, the issuer has had no outstanding debt other than the
existing notes.
The indenture prohibits the issuer from engaging in any business activities except those relating to the notes
and other indebtedness and to its corporate existence. See Description of the NotesCertain Covenants
Limitation on the Activities of the Issuer.
151
REGULATION OF THE INDONESIAN COAL MINING INDUSTRY

Mining Regulation
Pursuant to Article 33 of the Indonesian 1945 Constitution, as amended, all mineral resources are deemed to
be national assets and are therefore controlled by the state for the best interests of the nation and the prosperity of
the people. Until recently, general mining activities in Indonesia are governed by Law No. 11 of 1967 concerning
Basic Principles of Mining (Law 11/1967) and its implementing regulations, namely Government Regulation
No. 32 of 1969 concerning the Implementation of Mining Law, as amended by Government Regulation No. 79 of
1992 and Government Regulation 75 of 2001 and the Decree of the Minister of Energy No. 1453.K/29/MEM/
2000, dated November 3, 2000 concerning the Technical Guidelines for Undertaking Governmental Duties in the
General Mining Sector (Decree 1453), and the Decree of the Minister of Energy No. 1614 of 2004 concerning
the Guidelines for Processing Applications of Contracts of Work and coal contracts of work in the framework of
Foreign Investment (Decree 1614).
Law 11/1967 provides that authority over and control and regulation of strategic and vital mineral resources,
including coal, in Indonesia is vested in the Ministry of Energy and Mineral Resources, while authority over and
control and regulation of non-strategic and non-vital mineral resources is vested in the regional governments of
Indonesia where mineral resources are located. Law 11/1967 also stipulates that general mining activities,
including but not limited to the general survey of, the exploration for, and exploitation of, mineral resources may
be undertaken by government institutions, state-owned companies and Indonesian entities through a mining
authorization (Kuasa Pertambangan or KP). Further provisions with regard to the contents, authority, extent of
area and certain other aspects of the KP are regulated by the implementing regulations. A number of these
implementing regulations have subsequently devolved the authority over and control of strategic and vital
minerals the subject of a KP to regional and provincial governments (depending on the area delineated by the
KP) as discussed further below.
Under the Law 11/1967, the Government of Indonesia is the holder of a KP in relation to all natural
resources in the mining territory of Indonesia and has the authority to operate mining activities. As part of this
authority, the Government of Indonesia may appoint a contractor and enter into an agreement with such
contractor to operate mining activities. The terms and conditions of such agreement are regulated in separate
regulations. See Coal Contract of Work.
Mining Law
On January 12, 2009, the Mining Law regulating mineral and coal mining in Indonesia came into effect.
One of the purposes of the Mining Law is to allocate the authority for the regulation of the mineral and coal
mining industry among the Government of Indonesia and the regional government agencies.
Under the Mining Law, no form of contractual-based concessions will be available for new mining projects.
All investors will be issued a mining business license (Izin Usaha Pertambangan or IUP) by the regional,
provincial or central government, depending on the geographical coverage of the mine and its infrastructure. For
mining areas that have been declared by the Government of Indonesia as state reserve areas, a special mining
business license (Izin Usaha Pertambangan Khusus or IUPK) will be issued directly by the central government
instead. Another type of mining license is the people mining license (Izin Pertambangan Rakyat or IPR),
granted either to individuals, community groups or cooperatives within a limited mining operational area.
Under the Law 11/1967, the KPs could not be held by Indonesian entities with foreign ownership or
management. Under the Mining Law, an IUP can be held by Indonesian entities, including entities which are
established and domiciled in Indonesia that are foreign owned. However, it imposes obligations on an IUP holder
with foreign shareholders to implement a divestment program after five years from the commencement of
production. An IUPK to develop state reserve areas must be first offered to state or regional government-owned
companies. In the event that it is not taken up, the IUPK may then be offered to companies in the private sector
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through a tender process. IUPKs are only applicable for coal, copper, lead, gold, iron, nickel and bauxite. There
are two types of IUPs or IUPKs for coal. Firstly, an Exploration IUP or IUPK may be granted for general survey,
exploration and feasibility studies for a period of seven years. The licensed area shall be between 5,000 to 50,000
hectares. Secondly, a Production Operation IUP or IUPK may be granted for construction mining and related
operations for a period of 20 years with two options to extend the license period by ten years each. The licensed
area shall be a maximum of 15,000 hectares.
Under Government Regulation No. 23 of 2010 concerning the Implementation of Mineral and Coal Mining
Business Activities dated February 1, 2010 (Government Regulation 23), the foreign shareholders of an IUP
and IUPK holder must divest their shares after five years as of commencement of production period, so that at
least 20% of the shares are owned and maintained by an Indonesian entity. The Government and the local
government have the first priority to purchase the shares, followed by any state-owned company and any regional
government-owned company through an auction. If any of the Government, local government, state-owned
company or regional government-owned company is not interested in purchasing the divested shares, it will be
offered to Indonesian entities through an auction.
The obligation to divest foreign ownership in an IUP and IUPK holder demonstrates the Governments
intention to protect and promote national and local mining companies. This is also reflected in the obligation of
IUP or IUPK holders to engage local mining services companies and/or national mining services companies.
Other mining services companies which are partially or completely owned by foreign entities and/or foreigner
and non-Indonesian companies may only be engaged to provide mining services in situations where no local and/
or national mining services companies are technically and/or financially able to provide such services. In
addition, a mining services company has the obligation to prioritize both local contractors and human resources
in supporting their activities. A holder of an IUP or an IUPK is also prohibited from engaging its subsidiaries
and/or affiliated mining services companies in its mining operational area, unless a permit has been obtained
from the Ministry of Energy and Mineral Resources and there are no unaffiliated mining services companies
qualified to provide such services. This prohibition is further affirmed by Regulation of the Minister for Energy
and Mineral Resources No. 28 of 2009 concerning Mineral and Coal Mining Services Business (MEMR
Regulation 28). It states that such approval may only be granted after the IUP or IUPK holders announce a
bidding process in local and/or national newspapers and guarantee that there will be no transfer pricing or
transfer profit.
Other material provisions of the Mining Law include:
a contract of work or a coal contract of work holder who has carried out exploration, feasibility studies or
who is at the construction or operation production stages must submit its activity plan for the reminder of
its contract period to the Government of Indonesia for approval within one year from the effective date of
the Mining Law;
while the existing coal contracts of work and contracts of work will remain valid until their expiry, their
contract terms must be amended within one year from the effective date of the Mining Law to bring them
in line with the Mining Law, except for terms related to state revenue;
all holders of IUP and IUPK will be required to pay production royalties in an amount to be further
decided by regulation. For state reserve areas, the holder of the IUPK will be required to pay an additional
royalty equal to 10.0% of production;
all holders of IUP and IUPK must conduct their own coal mining, processing and refining activities.
Under MEMR Regulation 28, mining services companies are only allowed to perform overburden
removal and to transport coal;
the central government has the power to determine production levels for each commodity in each year on
a province by province basis;
IUP and IUPK holders may not transfer their IUPs and IUPKs to any third party; and
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both the IUP and IUPK holders must submit a plan of reclamation and post mining activity and to provide
a reclamation guarantee and post mining guarantee.
According to the Mining Law, the implementing regulations must be issued within one year from the
effective date of the Mining Law. As of the date of this offering circular, the Government of Indonesia had issued
two governmental regulations as follows:
Government Regulation No. 22 of 2010 concerning the Determination of Mining Areas dated 1 February
2010 (Government Regulation 22).
Government Regulation 22 regulates the procedures to determine the mining operational area (Wilayah
Usaha Pertambangan or WUP), special mining operation area (Wilayah Usaha Pertambangan Khusus
or WUPK) and peoples mining area (Wilayah Pertambangan Rakyat or WPR). The determination of
these mining areas lies on the sole discretion of the Government, and specifically for WUPK, prior
approval from the House of Representatives (Dewan Perwakilan Rakyat) is required.
Government Regulation 23.
Government Regulation 23 states the procedure for obtaining IUP, IUPK and IPR, which may only be
obtained by the said company after it has acquired a mining business license area (Wilayah Izin Usaha
Pertambangan or WIUP) or a special mining business license area (Wilayah Izin Usaha Pertambangan
Khusus or WIUPK). A WIUP or WIUPK can only be acquired through an auction held by a committee
which is assembled by the Government (the Ministry of Energy and Mineral Resources, the governor or
the regent/major, depending on the location of WIUP/WIUPK). Especially for a WIUPK, first priority is
given to a state-owned company or a local government-owned company. If none of them are interested,
the WIUPK will be offered to coal mining companies through an auction.
Government Regulation 23 provides that the holders of Production Operation IUP that export their
produced mineral and/or coal must refer to the benchmark prices to be determined by the Ministry of
Energy and Mineral Resources based on market mechanism and/or in accordance with the price which
generally applicable in the international market. Details of the determination of these benchmark prices
will be regulated in a Ministerial regulation.
In addition, Government Regulation 23 also provides that the holders of Production Operation IUP and
Production Operation IUPK must prioritize domestic needs for coal. The holder of Production Operation IUP
and Production Operation IUPK may export their coal only after the domestic needs of coal have been
fulfilled. Further details on the procedures of prioritization coal for domestic needs are regulated in a
Ministerial regulation. Prior to the issuance of Government Regulation 23, a Ministerial Regulation No. 34 of
2009 regarding Prioritization of Domestic Mineral and Coal Supplies (MEMR Regulation 34) has been
issued by the Minister of Energy and Mineral Resources. This MEMR Regulation 34 requires producers of
coal and minerals in Indonesia to allocate a portion of their annual production output to the domestic
Indonesian market.
Some material provisions of MEMR Regulation 34 are:
Tonnagethe annual production output required for the domestic Indonesian market will be set by the
Ministry of Energy and Mineral Resources based on the estimated annual demand proposed by
potential domestic buyers in the previous year. MEMR Regulation 34 does not specify how each
individual companys tonnage for domestic market obligation will be calculated (as opposed to how the
national domestic market obligation requirement is calculated).
PriceThe price of coal allocated for the domestic market will refer to the coal benchmark price,
which is based on the international index. Details of the implementation of these benchmark prices
have yet to be introduced and will be provided in a separate Ministerial regulation.
Annual Work Program and BudgetMEMR Regulation 34 provides that each coal company must
include in its annual work program and budget the minimum percentage of its production proposed to
be made available for domestic market obligation sales.
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Buy inCoal producers may buy coal from other sources to satisfy their domestic market obligation.
On-selling prohibitionMEMR Regulation 34 prohibits domestic purchasers from exporting their
purchased coal.
Currently the Government is drafting the other two implementing regulations for the Mining Law which
relate to (i) reclamation and post-mining activities; and (ii) the development and monitoring of mining business
operations.
Coal Contract of Work
When Law 11/1967 was enacted, the Minister of Energy and Mineral Resources was given the authority to
appoint contractors through contracts of work to carry out mining activities that had not been or could not be
undertaken by the Government of Indonesia as the holder of the KP. Such contracts of work governed all mineral
mining activities. Contracts of work were entered into by all foreign investment companies which intend to
engage in mining activities in Indonesia and by domestic investment companies.
In October 1981, Presidential Decree No. 49 of 1981 regarding Provisions for Cooperation Agreement on
Coal Mining Operation between Perusahaan Negara Tambang Batubara and Private Contractors (Decree 49)
was enacted. The term used in Decree 49 was cooperation agreement. A cooperation agreement is an
agreement entered into by and between Perusahaan Negara Tambang Batubara, as the holder of the KP, and a
private company, as the contractor, to engage in coal mining activities for a period of 30 years. A cooperation
agreement is also known as a coal contract of work (Perjanjian Kerjasama Pengusahaan Batubara).
Under certain generations of coal contracts of work (as discussed below), the Government of Indonesia
receives 13.5% of all coal produced within the concession area, subject to deductions for certain costs and an
administration fee, and a dead rent at a rate per hectare per annum that is dependent on the relevant phase of
development. Pursuant to Government Regulation No. 45 of 2003 regarding Tariffs of Non-Tax State Revenues
Effective Within the Ministry of Energy and Mineral Resources, holders of a KP are obliged to pay an
exploitation royalty per ton ranging from 3.0% to 7.0% of the sales price of the coal depending on the quality of
the coal and whether the coal is extracted from an open pit or underground mine, a regional development fee
based on what is agreed with the regional government in each case and a dead rent at a rate per hectare per
annum that is dependent on the relevant phase of development.
There are three different generations of coal contracts of work in existence, all of which have differing terms
and conditions. The use of the term first generation coal contracts of work refers to those entered into after the
enactment of Decree 49 and before Decree 49 was revoked. First generation coal contracts of work acknowledge,
among other things, that (i) the contractor must deliver 13.5% share of its coal to PT Perusahaan Negara
Tambang Batubara in the form of physical delivery of coal or pay 13.5% of the proceeds of sale derived from the
final processed coal production in each year net of certain costs and an administration fee as royalties to PT
Perusahaan Negara Tambang Batubara; (ii) the contractor must pay, among other amounts, corporate tax and the
regional development levy (Iuran Pembangunan Daerah); and (iii) the capital goods and imported material
remain the property of PT Perusahaan Negara Tambang Batubara, and four years after the production stage
commenced, the foreign investment contractor was required to offer annually a percentage of its shares to the
Government of Indonesia and/or an Indonesian company controlled by Indonesians and/or an Indonesian citizen,
so that by the tenth year of production, at least 51.0% of the share capital of such contractor is owned by the
Government of Indonesia and/or an Indonesian company controlled by Indonesians and/or an Indonesian citizen.
In 1984, the name and status of PT Perusahaan Negara Tambang Batubara was changed to Perusahaan
Umum (PERUM) Tambang Batubara. In 1990, Perusahaan Umum (PERUM) Tambang Batubara was dissolved
and all of its rights and obligations relating to cooperation agreements were assigned to PT Perusahaan Negara
Tambang Batubara.
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In 1993, Presidential Decree No. 21 of 1993 concerning Principle Provisions for Cooperation Agreement on
Coal Mining Operation between PT Perusahaan Negara Tambang Batubara and Private Contractors
(Decree 21) was enacted. The term used in Decree 21 was cooperation agreement on coal mining operation.
The coal contracts of work that were entered into after the enactment of Decree 21 are referred to as second
generation coal contracts of work.
The principal differences between a first generation and a second generation coal contracts of work are that
the contractor under a second generation coal contract of work is required to pay compulsory governmental taxes
and levies, pursuant to the prevailing regulations enacted at that time, and all equipment purchased by the
contractor under a second generation coal contract of work remains the property of the contractor. Such property
belongs to the Government of Indonesia under a first generation coal contract of work and the contractor under a
first generation coal contract of work is only required to pay taxes and levies stipulated in the coal contract of
work. Furthermore, instead of the 51.0% divestment requirement in first generation coal contract of work, under
the second generation coal contract of work, foreign investment contractors are required to offer its shares to the
Government of Indonesia, Indonesian entities and/or Indonesian citizens to the extent required under the foreign
investment law. However, the foreign investment law has subsequently been revoked by the 2007 Investment
Law which no longer provides for any compulsory offer of shares by a foreign investor to Indonesian entities
and/or citizens.
Decree 21 was then revoked and replaced by Presidential Decree No. 75 of 1996 concerning Main
Provisions of Contracts of Works for Coal Mining Undertakings (Decree 75). Decree 75 stipulates that work
agreement on coal mining operation, which is known as a coal cooperation agreement, is an agreement
between the Government of Indonesia and a private contractor to perform coal mining activities. Pursuant to
Decree 75, all rights and obligations of PT Perusahaan Negara Tambang Batubara relating to cooperation
agreements on coal mining operation were assigned to the Minister of Energy and Mineral Resources. The coal
contracts of work that were entered into after the enactment of Decree 75 are referred to as third generation coal
contracts of work.
In addition, pursuant to Decree 75, all coal contracts of work enable the Government of Indonesias 13.5%
share of coal to be paid in cash based on the FOB invoice price of coal payment or the price at sale point. The
coal contract of work requires the contractor to pay government taxes and other regional government levies that
have been approved by the Government of Indonesia based on the prevailing regulations at the time the coal
contract of work was signed. The contractor is not required to pay several levies, (including import duty (bea
masuk), import levy (pungutan impor) and transfer of title levy (bea balik nama)). In addition, a foreign
investment contractor is required to sell a portion of its shares to an Indonesian citizen and/or entity pursuant to
prevailing regulations.
The implementing regulation of Decree 75 is Decree of the Minister of Energy No. 680.K/29/M.PE/1997 as
amended by Decree of the Minister of Energy No. 0057K/40/MEM/2004. This implementing regulation
stipulates that all matters in relation to coal mining operations based on Decree 49 and Decree 21 which had
previously been under the authority of PT Perusahaan Negara Tambang Batubara are assigned to the Minister of
Energy and Mineral Resources and carried out by the Directorate General of Geology and Mineral Resources.
Decree 75 regulates coal contracts of work. Some material components of Decree 75 are as follows:
the contractor bears all risks and costs related to coal mining activities performed under the coal contract
of work;
the contractor must deliver 13.5% of the proceeds derived from the sale of final processed coal
production to the Government of Indonesia in cash based on the FOB invoice price or the price at point of
sale;
the contractor must pay an annual fixed fee (dead rent) to the Government of Indonesia based on the size
of the contract or authorization area in accordance with prevailing regulations;
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capital goods and materials to be imported for the operation of the mining activities are exempted from
among others, import duties and import levies;
the contractor must prioritize the use of Indonesian products and services and Indonesian labor with
regard to the Government of Indonesias policy related to the development of certain regional areas and
environmental conservation;
the contractor must pay taxes to the Government of Indonesia in accordance with the prevailing tax
regime at the time of the contract;
the contractor must pay regional levies that have been ratified by the Government of Indonesia; and
the contractor must submit an application and obtain approval from the government on annual basis for
the required capital goods and materials to be imported.
In 2004, Decree 1614 was enacted, which differentiates between a contract of work and a coal contract of
work. Pursuant to Decree 1614:
a contract of work (kontrak karya) is an agreement entered into by and between the Government of
Indonesia with a limited liability company established under the framework of foreign investment to
conduct mining activities, excluding oil, gas, geothermal, radioactive and coal; and
a coal contract of work (Perjanjian Karya Pengusahaan Pertambangan Batubara) (PKPPB) is an
agreement entered into by and between the Government of Indonesia with a limited liability company
established to conduct foreign or domestic investments in coal mining activities.
However, Decree 1614 will not affect the existing coal contract of work held by Berau Coal as it provides
that all existing coal contracts of work that have been signed by the Government of Indonesia prior to the
issuance of Decree 1614, remain under the authority of the Minister of Energy and Mineral Resources and are
carried out by the Directorate General of Geology and Mineral Resources (currently, the Directorate General of
Mineral, Coal and Geothermal).
Regional Government Law
Indonesia is divided into provinces, which are further subdivided into regencies and municipalities. The
regencies and municipalities within a province are autonomous in most of their activities and, therefore, are not
subservient to the provincial government.
In 1999, the Government of Indonesia adopted Law No. 22 of 1999 (Law 22/1999), which transferred and
delegated to the regional governments certain powers that had previously been exercised by the Government of
Indonesia. On October 15, 2004, the Government of Indonesia enacted Law No. 32 of 2004 concerning the
regional government, as amended by Government Regulation in Lieu of Law No. 3 of 2005 which was later
reaffirmed as law by Law No. 8 of 2005 and lastly amended by Law No. 12 of 2008 (Law 32/2004) that
replaced Law No. 22 of 1999 and, as was the case with Law 22/1999, substantially changed the legal and
regulatory framework of the mining industry in Indonesia.
Law 32/2004 requires that regional governments maintain fair and harmonious relationships with the
Government of Indonesia and other regional governments when discharging their governmental affairs, including
in connection with the utilization of natural and other resources. The governmental affairs affected include
matters such as (i) authority and responsibility for, and utilization, maintenance and control of the impact on,
cultivation and conservation of natural and other resources; (ii) profit sharing from the utilization of natural and
other resources; and (iii) environmental harmonization, space arrangement plans and land rehabilitation. As of
the date of this offering circular, the Government has issued several implementing regulations of Law 32/2004,
inter alia, the Government Regulation No. 38 of 2007 on the Division of Governmental Duties between the
Central Government, Provincial Government and Regency Government (Government Regulation 38).
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Government Regulation 38 stipulates that energy and mineral resources affairs are divided among the
governmental levels of the central, provincial and regional governments. The regency and municipal government
may choose whether to manage energy and mineral resources affairs if they think that such management may
significantly increase their community welfare.
Forestry Regulation
Law No. 41 of 1999 concerning Forestry, as amended by Law No. 19 of 2004, which ratifies Government
Regulation in Lieu of Law No. 1 of 2004 (Forestry Law) provides that open-cut mining operations cannot be
conducted within protected forests. Notwithstanding this general prohibition, a number of licenses and contracts
for open-cut mining in forest areas that existed prior to 2004 remain valid until their expiration. Significant areas
of Indonesia have been classified as protected forests. Berau Coals concession area does not fall within
protected forests but falls within commercially producing forests and, therefore, it will require borrow-use
permits for its mining operations in those parts of its concession areas.
Based on Forestry Law, the use of forest areas for mining purposes must be conducted based on a borrowuse permit (Izin Pinjam Pakai) issued by the Minister of Forestry of Indonesia. Under Government Regulation
No. 24 of 2010 on the Utilisation of Forest Area and Regulation of Minister of Forestry No. P.43/Menhut II/2008
regarding the Guidelines of Borrow Use Forest Area (Regulation 43), the company applying for a borrow-use
permit may deliver land compensation or pay the compensation in the form of a non-tax state income. It also
stipulates that a borrow-use permit is valid for a maximum of 20 years.
Pursuant to the Decree of the Minister of Forestry and Plantations No. 146/KPTS-II/99 dated March 22,
1999 regarding Guidelines for Reclamation of Ex-Mines within Forestry Areas, a mining and energy company
whose mining activities are conducted within forest areas which are licensed by the Minister of Forestry must
commence reclamation of its mining areas, at its own expense, within a maximum period of six months after
mining activities have been completed. These reclamation and rehabilitation activities are required to be
consolidated in a reclamation plan to be evaluated and approved by the Center for Land Rehabilitation and Soil
Conservatory (Balai Rehabilitasi Lahan dan Konservasi Tanah), the Land Rehabilitation and Soil Conservatory
Unit or the Level II Regional Forestry Service Office (Unit Rehabilitasi Lahan dan Konservasi Tanah atau Dinas
Kehutanan Daerah Tingkat II). Berau Coal is required to submit a report concerning the progress of reclamation
and rehabilitation activities to these government agencies every quarter. In addition, Government Regulation
No. 76 of 2008 regarding reclamation and reforestation requires the holders of such rights to conduct
reforestation and reclamation.
Environmental Regulation
Environmental protection in Indonesia is governed by various laws, regulations and decrees, including:
Law No. 32 of 2009 regarding Environmental Protection and Management (Environmental Law) which
revokes the previous law on the same matter, Law No. 23 of 1997 (Law 23/1997);
Government Regulation No. 27 of 1999 regarding Environmental Impact Analysis (Analisa Mengenai
Dampak Lingkungan Hidup or AMDAL);
Regulation of the State Minister of Environmental Affairs No. 11 of 2006 regarding businesses and/or
action plans which must be completed with AMDAL (Regulation 11);
Decree of the Minister of Energy and Mineral Resources No. 1453K/29/MEM/2000 dated November 3,
2000 concerning the Technical Guidelines with respect to the Organization of the Government Duty in
the Field of General Mining (Decree 1453);
Decree of the Minister of Energy and Mineral Resources No. 1457 K/28/MEM/2000 dated November 3,
2000 concerning Technical Guidelines for Environmental Management in the Field of Mines and Energy
(Decree 1457); and
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Minister of Energy and Mineral Resources Regulation No. 18 of 2008 dated May 29, 2008 concerning
Reclamation and Mine Site Closure (Regulation 18).
The Environment Law, which was enacted on October 3, 2009 to replace the previous Law 23/1997,
introduces several materials provisions including:
a new permit, the Environmental Permit (Izin Lingkungan) is now mandatory for a company which is
required to obtain an AMDAL or a UKL/UPL. The environmental permit would be a prerequisite to
obtain the relevant business licenses and if the environmental permit is revoked, the business license
would terminate as well. The Environmental Law requires all existing environmental permits to be
integrated into environmental permit within one year as of the enactment of Environmental Law.
an environmental audit is now required for (i) businesses that should have but have not prepared an
AMDAL, (ii) businesses in high-risk sectors or (iii) companies that do not appear to comply with
environmental laws and regulations.
all holders of environmental permit must provide an environmental guarantee to be placed in designated
state owned-banks in order to ensure recovery of environmental functions.
any business which potentially has important impact to the environment must conduct environmental risk
analysis.
all waste disposals require licensing and may only be conducted in specified locations determined by the
Minister of Environmental Affairs.
the imposition of remedial and preventative measures and sanctions (such as the obligation to rehabilitate
tailings areas, the imposition of substantial criminal penalties and fines and the cancellation of approvals)
to remedy or prevent pollution caused by operations.
the sanctions imposed range from one to 15 years of imprisonment applicable to any person who caused
environmental pollution or environmental damage and/or fines ranging from Rp. 500 million to Rp. 15
billion. The imprisonment and the amount of fine will be increased by one-third if the criminal offense is
conducted on behalf of a company. A monetary penalty may be imposed in lieu of performance of an
obligation to rehabilitate damaged areas.
The above matters will be further regulated in a number of implementing regulations which has not been
issued. In the interim, all implementing regulations of Law 23/1997 will remain valid to the extent they are not
contradictory to the Environmental Law.
Regulation 11 and Decree 1457 stipulate, among other matters, that mining companies whose operations
have a significant environmental or social impact must prepare and maintain an AMDAL document which
consists of Terms of Reference on Environmental Impact Analysis (Kerangka Acuan Analisis Dampak
Lingkungan or KA ANDAL), an Environmental Impact Analysis (Analisis Dampak Lingkungan or
ANDAL), an Environmental Management Plan (Rencana Pengelolaan Lingkungan or RKL) and an
Environmental Monitoring Plan (Rencana Pemantauan Lingkungan or RPL). Where the AMDAL document is
not required, under Decree 1457, a mining company must prepare an Environmental Management Effort (Upaya
Pengelolaan Lingkungan) and an Environmental Monitoring Effort (Upaya Pemantauan Lingkungan).
Waste water disposal is regulated by Government Regulation No. 82 of 2001 concerning Water Quality
Management and Water Pollution Control (Government Regulation 82). Government Regulation 82 requires
responsible parties, including mining companies, to submit reports regarding their disposal of waste water
detailing their compliance with the relevant regulations. Such reports are to be submitted to the relevant mayor or
regent, with a copy provided to the Minister of Environmental Affairs, on a quarterly basis.
The Decree of the Minister of Environmental Affairs No. 113 of 2003 concerning Waste Water Quality
Standard for Coal Mining Business and/or Activities (Decree 113) further regulates mining companies
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treatment of waste water. Decree 113 obliges mining companies to (i) process their waste water from mining
activities and processing/washing activities in accordance with mandated quality standards stipulated in Decree
113; (ii) manage water that is affected by mining activities by way of sedimentation pools; and (iii) examine the
location for the point of compliance of the waste water from mining activities where the waste water from the
sedimentation pools and/or the waste water treatment facilities is discharged into the surface water. Under Decree
113, mining companies must comply with requirements stipulated in their respective licenses regarding disposal
of waste water and submit an analysis of the waste water and daily flow rate to the regent or mayor, with copies
to the governor and the Minister of Environmental Affairs and other related government institutions on a
quarterly basis.
Mining companies must also comply with other regulations, including Government Regulation No. 18 of
1999, as amended by Government Regulation No. 85 of 1999 regarding Management of Hazardous and Toxic
Waste Materials, and Government Regulation No. 74 of 2001 regarding Management of Hazardous and Toxic
Materials (Bahan Berbahaya dan Beracun), relating to the management of certain materials and waste.
Flammable, poisonous or infectious waste from mining operations is subject to these regulations unless we can
prove scientifically that they fall outside the categories set forth in such regulations. These regulations require a
company that uses such materials or produces waste to obtain a license in order to store, collect, utilize, process
and accumulate such waste. This license may be revoked and operations may be required to cease if the
regulations relating to such waste are violated.
The activities of storing and collecting used lubricant oil is regulated by the Decree of the Head of Regional
Environmental Impact Controlling Agency (Badan Pengendalian Dampak Lingkungan Daerah) No. 255 of 1996
concerning the Procedure and Requirements on the Storing and Collecting of Used Lubricant Oil (Decree 255)
which provides, among other things, that an entity which collects used oil for further use or processing must
comply with certain requirements, as regulated by Decree 255, including obtaining a license, meeting certain
specifications with regard to the buildings where used oil is to be stored, setting up a standard procedure on
storage and transportation of used oil and submitting quarterly periodic reports with regard to these activities.
Decree 1453 provides technical guidelines for the preparation of the AMDAL, RKL and RPL documents for
general mining activities. Decree 1453 states that regional governments are responsible for the monitoring the
implementation of regulation of environmental matters and issuance of the approval of AMDAL. Berau Coal has
received approval for AMDAL documents and reports from the relevant regional government except in relation
to our concession area, which is in preparation. Pursuant to Decree 1453, holders of KPs, contracts of work and
coal contracts of work are required to provide to the relevant regional government an Annual Environmental
Management and Monitoring Plan (Rencana Tahunan Pengelolaan dan Pemantauan Lingkungan or RTKPL)
at the beginning of the exploitation or production stage. From that time on, holders are also required to provide
an Annual Environmental Management Plan (Rencana Tahunan Pengelolaan Lingkungan or RTKL), and
provide a reclamation guarantee to be deposited with the government bank or foreign exchange bank (bank
devisa). Guidelines for the preparation of the RTKPL and RTKL and procedures for the deposit of a reclamation
guarantee are contained in Decree 1453. Berau Coal has complied with its obligations to submit quarterly reports
on exploration, mining services, RPL and RKL and safety and occupational health, to the Government of
Indonesia. Berau Coal has also complied with its obligations to submit RTKPL and RTKL reports and has
provided a reclamation guarantee for 2009 in respect of the mining operations at the Lati, Binungan and
Sambarata mines, while payment for 2010 is being processed. Upon approval of the mine closing plan. Berau
Coal will have to pay the mine closure guarantee.
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Decree of the Minister of Mines and Energy No. 1211.K/008/M.PE/1995 dated July 17, 1995 regarding
Prevention and Management of Destruction and Pollution of the Environment in General Mining Activities
(Decree 1211) requires a mining company to have the facilities and bear the costs and expenses of performing
activities to prevent and minimize environment pollution and destruction resulting from its mining activities. For
this purpose, the mining company must, among others:
appoint a Head of Mine Technology (Kepala Teknik Tambang) who is required to directly manage the
prevention of environmental damage and pollution caused by general mining activities and submit a
report regularly every six months to the Head of Mine Inspection (Kepala Pelaksana Inspeksi Tambang
or KAPIT), and a copy to the Head of Regional Mine Inspection Implementation (Kepala Pelaksana
Inspeksi Tambang Wilayah);
submit a RTKL, which includes information regarding reclamation activities to the Head of Mine
Inspection (KAPIT) and a copy to the Head of Regional Mine Inspection Implementation (Kepala
Pelaksana Inpseksi Tambang Wilayah); and
submit an Annual Plan for Environment Monitoring (Rencana Tahunan Pemantauan Lingkungan) to the
Head of Mine Inspection (KAPIT) and a copy to the Head of Regional Mine Inspection Implementation
(Kepala Pelaksana Inspeksi Tambang Wilayah).
Under Decree 1211, mining companies are also required to provide a reclamation guarantee, the amount of
which has to be approved by the Directorate General of Mineral, Coal and Geothermal, in a form of security
deposit in the relevant companys account in the appointed bank. Berau Coal has complied with the requirements
under Decree 1211 in all material respects, including the payment of the reclamation guarantee up to 2009, while
payment for 2010 is being processed.
In relation to the reclamation and closing of mines, pursuant to Minister of Energy and Mineral Resources
Regulation No. 18 of 2008 on Reclamation and Closing of Mines, a holder of a mining business license must
provide reclamation and closing of mines guarantee in the form of time deposit, bank guarantee, insurance or
accounting reserve. The amount guaranteed will be determined by the Minister, Governor or Regent/Major as
relevant, having jurisdiction over the mining operational area. Failure to provide the guarantee will result in
administrative sanctions in the form of written warning, temporary suspension of part or all of the mining
activities and/or revocation of the mining license.
Other Regulations Related to Mining Operations and Coal Mining Companies
Other relevant regulations applicable to our mining operations include among others regulations regarding
the use of harbors for internal use and storage and usage of explosive materials, and other governmental
regulations as follows:
usage and operation of ports/terminal and jetties for internal use:
Recently the Government of Indonesia issued Law No. 17 of 2008 concerning Sea Transport (Pelayaran)
and Government Regulation No. 61 of 2009 concerning Ports which replaces the previous regulatory
framework relevant to ports and terminals. An implementing Ministerial regulation is to be issued,
pending of which the Decree of Minister of Transportation No. KM. 55 Year 2002, as amended by Decree
of the Minister of Transportation No. KM. 55 Year 2007 on the Management of Special Ports remain
effective. Under these regulations in order to operate a special terminal or jetties for internal use to
support its business activities, an Indonesian entity is required to obtain a special terminal construction
license and a terminal operating license, issued by the Minister of Transportation. Once the terminal
construction license has been obtained the licensee has one year in which to commence the construction
of the terminal, and the construction must be completed within three years of the date of issuance of the
license. The terminal operating license is valid for 5 years and can be extended.
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approval for the changes of investment:

In 2009, the Minister of Energy and Mineral Resources enacted Regulation of the Minister of Energy and
Mineral Resources No. 18 of 2009 on Procedures for Changing Investment in the Framework of the
Implementation of Contract of Work and Coal Contract of Work (Regulation 18/2009). Pursuant to
such regulation, with respect to a companys coal contract of work, a prior approval from the Minister of
Energy and Mineral Resources is required for the changes of investment and source of financing;
company status from foreign investment to domestic investment or from domestic investment to foreign
investment; articles of association of such company; members of the board of directors and/or the board
of commissioners of such company; and/or share ownership.
In 2010, Regulation No. 5 of 2010 on Delegation of Authority to Grant Permit in Energy and Mineral
Resources Area to The Chairman of Investment Coordinating Board (Regulation 5/2010) is issued by
Minister of Energy and Mineral Resources. Regulation 5/2010 stipulates that approval for the same
matters regulated under Regulation 18/2009 shall be issued by the Chairman of Investment Coordinating
Board after obtaining recommendation from the Ministry of Energy and Mineral Resources. However,
Regulation No. 5/2010 does not specifically revoked Regulation 18/2009, which in practice, creates
confusion for the implementation of these two regulations. Further clarification from the Ministry of
Energy and Mineral Resources is awaited.
power generation for internal use:
Regulation of Minister of Energy and Mineral Resources No. 10 of 2005 requires businesses to obtain an
electricity generation permit for own use in order to build power generation facilities. The permit is
issued by the appropriate authority depending on the facilities installed.
storage and usage of explosive materials:
The storage and usage of explosive material is subject to the Decree of Minister of Mining and Energy
No. 555.K/26/M.PE/1995 dated May 22, 1995 and Chief of the Police Force of the Republic of Indonesia
Regulation No. 2 Year 2008 concerning Monitoring, Control and Security of Commercial Explosive
Material dated April 29, 2008 (CPFRI Regulation No. 2 Year 2008). Pursuant to CPFRI Regulation
No. 2 Year 2008 there are several licenses that should be obtained. It includes: explosive material
warehouse license; ownership, possession and storage license; and explosive material purchase and usage
license.
Berau Coal has complied with these regulations in all material respects.
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DESCRIPTION OF THE NOTES

For purposes of this Description of the Notes, the term Issuer refers only to Berau Capital Resources
Pte. Ltd., a private company with limited liability incorporated under the laws of Singapore and a wholly-owned
subsidiary of the Parent Guarantor, and any successor obligor on the Notes, and the term Parent Guarantor
refers only to PT Berau Coal Energy Tbk, a company incorporated with limited liability under the laws of
Indonesia, and not to any of its Subsidiaries. The Parent Guarantors guarantee of the obligations of the Issuer
under the Indenture and the Notes is referred to as the Parent Guarantee. Each Subsidiary of the Parent
Guarantor that guarantees the Notes is referred to as a Subsidiary Guarantor, and each such guarantee is
referred to as a Subsidiary Guarantee. The term Guarantor refers to either the Parent Guarantor or a
Subsidiary Guarantor, as the context requires, and the term Guarantee refers to either the Parent Guarantee or a
Subsidiary Guarantee (including any Indonesian Law Guarantee), as the context requires. The term Guarantors
refers to the Parent Guarantor and the Subsidiary Guarantors collectively, and the term Guarantees refers to the
Parent Guarantee and the Subsidiary Guarantees, collectively.
On July 8, 2010, the Issuer issued US$350,000,000 aggregate principal amount of Notes (the Existing
Notes) under an Indenture dated as of July 8, 2010 by and among the Issuer, the Parent Guarantor and each
Subsidiary Guarantor, as guarantors, and HSBC Bank USA, National Association, as trustee (the Trustee).
The Issuer may issue additional Notes (Additional Notes) from time to time under the Indenture. The
Issuer will only be permitted to issue such Additional Notes if, at the time of such issuance, it is in compliance
with the covenants contained in the Indenture. The Notes offered hereby will constitute Additional Notes for the
purposes of the Indenture. The Notes offered hereby and any subsequent issue of Additional Notes will be
secured, equally and ratably, with the Existing Notes. The Notes offered hereby, the Existing Notes and any
Additional Notes subsequently issued under the Indenture will be treated as a single series of Notes for all
purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to
purchase. Holders of the Notes offered hereby, the Existing Notes and any Additional Notes subsequently issued
under the Indenture will vote as one class under the Indenture. Unless the context otherwise requires, for all
purposes of the Indenture and this Description of the Notes, references to the Notes include any Additional
Notes actually issued, including the Notes offered hereby, and Original Issue Date refers to July 8, 2010, the
date the Existing Notes were issued.
The following is a summary of certain provisions of the Indenture, the Notes and the Guarantees. This
summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of
the Indenture, the Notes and the Guarantees. It does not restate those agreements in their entirety. Whenever
particular sections or defined terms of the Indenture not otherwise defined herein are referred to, such sections or
defined terms are incorporated herein by reference. Copies of the Indenture are available during normal office
hours at the corporate trust office of the Trustee at 452 Fifth Avenue, New York, New York 10018.
Brief Description of the Notes
The Notes will:
be general obligations of the Issuer;
be senior in right of payment to any existing and future obligations of the Issuer expressly subordinated in
right of payment to the Notes;
rank at least pari passu in right of payment with all unsubordinated Indebtedness of the Issuer (subject to
any priority rights of such unsubordinated Indebtedness pursuant to applicable law);
be guaranteed by the Guarantors on an unsubordinated basis; and
be secured by first-priority Liens on the Collateral.
The Notes will mature on July 8, 2015 unless earlier redeemed pursuant to the terms thereof and the
Indenture.
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Interest
The Notes will bear interest at 12.5% per annum from the Original Issue Date or from the most recent
interest payment date to which interest has been paid or duly provided for, payable semi-annually in arrears on
January 8 and July 8 of each year (each a Notes Interest Payment Date) commencing January 8, 2011. Interest
on the Notes will be paid to Holders of record at the close of business on June 23 or December 24 immediately
preceding a Notes Interest Payment Date (each a Notes Record Date), notwithstanding any transfer, exchange
or cancellation thereof after a Notes Record Date and prior to the immediately following Notes Interest Payment
Date. Interest on the Notes will be calculated on the basis of a 360-day year comprised of twelve 30-day months.
Payment of Notes
Except as otherwise provided in the Indenture, the Notes may not be redeemed prior to maturity.
In any case in which the date of the payment of principal of, premium, if any, or interest on the Notes
(including any payment to be made on any date fixed for redemption or purchase of any Note) is not a Business
Day in the relevant place of payment, then payment of principal, premium, if any, or interest need not be made in
such place on such date but may be made on the next succeeding Business Day in such place. Any payment made
on such Business Day will have the same force and effect as if made on the date on which such payment is due,
and no interest on the Notes will accrue for the period after such date. Interest on overdue principal and interest
and Additional Amounts, if any, will accrue at a rate that is 1% higher than the then applicable interest rate on
the Notes.
The Notes will be issued only in fully registered form, without coupons, in minimum denominations of
US$100,000 of principal amount and integral multiples of US$1,000 in excess thereof. See Book-Entry;
Delivery and Form. No service charge will be made for any registration of transfer or exchange of Notes, but the
Issuer may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge
payable in connection therewith.
All payments on the Notes will be made in U.S. Dollars in immediately available funds by the Issuer at the
office or agency of the Issuer maintained for that purpose in the Borough of Manhattan, The City of New York
(which initially will be the corporate trust administration office of the Trustee, currently located at HSBC Bank
USA, National Association, Corporate Trust and Loan Agency, 452 Fifth Avenue, New York, New York,
10018), and the Notes may be presented for registration of transfer or exchange at such office or agency;
provided that, payment of interest may be made by check mailed to the address of the Holders as such address
appears in the Note register for Holders of Certificated Notes who have not provided a specified account for
receipt of funds to the Paying Agent. Interest payable on the Notes held through DTC will be available to DTC
participants (as defined herein) on the New York Business Day following payment thereof.
The Parent Guarantee
The Parent Guarantee will:
be a general obligation of the Parent Guarantor;
be effectively subordinated to secured obligations of the Parent Guarantor, to the extent of the value of
the assets (other than the Common Security (as defined below)) serving as security therefor;
be senior in right of payment to all future obligations of the Parent Guarantor expressly subordinated in
right of payment to the Parent Guarantee; and
rank at least pari passu in right of payment with all unsecured, unsubordinated Indebtedness of the Parent
Guarantor (subject to any priority rights of such unsecured, unsubordinated Indebtedness pursuant to
applicable law).
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In addition, subject to the limitation described in Risk FactorsRisks Relating to the Notes and the
Guarantees, the Parent Guarantee will:
be secured by a first ranking security interest in the Notes Collateral (subject to any Permitted Liens)
pledged by the Parent Guarantor, as described below under the caption Security;
be secured on an equal and ratable basis with all obligations of the Parent Guarantor (and any other
obligors) under all existing and future Permitted Pari Passu Secured Indebtedness by first-priority Liens
on the Common Security; and
rank effectively senior in right of payment to the unsecured obligations of the Parent Guarantor with
respect to the value of the Collateral securing the Parent Guarantee (subject to any priority rights of such
unsecured obligations pursuant to applicable law).
Under the Indenture, the Parent Guarantor will guarantee the due and punctual payment of the principal of,
premium, if any, and interest on, and all other amounts payable under, the Notes. The Parent Guarantor will
(1) agree that its obligations under the Parent Guarantee will be enforceable irrespective of any invalidity,
irregularity or unenforceability of the Notes or the Indenture and (2) waive its right to require the Trustee to
pursue or exhaust its legal or equitable remedies against the Issuer prior to exercising its rights under the Parent
Guarantee. Moreover, if at any time any amount paid under a Note or the Indenture is rescinded or must
otherwise be restored, the rights of the Holders under the Parent Guarantee will be reinstated with respect to such
payments as though such payment had not been made. All payments under the Parent Guarantee are required to
be made in U.S. Dollars.
Release of the Parent Guarantee
The Parent Guarantee may be released in certain circumstances, including:
upon repayment in full of the Notes; and
upon a defeasance as described under DefeasanceDefeasance and Discharge.
The Subsidiary Guarantees
PT Armadian Tritunggal, PT Berau Coal (Berau Coal), Empire Capital Resources Pte. Ltd., Winchester
Investment Holdings PLC, Aries Investments Limited, Rognar Holding B.V. (Rognar), Seacoast Offshore Inc.
and the Issuer are the only Subsidiaries of the Parent Guarantor. Each of these Subsidiaries is a Restricted
Subsidiary. Each of these Subsidiaries, except for Berau Coal, are holding companies, financing subsidiaries, or
dormant companies that do not have significant operations. The initial Subsidiary Guarantors that executed the
Indenture on the Original Issue Date were PT Armadian Tritunggal, Berau Coal, Empire Capital Resources Pte.
Ltd., Winchester Investment Holdings PLC, Aries Investments Limited and Seacoast Offshore Inc. Rognar is not
an initial Subsidiary Guarantor. On the date hereof, the initial Subsidiary Guarantors continue to guarantee the
Existing Notes.
The Parent Guarantor will (i) cause each of its future Restricted Subsidiaries (other than a Finance
Subsidiary), immediately upon the Parent Guarantor becoming the direct or indirect holder of more than 80.0%
of the Voting Stock of such Restricted Subsidiary and (ii) use its reasonable best efforts to cause each of its other
future Restricted Subsidiaries (other than a Finance Subsidiary) immediately upon becoming a Restricted
Subsidiary, to execute and deliver to the Trustee a supplemental indenture to the Indenture pursuant to which
such Restricted Subsidiary will guarantee the payment of the Notes. Each Restricted Subsidiary that guarantees
the Notes after the Original Issue Date is referred to as a Future Subsidiary Guarantor and upon execution of
the applicable supplemental indenture to the Indenture will be a Subsidiary Guarantor.
The Subsidiary Guarantee of each Subsidiary Guarantor will:
be a general obligation of such Subsidiary Guarantor;
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be effectively subordinated to secured obligations of such Subsidiary Guarantor, to the extent of the value
of the assets (other than the Common Security) serving as security therefor;
be senior in right of payment to all future obligations of such Subsidiary Guarantor expressly
subordinated in right of payment to such Subsidiary Guarantee; and
rank at least pari passu in right of payment with all unsecured, unsubordinated Indebtedness of such
Subsidiary Guarantor (subject to any priority rights of such unsecured, unsubordinated Indebtedness
pursuant to applicable law).
In addition, subject to the limitations described in Risk FactorsRisks Relating to the Notes and the
Guarantees, the Subsidiary Guarantees of each Subsidiary Guarantor Pledgor (as defined below) will:
be secured on an equal and ratable basis with all obligations of such Subsidiary Guarantor Pledgor (and
any other obligors) under all existing and future Permitted Pari Passu Secured Indebtedness by firstpriority Liens on the Common Security; and
rank effectively senior in right of payment to the unsecured obligations of such Subsidiary Guarantor
Pledgor with respect to the value of the Collateral securing such Subsidiary Guarantee (subject to any
priority rights of such unsecured obligations pursuant to applicable law).
Under the Indenture, and any supplemental indenture to the Indenture, as applicable, each of the Subsidiary
Guarantors jointly and severally guarantees the due and punctual payment of the principal of, premium, if any,
and interest on, and all other amounts payable under, the Notes. Each Subsidiary Guarantor will (1) agree that its
obligations under the Subsidiary Guarantees will be enforceable irrespective of any invalidity, irregularity or
unenforceability of the Notes or the Indenture and (2) waive its right to require the Trustee to pursue or exhaust
its legal or equitable remedies against the Issuer prior to exercising its rights under the Subsidiary Guarantees.
Moreover, if at any time any amount paid under a Note or the Indenture is rescinded or must otherwise be
restored, the rights of the Holders under the Subsidiary Guarantees will be reinstated with respect to such
payments as though such payment had not been made. All payments under the Subsidiary Guarantees are
required to be made in U.S. Dollars.
Under the Indenture, and any supplemental indenture to the Indenture, as applicable, each Subsidiary
Guarantee is limited in an amount not to exceed the maximum amount that can be guaranteed by the applicable
Subsidiary Guarantor without rendering the Subsidiary Guarantee, as it relates to such Subsidiary Guarantor,
voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting
the rights of creditors generally. If a Subsidiary Guarantee were to be rendered voidable, it could be subordinated
by a court to all other indebtedness (including guarantees and other contingent liabilities) of the applicable
Subsidiary Guarantor, and, depending on the amount of such indebtedness, a Subsidiary Guarantors liability on
its Subsidiary Guarantee could be reduced to zero.
The obligations of each Subsidiary Guarantor under its respective Subsidiary Guarantee and the
enforceability of the Collateral granted in respect of the Subsidiary Guarantees of the Subsidiary Guarantor
Pledgors may be limited, or possibly invalid, under applicable laws. See Risk FactorsRisks Relating to the
Notes and the GuaranteesThe guarantees may be challenged under applicable financial assistance, insolvency
or fraudulent transfer laws, which could impair the enforceability of the guarantees.
Release of the Subsidiary Guarantees
A Subsidiary Guarantee given by a Subsidiary Guarantor may be released in certain circumstances,
including:
upon repayment in full of the Notes;
upon a defeasance as described under DefeasanceDefeasance and discharge;
upon the designation by the Parent Guarantor of such Subsidiary Guarantor as an Unrestricted Subsidiary
in compliance with the terms of the Indenture; or
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upon the sale of a Subsidiary Guarantor in compliance with the terms of the Indenture (including the
covenants under the captions Certain CovenantsLimitation on Sales and Issuances of Capital Stock
in Restricted Subsidiaries, Certain CovenantsLimitation on Asset Sales and Consolidation,
Merger and Sale of Assets) resulting in such Subsidiary Guarantor no longer being a Restricted
Subsidiary, so long as (1) such Subsidiary Guarantor is simultaneously released from its obligations in
respect of any of the Parent Guarantors other Indebtedness or any Indebtedness of any other Restricted
Subsidiary and (2) the proceeds from such sale or disposition are used for the purposes permitted or
required by the Indenture.
All of the Parent Guarantors Subsidiaries are Restricted Subsidiaries. However, under the circumstances
described below under the caption Certain CovenantsDesignation of Restricted and Unrestricted
Subsidiaries, the Parent Guarantor will be permitted to designate certain of its Subsidiaries as Unrestricted
Subsidiaries. The Unrestricted Subsidiaries will generally not be subject to the restrictive covenants in the
Indenture. The Unrestricted Subsidiaries will not guarantee the Notes.
Security
The obligations of the Issuer and the Guarantors under the Notes, the Guarantees and the Indenture will be
secured by a security package described below. The Notes Collateral (as defined below) together with the
Common Security (as defined below) is referred to herein as the Collateral.
Description of the Notes Collateral
secured on a first priority basis by Liens on the Notes collateral (the Notes Collateral), which shall consist of a
security interest in the notes debt service account (the Notes Debt Service Account) and the notes interest
reserve account (the Notes Interest Reserve Account), established under the Cash and Accounts Management
Agreement.
The Notes Interest Reserve Account
In addition to the amounts required to be deposited and held in the Notes Debt Service Account under the
Cash and Accounts Management Agreement, the Parent Guarantor shall ensure that the Notes Interest Reserve
Account has at all times on deposit an amount at least equal to the interest and Additional Amounts, if any, due
on the next Notes Interest Payment Date with respect to the Notes (including any Additional Notes). The Trustee
will be entitled to withdraw amounts from the Notes Debt Service Account and the Notes Interest Reserve
Account to pay principal, premium, if any, or accrued interest due under the Notes in the event that the Trustee
has not received any such required payment when due. In the event that amounts in the Notes Interest Reserve
Account have been withdrawn by the Trustee to pay principal, premium, if any, or accrued interest due under the
Notes, the Issuer or the Parent Guarantor will within five days make additional deposits into the Notes Interest
Reserve Account to ensure that the balance on deposit therein is equal to the amount of cash or Temporary Cash
Investments then required to be held therein. Any funds in the Notes Debt Service Account or the Notes Interest
Reserve Account will be permitted to be invested by the Issuer or the Parent Guarantor only in Temporary Cash
Investments described in clauses (1), (2) and (3) of the definition of such term.
Description of the Common Security
further secured on a first priority basis by Liens on the common security (the Common Security), as described
below:
Subject to the terms and conditions of the Intercreditor Agreement described under the caption
Intercreditor Agreement below, the Parent Guarantor has pledged, for the benefit of the Secured
Parties (as defined below), or caused the initial Subsidiary Guarantors to pledge, the Capital Stock owned
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by the Parent Guarantor or such Subsidiary Guarantor of any Person that is a Restricted Subsidiary (other
than a Finance Subsidiary (except the Issuer)) on the Original Issue Date on a first priority basis (subject
to Permitted Liens) in order to secure the obligations under the Common Secured Indebtedness;
The Parent Guarantor has also agreed, for the benefit of the Secured Parties, to pledge, or cause each
Subsidiary Guarantor to pledge, the Capital Stock owned by the Parent Guarantor or such Subsidiary
Guarantor of any Person that is a Restricted Subsidiary or becomes a Restricted Subsidiary (other than a
Finance Subsidiary (other than the Issuer)) after the Original Issue Date, immediately upon such Person
becoming a Restricted Subsidiary, to secure the obligations under the Common Secured Indebtedness;
Berau Coal has executed deeds of fiduciary security granting security interests to the Common Security
Agent, for the benefit of the Secured Parties, with respect to material assets owned by it, including
insurance, its rights under certain principal agreements and its rights to cash receivables under those
principal agreements (including coal supply agreements) and all of its intercompany advances governed
by Indonesian law, in each case, to the extent permitted by applicable law and subject to relevant third
party consents;
Each of the Parent Guarantor, the Issuer and the Subsidiary Guarantors has assigned its interest under
intercompany advances (other than those governed by Indonesian law), including any Intercompany
Loans, to the Common Security Agent for the benefit of the Secured Parties;
The Issuer has executed a security document granting security interests to the Common Security Agent
for the benefit of the Secured Parties, with respect to all of its property and assets (other than the Notes
Debt Service Account and the Notes Interest Reserve Account);
Berau Coal has executed an assignment of principal agreements, assigning to the Common Security
Agent its rights under certain principal agreements, including coal supply agreements (other than those
governed by Indonesian law) described therein;
Pursuant to various Common Security Documents, each of the Parent Guarantor, Berau Coal and certain
other Restricted Subsidiaries has granted to the Common Security Agent, for the benefit of the Secured
Parties, security interests over its respective rights and claims with respect to onshore accounts as
provided for under the Cash and Accounts Management Agreement; and
Pursuant to various Common Security Documents, each of the Issuer, the Parent Guarantor, Berau Coal
and certain other Restricted Subsidiaries has granted to the Common Security Agent, for the benefit of the
Secured Parties, security interests over its rights and claims with respect to offshore accounts as provided
for under the Cash and Accounts Management Agreement; and Berau Coal has granted to the Common
Security Agent security interests over its rights and claims with respect to its offshore cash receivables.
Shares
The following Capital Stock of Restricted Subsidiaries are included in the Common Security:
Shareholder
Company
Parent Guarantor
Parent Guarantor
Parent Guarantor
Parent Guarantor
Parent Guarantor
PT Armadian Tritunggal
Winchester Investment Holdings PLC
Berau Coal
Winchester Investment Holdings PLC
Issuer
Seacoast Offshore Inc.
Berau Coal
Berau Coal
Empire Capital Resources Pte. Ltd.
Rognar Holding B.V.
Rognar Holding B.V.
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% of Shares
Owned
99.99
100
100
100
0.01
51
99.99
39
100
87.18
12.82
Each Subsidiary Guarantor providing Common Security is referred to as a Subsidiary Guarantor Pledgor.
The Common Security will be shared pari passu in right and priority of payment with certain other creditors in
respect of certain obligations of the Guarantors in accordance with the Intercreditor Agreement. See
The Role of the Trustee in respect of the Notes Collateral
The Trustee, on behalf of the Holders, has executed each Notes Security Document.
The Common Security Agent
Additionally, the Trustee, on behalf of the Holders, has:
irrevocably appointed Credit Suisse AG, Singapore Branch as Common Security Agent (the Common
Security Agent), to act as its agent and security trustee under the Common Security Documents; and
authorized the Common Security Agent to perform the duties and exercise the rights, powers and
discretions that are specifically given to it under the Common Security Documents, together with any
other incidental rights, power and discretions.
Credit Suisse AG, Singapore Branch is initially acting as Common Security Agent under the Common
Security Documents in respect of the security over the Common Security. The Common Security Agent, acting
in its capacity as such, shall have such duties with respect to the Common Security pledged, assigned or granted
pursuant to the Common Security Documents as are set forth in the Common Security Documents. Under certain
circumstances, the Common Security Agent may have obligations under the Common Security Documents that
are in conflict with the interests of the Holders. The Common Security Agent will be under no obligation to
exercise any rights or powers conferred under any of the Common Security Documents for the benefit of the
Holders unless such Holders have offered to the Common Security Agent indemnity or security satisfactory to
the Common Security Agent against any loss, liability or expense. Furthermore, each Holder, by accepting the
Notes, will agree, for the benefit of the Common Security Agent, that such Holder is solely responsible for its
own independent appraisal of and investigation into all risks arising under or in connection with the Common
Security Documents and has not relied on and will not at any time rely on the Common Security Agent in respect
of such risks.
The Issuer, the Guarantors, the Common Security Agent and the Trustee have entered or will enter into
various Security Documents defining the terms of the security for the Notes, the Guarantees and any Permitted
Pari Passu Secured Indebtedness. These Security Documents secure the payment and performance when due of
all the obligations of the Issuer and the Guarantors under the Indenture, the Notes and the Guarantees and any
Permitted Pari Passu Secured Indebtedness, as provided in the Security Documents.
Cash and Accounts Management Agreement
The Parent Guarantors and Berau Coals bank accounts are governed by the Cash and Accounts
Management Agreement. The bank accounts will, in the case of U.S. dollar accounts, be maintained with the
Account Manager in Hong Kong and, in the case of Indonesian Rupiah accounts, be maintained with an Account
Manager in Jakarta. See Description of Material AgreementsCash and Accounts Management Agreement.
The Cash and Accounts Management Agreement is governed by and construed in accordance with English law.
Permitted Pari Passu Secured Indebtedness
On or after, with respect to any Permitted Refinancing Indebtedness or any Additional Notes, July 23, 2010
and, with respect to any other Indebtedness, the date that is 366 days after July 23, 2010, the Issuer, the Parent
Guarantor and each Subsidiary Guarantor Pledgor may create Liens on the Common Security pari passu with the
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Lien for the benefit of the Holders to secure Indebtedness of the Issuer (including Additional Notes) or
Indebtedness of the Parent Guarantor, a Subsidiary Guarantor or a Finance Subsidiary and any Pari Passu
Guarantee of the Parent Guarantor or a Subsidiary Guarantor Pledgor with respect to such Indebtedness (such
Indebtedness of the Issuer, the Parent Guarantor, a Subsidiary Guarantor or a new Finance Subsidiary and any
such Pari Passu Guarantee, Permitted Pari Passu Secured Indebtedness); provided that (1) each of the Issuer,
the Finance Subsidiary, the Parent Guarantor or such Subsidiary Guarantor Pledgor, as applicable, is permitted to
Incur such Indebtedness under the covenant under the caption Limitation on Indebtedness; (2) the holders of
such Indebtedness (or their representative) (other than Additional Notes) become party to the Intercreditor
Agreement; (3) the agreement in respect of such Indebtedness contains provisions with respect to releases of the
Common Security and such Pari Passu Guarantee substantially similar to and no more restrictive on the Parent
Guarantor and such Subsidiary Guarantor Pledgor than the provisions of the Indenture and the Common Security
Documents; (4) such Permitted Pari Passu Secured Indebtedness (other than any Permitted Refinancing
Indebtedness relating to Indebtedness outstanding on July 23, 2010 or any Additional Notes) will be of a tenor at
least equal to or exceeding the Stated Maturity of the Notes; and (5) the Parent Guarantor and such Subsidiary
Guarantor Pledgor deliver to the Common Security Agent a certificate from the Guarantors setting forth
compliance with the provisions of the Intercreditor Agreement and the creditors under such Permitted Pari Passu
Secured Indebtedness (or their representative) (other than Additional Notes) deliver to the Common Security
Agent a deed of accession to the Intercreditor Agreement, in each case, in form and substance substantially as set
forth in the Intercreditor Agreement, and to the Trustee an Opinion of Counsel and an Officers Certificate with
respect to corporate and collateral matters in connection with the Common Security Documents, in each case in
form and substance substantially as set forth in the Common Security Documents and reasonably acceptable to
the Trustee. The Trustee will be permitted and authorized (but not obligated) without the consent of any Holder
to enter into any amendments to the Common Security Documents or the Indenture and take any other action
necessary to permit the creation and registration of Liens on the Common Security to secure Permitted Pari Passu
Secured Indebtedness in accordance with this paragraph (including, without limitation, the appointment of any
successor Common Security Agent as collateral agent under the Intercreditor Agreement to hold the Common
Security on behalf of the Holders and the holders of the Permitted Pari Passu Secured Indebtedness).
Notwithstanding the above, the Senior Secured Credit Facility Indebtedness will constitute Permitted Pari
Passu Indebtedness and share in the Common Security beginning from the date on which the first Common
Security was granted.
Except for certain Permitted Liens and the Permitted Pari Passu Secured Indebtedness, the Parent Guarantor
and the Restricted Subsidiaries will not be permitted to issue or Incur any other Indebtedness secured by all or
any portion of the Collateral without the consent of each Holder.
Intercreditor Agreement
The Trustee, on behalf of the Holders, has entered into an intercreditor agreement dated July 19, 2010 (the
Intercreditor Agreement) that governs the relationship among the Holders, the lenders under the Senior
Secured Credit Facility and the holders of any other Permitted Pari Passu Secured Indebtedness (or their
representatives).
Under the Intercreditor Agreement, the Trustee (together with the Holders and any future holders (or their
representatives) of any Permitted Pari Passu Secured Indebtedness, the Secured Parties) has appointed the
Common Security Agent as security agent with respect to the Common Security securing the obligations of the
Issuer, the Parent Guarantor and the Subsidiary Guarantors under the Indenture, the Guarantees and any
Permitted Pari Passu Secured Indebtedness (the Common Secured Indebtedness), to exercise remedies in
respect thereof upon the occurrence of an Event of Default under the Notes and the Indenture that has caused the
Holders to declare the Notes to be due and payable prior to its Stated Maturity, or upon an event of default under
any Permitted Pari Passu Secured Indebtedness that has caused the holder thereof to declare such Permitted Pari
Passu Indebtedness to be due and payable prior to its Stated Maturity, and to act as otherwise specified in the
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The Intercreditor Agreement provides, among other things (i) that the Secured Parties shall share equal
priority and pro rata entitlement in and to the Common Security, except for certain fees, costs and expenses of
the Common Security Agent, the Trustee and any agent or representative acting on behalf of the holders of
Permitted Pari Passu Secured Indebtedness, (ii) the conditions under which the Secured Parties will consent to
the release or granting of any Lien on the Common Security and (iii) the conditions under which the Secured
Parties will be entitled to enforce their rights with respect to such Common Security under the Indebtedness
secured thereby (collectively, the Intercreditor Rights).
The Intercreditor Agreement further provides that if a default has occurred and is outstanding under any
Common Secured Indebtedness (the First Senior Debt Document) and that results in a cross-default in another
Common Secured Indebtedness (the Second Senior Debt Document) but the circumstances which gave rise to
the default under the First Senior Debt Document do not result in a default (other than the cross-default) under
the Second Senior Debt Document, the cross-default under the Second Senior Debt Document will be deemed to
have been remedied if the relevant holders under the First Senior Debt Document agree that the default under the
First Senior Debt Document is waived or is deemed to have been cured (in accordance with the provisions of the
First Senior Debt Document). The deemed consent provision described in this paragraph will not apply to a
Second Senior Debt Document where the holders (or their representatives, as applicable) under that Second
Senior Debt Document have already instructed the Common Security Agent to take action to enforce the
Common Security in reliance on the cross-default in accordance with the Intercreditor Agreement.
Under the terms of the Intercreditor Agreement, creditors holding 66 2 3% of the then outstanding Common
Secured Indebtedness (the Majority Secured Creditors) will generally have the right to instruct the Common
Security Agent to take enforcement action. Notwithstanding this general rule, an Affected Secured Creditor is
entitled to instruct the Common Security Agent to enforce the Common Security in the following circumstances:
if an event of default has occurred and is outstanding under any Common Secured Indebtedness arising
from non-payment of any amounts when due (after the expiry of any originally applicable grace period)
(a Payment Event of Default) then the holders of the Common Secured Indebtedness to which that
Payment Event of Default applies may constitute an Affected Secured Creditor with the right to instruct
the Common Security Agent to enforce on the Common Security;
if an event of default other than a Payment Event of Default has occurred and is outstanding under any
Common Secured Indebtedness (a Non-Payment Event of Default) then the holders of the Common
Secured Indebtedness to which that Non-Payment Event of Default applies may constitute an Affected
Secured Creditor after the period of 21 days has expired from the date on which such holders gave notice
of the Non-Payment Event of Default to the Common Security Agent (or 14 days has expired in the case
of a Non-Payment Event of Default arising as a result of the breach of the financial covenant provisions
of any Common Secured Indebtedness).
The Indenture, Intercreditor Agreement and Common Security Documents provide that if there is any
discrepancy or inconsistency between (1) the Intercreditor Agreement and (2) the Indenture or Common Security
Documents with respect to terms governing the Intercreditor Rights, the Intercreditor Agreement shall prevail.
The Indenture, the Intercreditor Agreement and the Common Security Documents also provide that,
notwithstanding provisions in the Indenture or the Common Security Documents that permit amendments
without consent of Holders, no amendments to the Indenture or the Common Security Documents shall be made
without the consent of the Holders of not less than a majority of the outstanding Notes if such amendments would
modify any of the Intercreditor Rights.
Prior to the Incurrence of any Permitted Pari Passu Secured Indebtedness (other than the Senior Secured
Credit Facility Indebtedness or Additional Notes), the holders of such Permitted Pari Passu Secured Indebtedness
(or their representative or trustee) will accede as parties to the Intercreditor Agreement. The Intercreditor
Agreement is governed by and construed in accordance with English law.
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Enforcement of Security
Upon the occurrence of an Event of Default under the Indenture, the security described above shall become
enforceable in accordance with the Intercreditor Agreement and the Common Security Documents, in the case of
the Common Security, and the Notes Security Documents, in the case of the Notes Collateral, and applicable
laws.
The Notes Collateral
The first priority Lien over the Notes Collateral securing the Notes and the Guarantees is granted to the
Trustee. The Trustee holds such Liens and security interests in the Notes Collateral granted pursuant to the Notes
Security Documents with sole authority as directed by the written instruction from the Holders holding not less
than 25.0% in aggregate principal amount of the Notes then outstanding pursuant to the terms of the Indenture to
exercise remedies under the Notes Security Documents. The Trustee has agreed to act as secured party on behalf
of the Holders under the applicable Notes Security Documents, to follow the instructions provided to it in
accordance with the Indenture and the Notes Security Documents and to carry out certain other duties.
The Indenture and/or the Notes Security Documents principally provide that, at any time while the Notes are
outstanding, the Trustee has the exclusive right, as directed by the written instructions from the Holders holding
not less than 25.0% in aggregate principal amount of the Notes then outstanding pursuant to the terms of the
Indenture, to manage, perform and enforce the terms of the Notes Security Documents relating to the Notes
Collateral and to exercise and enforce all privileges, rights and remedies thereunder according to such written
direction, including to take or retake control or possession of such Notes Collateral and to hold, prepare for sale,
process, lease, dispose of or liquidate such Notes Collateral, including following the occurrence of an Event of
Default under the Indenture.
All payments received and all amounts held by the Trustee in respect of the Notes Collateral under the
Notes Security Documents will be applied by the Trustee as follows:
first, to the Trustee, the Principal Paying Agent and the Registrar to the extent necessary to reimburse the
Trustee, the Principal Paying Agent and the Registrar for any expenses incurred in connection with the
collection or distribution of such amounts held or realized or in connection with expenses incurred in
enforcing their remedies under the Notes Security Documents and preserving the Notes Collateral and all
amounts owed to, or for which the Trustee, the Principal Paying Agent and the Registrar are entitled to
indemnification and/or security under, the Notes Security Documents or the Indenture;
second, to the Holders; and
third, any surplus remaining after such payments will be paid to the Parent Guarantor or any other Person
entitled thereto.
The Trustee may decline to foreclose on the Notes Collateral or exercise remedies available if it does not
receive security and/or indemnification to its satisfaction. In addition, the Trustees ability to foreclose on the
Notes Collateral may be subject to lack of perfection, the consent of third parties, prior Liens and practical
problems associated with the realization of the Trustees Liens on the Notes Collateral. Neither the Trustee nor
any of its officers, directors, employees, attorneys or agents will be responsible or liable for the existence,
genuineness, value or protection of any Notes Collateral securing the Notes, for the legality, enforceability,
effectiveness or sufficiency of the Notes Security Documents, for the creation, perfection, priority, sufficiency or
protection of any of the Liens, or for any defect or deficiency as to any such matters, or for any failure to
demand, collect, foreclose or realize upon or otherwise enforce any of the Liens or Notes Security Documents or
any delay in doing so.
The Notes Security Documents provide that the Parent Guarantor and the Subsidiary Guarantor Pledgors
will indemnify the Trustee for all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
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costs, expenses or disbursements of any kind imposed against the Trustee arising out of the Notes Security
Documents except to the extent that any of the foregoing are finally judicially determined to have resulted from
the gross negligence or willful default of the Trustee.
The Common Security
Enforcement of security with respect to Common Security will be made in accordance with the Intercreditor
Agreement.
The first priority Lien over the Common Security securing the Notes and the Guarantees is granted to the
Common Security Agent on behalf of the Secured Parties. The Common Security Agent holds such Liens and
security interests in the Common Security granted pursuant to the Common Security Documents with sole
authority in accordance with the terms of the Intercreditor Agreement and the Common Security Documents. The
Common Security Agent has agreed to act as secured party on behalf of the Holders and to follow the
instructions provided to it under the Intercreditor Agreement and the Common Security Documents and to carry
out certain other duties.
The Indenture, the Intercreditor Agreement and/or the Common Security Documents principally provide
that, (i) at any time while the Notes are outstanding, the Common Security Agent has the exclusive right to
manage and perform the terms of the Common Security Documents to which it is a party and (ii) upon the
occurrence of an Event of Default under the Indenture or any other credit document pursuant to which the Parent
Guarantor incurs Permitted Pari Passu Secured Indebtedness, the Common Security Agent has, with respect to
the Common Security granted to it, the exclusive right to exercise and enforce all privileges, rights and remedies
thereunder as directed by the written instruction of the Majority Secured Creditors or the Affected Secured
Creditor, as the case may be, including to take or retake control or possession of such Common Security and to
hold, prepare for sale, process, lease, dispose of or liquidate such Common Security, subject in each case, to the
terms and conditions of the Intercreditor Agreement and the Common Security Documents.
The Intercreditor Agreement provides that the proceeds of any sale or other realization upon all or any part
of the Common Security under the Common Security Documents will be applied by the Common Security Agent
principally as follows:
first, in discharging any sums owing to the Common Security Agent, any receiver or any delegate;
second, in payment of all costs and expenses incurred by the facility agent under the Senior Secured
Credit Facility, the Trustee under the Indenture or the agent or trustee of any other Permitted Pari Passu
Secured Indebtedness in connection with any realization or enforcement of the Common Security taken in
accordance with the terms of the Intercreditor Agreement or any action taken at the request of the
Common Security Agent;
third, in payment to the Secured Parties pari passu and on a pro rata basis for application toward the
discharge of the Common Secured Indebtedness;
fourth, if none of the Issuer or the Guarantors are under any further actual or contingent liability under
any document evidencing the Common Secured Indebtedness (each a Secured Party Document), in
payment to any person to whom the Common Security Agent is obliged to pay in priority to the Issuer or
the Guarantors; and
fifth, the balance, if any, in repayment to the Issuer or the relevant Guarantor.
The Common Security Agent may decline to foreclose on the Common Security or exercise remedies
available if it does not receive security and/or indemnification to its satisfaction. In addition, the Common
Security Agents ability to foreclose on the Common Security may be subject to lack of perfection, the consent of
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third parties, prior Liens and practical problems associated with the realization of the Common Security Agents
Liens on the Common Security. Neither Common Security Agent nor any of its respective officers, directors,
employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of
any Common Security securing the Notes, for the legality, enforceability, effectiveness or sufficiency of the
Common Security Documents, for the creation, perfection, priority, sufficiency or protection of any of the Liens,
or for any defect or deficiency as to any such matters, or for any failure to demand, collect, foreclose or realize
upon or otherwise enforce any of the Liens or Common Security Documents or any delay in doing so.
The Common Security Documents provide that the Parent Guarantor and the Subsidiary Guarantor Pledgors
will indemnify the Common Security Agent for all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind imposed against the Common Security Agent
arising out of the Common Security Documents except to the extent that any of the foregoing are finally
judicially determined to have resulted from the gross negligence or willful default of the Common Security
Agent.
Release of Collateral
The security created in respect of the Notes Collateral granted under the Notes Security Documents may be
released in certain circumstances, including:
upon repayment in full of the Notes; and
upon defeasance and discharge of the Notes as provided below under the caption Defeasance
Defeasance and Discharge.
The security created in respect of the Common Security in favor of the Common Security Agent granted
under the Common Security Documents may be released in accordance with the Intercreditor Agreement. The
Intercreditor Agreement generally provides that at any time and from time to time, the Common Security Agent
may release the Common Security with the prior written consent of the Secured Party Consenting Group (as
defined below). Notwithstanding the foregoing, the Common Security Agent may release any and all of the
Common Security if so permitted under each of the Secured Party Documents, including in compliance with the
covenants under the captions Limitations on Sales and Issuances of Capital Stock in Restricted Subsidiaries
or Limitation on Asset Sales or in accordance with the provision under the caption Consolidation,
Merger and Sale of Assets, provided that (i) a share pledge over at least 90% of the Capital Stock of Berau Coal
shall at all times remain part of the Common Security while the Notes remain outstanding; and (ii) the Issuer, or
the relevant Guarantor, delivers to the Common Security Agent, an Officers Certificate certifying that the
release of any such security interest is permitted under the terms of all relevant Secured Party Documents and
that the conditions precedent to any such release have been fulfilled and an Opinion of Counsel stating that the
release of any such security interest is permitted under the terms of all relevant Secured Party Documents. The
Secured Party Consenting Group means a group which collectively consists of (i) the Trustee acting on behalf
of the Holders holding 100% of the aggregate principal amount of Indebtedness of the Issuer outstanding and
(ii) holders holding 100% of the aggregate principal amount of Permitted Pari Passu Secured Indebtedness that
have acceded to the Intercreditor Agreement pursuant to the terms of the agreements evidencing such Permitted
Pari Passu Secured Indebtedness.
Further Issues
Subject to the covenants described below, the Issuer may, from time to time, without notice to or the
consent of the Holders, create and issue Additional Notes having the same terms and conditions as the Notes
(including the benefit of the Guarantees) in all respects (or in all respects except for the issue date, issue price
and the first payment of interest on them and, to the extent necessary, certain temporary securities law transfer
restrictions) so that such Additional Notes may be consolidated and form a single class with the previously
outstanding Notes and vote together as one class on all matters with respect to the Notes; provided that the
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issuance of any such Additional Notes will then be permitted under the Certain CovenantsLimitation on
Indebtedness covenant described below; and provided further that in order for the Additional Notes to have the
same CUSIP, ISIN or other identifying number as the outstanding Notes, the Additional Notes must be fungible
with the outstanding Notes for U.S. federal income tax purposes.
In addition, the issuance of any Additional Notes by the Issuer will be subject to the following conditions:
(1) all Obligations with respect to the Additional Notes shall be secured and guaranteed under the Indenture,
the Guarantees, the Security Documents and any other Notes Documents to the same extent and on the same
basis as the Notes outstanding on the date the Additional Notes are issued;
(2) on the issue date of any Additional Notes, the Issuer will lend the proceeds of the offering of the
Additional Notes to the Parent Guarantor or a Subsidiary Guarantor pursuant to an Intercompany Loan and the
Parent Guarantor or each relevant Subsidiary Guarantor is permitted to Incur the Indebtedness represented by
such additional borrowings under the Certain CovenantsLimitation on Indebtedness covenant;
(3) the Parent Guarantor and the Issuer have delivered to the Trustee an Officers Certificate, in form and
substance reasonably satisfactory to the Trustee, confirming that the issuance of the Additional Notes complies
with the Indenture; and
(4) the Parent Guarantor and the Issuer have delivered to the Trustee one or more Opinions of Counsel, in
form reasonably satisfactory to the Trustee, confirming, among other things, that the issuance of the Additional
Notes does not conflict with applicable law and that, after giving effect to the issuance of the Additional Notes
and any transactions related thereto, the Lien or Liens created under the Security Documents, as amended,
extended, renewed, restated, supplemented or otherwise modified or replaced pursuant to such transaction, are
valid and perfected Liens not otherwise subject to any limitation, imperfection or new hardening or preference
period, in equity or at law, that such Lien or Liens were not otherwise subject to immediately prior to the
issuance of such Additional Notes and such amendment, extension, renewal, restatement, supplement,
modification or replacement.
Optional Redemption
At any time and from time to time prior to July 8, 2013, the Issuer may redeem up to 35% of the aggregate
principal amount of the Notes with the Net Cash Proceeds of one or more Equity Offerings at a redemption price
of 112.5% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the redemption date;
provided that at least 65% of the aggregate principal amount of the Notes originally issued on the Original Issue
Date remains outstanding after each such redemption and any such redemption takes place within 60 days after
the closing of the related Equity Offering.
At any time and from time to time prior to July 8, 2013, the Issuer may at its option redeem the Notes, in
whole or in part, at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable
Premium as of, and accrued and unpaid interest, if any, to the redemption date.
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At any time and from time to time on or after July 8, 2013, the Issuer may redeem the Notes, in whole or in
part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid
interest, if any, to the redemption date if redeemed during the twelve-month period commencing on July 8 of any
year set forth below:
Year
Percentage
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106.250%
103.125%
The Issuer or the Parent Guarantor may acquire Notes by means other than a redemption, whether by tender
offer, open market purchases, negotiated transactions or otherwise, so long as such acquisition does not otherwise
violate the terms of the Indenture.
Selection and Notice
The Issuer will give not less than 30 days nor more than 60 days notice of any redemption. The Trustee
will select Notes for redemption pro rata, by lot or by such other method as the Trustee in its sole discretion will
deem to be fair and appropriate.
A Note of US$100,000 in principal amount or less will not be redeemed in part. If any Note is to be
redeemed in part only, the notice of redemption relating to such Note will state the portion of the principal
amount to be redeemed. A new Note in principal amount equal to the unredeemed portion will be issued upon
cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or
portions of them called for redemption.
Repurchase of Notes Upon a Change of Control Triggering Event
Not later than 30 days following a Change of Control Triggering Event, the Issuer or the Parent Guarantor
will make an Offer to Purchase all outstanding Notes (a Change of Control Offer) at a purchase price equal to
101% of the principal amount thereof plus accrued and unpaid interest, if any, to the Offer to Purchase Payment
Date.
If the Issuer or the Parent Guarantor is unable to repay (or cause to be repaid) all of the Indebtedness, if any,
that would prohibit repurchase of the Notes or is unable to obtain the requisite consents of the holders of such
Indebtedness, or terminate any agreements or instruments that would otherwise prohibit a Change of Control
Offer, it will be prohibited from purchasing the Notes. In that case, the failure of either the Issuer or the Parent
Guarantor to purchase tendered Notes will constitute an Event of Default under the Indenture.
The Parent Guarantor and the Issuer will not be required to make a Change of Control Offer following a
Change of Control Triggering Event if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of
Control Offer to be made by the Parent Guarantor or the Issuer and such third party purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
A Change of Control Offer may be made in advance of a Change of Control Triggering Event, and
conditioned upon the occurrence of such Change of Control Triggering Event, if a definitive agreement is in
place for a Change of Control at the time of making the Change of Control Offer.
Certain of the events constituting a Change of Control Triggering Event under the Notes may also constitute
an event of default under certain debt instruments of the Parent Guarantor or its Subsidiaries. Future debt of the
Issuer, the Parent Guarantor or its Subsidiaries may (i) prohibit the Issuer or the Parent Guarantor from
purchasing Notes in the event of a Change of Control Triggering Event, (ii) provide that a Change of Control
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Triggering Event is a default or (iii) require the repurchase of such debt upon a Change of Control Triggering
Event. Moreover, the exercise by Holders of their right to require the Issuer or the Parent Guarantor to purchase
the Notes could cause a default under other Indebtedness, even if the Change of Control Triggering Event itself
does not, due to the financial effect of the purchase on the Issuer, the Parent Guarantor or its Subsidiaries. The
ability of the Issuer or the Parent Guarantor to pay cash to Holders following the occurrence of a Change of
Control Triggering Event may be limited by the Issuers and the Parent Guarantors then existing financial
resources. Sufficient funds might not be available when necessary to make the required purchase of the Notes.
See Risk FactorsRisks Relating to the Notes and the GuaranteesWe may not be able to finance an offer to
repurchase the notes upon the occurrence of certain events constituting a change of control as required by the
indenture.
The phrase all or substantially all, as used with respect to the assets of the Parent Guarantor in the
definition of Change of Control, will likely be interpreted under applicable law of the relevant jurisdictions and
its meaning would depend on particular facts and circumstances. As a result, there may be a degree of uncertainty
in ascertaining whether a sale or transfer of all or substantially all the assets of the Parent Guarantor has
occurred.
Except as described above with respect to a Change of Control Triggering Event, the Indenture does not
contain provisions that permit the Holders to require that the Issuer or the Parent Guarantor purchase or redeem
the Notes in the event of a takeover, recapitalization or similar transaction.
Sinking Fund
There will be no sinking fund payments for the Notes.
Additional Amounts
All payments of principal of, and premium, if any, and interest on the Notes and all payments under the
Guarantees will be made without withholding or deduction for, or on account of, any present or future taxes,
duties, assessments or other governmental charges of whatever nature imposed or levied by or within any
jurisdiction in which the Issuer, any applicable Guarantor or Surviving Person is organized or resident for tax
purposes or through which payment is made on behalf of the Issuer, a Surviving Person or a Guarantor (in each
case including any political subdivision or taxing authority thereof or therein) (each, as applicable, a Relevant
Jurisdiction), unless such withholding or deduction is required by law or by regulation or governmental policy
having the force of law. In such event, the Issuer, the applicable Guarantor or Surviving Person, as the case may
be, will make such deduction or withholding, make payment of the amount so withheld to the appropriate
governmental authority and will pay such additional amounts (Additional Amounts) as will result in receipt by
the Holder of such amounts as would have been received by such Holder had no such withholding or deduction
been required, provided that no Additional Amounts will be payable:
(a) for or on account of:
(i) any tax, duty, assessment or other governmental charge that would not have been imposed but for:
(A) the existence of any present or former connection between the Holder or beneficial owner of
such Note or Guarantee, as the case may be, and the Relevant Jurisdiction including, without
limitation, such Holder or beneficial owner being or having been a citizen or resident of such
Relevant Jurisdiction or treated as a resident thereof or being or having been physically
present or engaged in a trade or business therein or having or having had a permanent
establishment therein, other than merely holding such Note, the receipt of payments
thereunder or under the Guarantee or enforcing payment under the Note or the Guarantee;
(B) the presentation of such Note (where presentation is required) more than 30 days after the
later of the date on which the payment of the principal of, premium, if any, or interest on,
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such Note became due and payable pursuant to the terms thereof or was made or duly
provided for, except to the extent that the Holder thereof would have been entitled to such
Additional Amounts if it had presented such Note for payment on any date within such
30-day period;
(C) the failure of the Holder or beneficial owner to comply with a timely request of the Issuer,
any Guarantor or Surviving Person addressed to the Holder or beneficial owner, as the case
may be, to provide information to the Issuer, such Guarantor or Surviving Person concerning
such Holders or beneficial owners nationality, residence, identity or connection with any
Relevant Jurisdiction, if and to the extent that due and timely compliance with such request
would have reduced or eliminated any withholding or deduction as to which Additional
Amounts would have otherwise been payable to such Holder; or
(D) the presentation of such Note (where presentation is required) for payment in the Relevant
Jurisdiction, unless such Note could not have been presented for payment elsewhere;
(ii) any estate, inheritance, gift, sale, transfer, excise or personal property or similar tax, assessment or
other governmental charge;
(iii) any withholding or deduction in respect of any tax, duty, assessment or other governmental charge
where such withholding or deduction is imposed or levied on a payment to an individual and is
required to be made pursuant to European Council Directive 2003/48/EC or any other Directive
implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 on the
taxation of savings income or any law implementing or complying with, or introduced in order to
conform to, such Directives;
(iv) any tax, duty, assessment or other governmental charge which is payable other than (a) by
deduction or withholding from payments of principal of, or premium or interest on, the Note or
payments under the Guarantees, or (b) by direct payment by the Issuer or applicable Guarantor in
respect of claims made against the Issuer or the applicable Guarantor; or
(v) any combination of taxes, duties, assessments or other governmental charges referred to in the
preceding clauses (i), (ii), (iii) and (iv); or
(b) with respect to any payment of the principal of, or premium, if any, or interest on, such Note or any
payment under any Guarantee to such Holder, if the Holder is a fiduciary, partnership or person other
than the sole beneficial owner of any payment to the extent that such payment would be required to be
included in the income under the laws of a Relevant Jurisdiction for tax purposes, of a beneficiary or
settlor with respect to the fiduciary, or a member of that partnership or a beneficial owner who would
not have been entitled to such Additional Amounts had that beneficiary, settlor, partner, or beneficial
owner been the Holder thereof.
As a result of these provisions, there are circumstances in which taxes could be withheld or deducted but
Additional Amounts would not be payable to some or all beneficial owners of Notes.
Whenever there is mentioned in any context the payment of principal, premium or interest in respect of any
Note or under any Guarantee, such mention will be deemed to include payment of Additional Amounts provided
for in the Indenture to the extent that, in such context, Additional Amounts are, were or would be payable in
respect thereof.
Redemption for Taxation Reasons
The Notes may be redeemed, at the option of the Issuer, the Parent Guarantor or a Surviving Person, as a
whole but not in part, upon giving not less than 30 days nor more than 60 days notice to the Holders (which
notice will be irrevocable), at a redemption price equal to 100% of the principal amount thereof, together with
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accrued and unpaid interest (including any Additional Amounts), if any, to (but not including) the date fixed by
the Issuer, the Parent Guarantor or the Surviving Person, as the case may be, for redemption (the Tax
Redemption Date) if, as a result of:
(1) any change in, or amendment to, the laws or any regulations or rulings promulgated thereunder of a
Relevant Jurisdiction affecting taxation; or
(2) any change in, or amendment to, an official position regarding the application or interpretation of such
laws, regulations or rulings (including a holding, judgment or order by a court of competent
jurisdiction or a change in published practice),
which change or amendment becomes effective on or after the Original Issue Date with respect to any payment
due or to become due under the Notes, the Indenture, an Intercompany Loan or a Guarantee (or, if the Relevant
Jurisdiction was not a Relevant Jurisdiction on the Original Issue Date, the date on which the then current
Relevant Jurisdiction became the applicable Relevant Jurisdiction under the Indenture), the Issuer, a Guarantor or
the Surviving Person, as the case may be, is, or on the next Notes Interest Payment Date would be, required to
pay Additional Amounts (or, in the case of any payment with respect to an Intercompany Loan, would be
required to withhold or deduct any taxes, duties, assessments or governmental charges of whatever nature), and
such requirement cannot be avoided by taking reasonable measures by the Issuer, a Guarantor or the Surviving
Person, as the case may be (and for this purpose changing the jurisdiction through which payments are made on
behalf of the Issuer, a Guarantor or a Surviving Person should be considered reasonable); provided that changing
the jurisdiction of the Issuer, a Guarantor or the Surviving Person is not a reasonable measure for the purposes of
this section; provided further that no such notice of redemption will be given earlier than 90 days prior to the
earliest date on which the Issuer, a Guarantor or the Surviving Person, as the case may be, would be obligated to
pay such Additional Amounts (or, in the case of an Intercompany Loan, withhold or deduct such taxes, duties,
assessments or governmental charges) if a payment in respect of the Notes (or on an Intercompany Loan, as
applicable) were then due; provided further that where any such requirement to pay Additional Amounts (or
withhold or deduct an amount from any payment with respect to an Intercompany Loan) is due to taxes of the
Republic of Indonesia (or any political subdivision or taxing authority thereof or therein), the Issuer, the Parent
Guarantor or the Surviving Person shall be permitted to redeem the Notes in accordance with the provisions
above only if the rate of withholding or deduction in respect of which Additional Amounts are required (or in
respect of which withholding is required on payments on an Intercompany Loan) is in excess of 20.0%.
Prior to the mailing of any notice of redemption of the Notes pursuant to the foregoing, the Issuer or a
Guarantor, as the case may be, will deliver to the Trustee:
(1) an Officers Certificate stating that such change or amendment referred to in the prior paragraph has
occurred, and describing the facts related thereto and stating that such requirement cannot be avoided
by the Issuer or such Guarantor, as the case may be, taking reasonable measures available to it; and
(2) an Opinion of Counsel or an opinion of a tax consultant of recognized standing with respect to the
Relevant Jurisdiction stating that the requirement to pay such Additional Amounts results from such
change or amendment referred to in the prior paragraph.
The Trustee will accept such certificate and opinion as sufficient evidence of the satisfaction of the
conditions precedent described above, and it will be conclusive and binding on the Holders. The Trustee has no
duty to investigate or verify such certificate and opinion.
Any Notes that are redeemed will be cancelled.
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Certain Covenants
Set forth below are summaries of certain covenants contained in the Indenture.
Limitation on Indebtedness
(a) The Parent Guarantor will not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness
(including Acquired Indebtedness); provided that the Parent Guarantor, the Issuer, any Subsidiary Guarantor or
any Finance Subsidiary may Incur Indebtedness (including Acquired Indebtedness) if, after giving effect to the
Incurrence of such Indebtedness and the receipt and the application of the proceeds therefrom, (x) the Fixed
Charge Coverage Ratio would be not less than 2.5 to 1.0 and (y) in the case of a Subsidiary Guarantor Incurring
such Indebtedness, the outstanding aggregate principal amount of Indebtedness of all Subsidiary Guarantors does
not exceed 5.0% of the outstanding aggregate principal amount of Indebtedness of the Parent Guarantor and all
Restricted Subsidiaries.
(b) Notwithstanding the foregoing, the Parent Guarantor and, to the extent provided below, the Issuer, any
Subsidiary Guarantor or any other Restricted Subsidiary may Incur each and all of the following (Permitted
Indebtedness):
(1) Indebtedness of the Issuer under the Notes (excluding any Additional Notes), of the Parent
Guarantor under the Parent Guarantee, the Parent Guarantor and any Subsidiary Guarantor under the
Intercompany Loans extended with respect to the gross proceeds from the offering of the Notes on the
Original Issue Date, of each Subsidiary Guarantor under the respective Subsidiary Guarantee and of each
Subsidiary Guarantor under any Pari Passu Guarantee by such Subsidiary Guarantor and the Senior Secured
Credit Facility Indebtedness Incurred by the Parent Guarantor and the Issuers guarantee of the Senior
Secured Credit Facility Indebtedness;
(2) Indebtedness of the Parent Guarantor or any Restricted Subsidiary outstanding on the Original Issue
Date, excluding Indebtedness permitted under clause (b)(3) below;
(3) Indebtedness of the Parent Guarantor or any Subsidiary Guarantor owed to the Issuer, the Parent
Guarantor or any Restricted Subsidiary; provided that (x) any event which results in any such Subsidiary
Guarantor ceasing to be a Subsidiary Guarantor or any subsequent transfer of such Indebtedness (other than
to the Parent Guarantor or any Subsidiary Guarantor) will be deemed, in each case, to constitute an
Incurrence of such Indebtedness not permitted by this clause (b)(3), (y) if the Parent Guarantor is the obligor
on such Indebtedness, such Indebtedness must be unsecured and expressly subordinated in right of payment
to the Parent Guarantee and (z) if a Subsidiary Guarantor is the obligor on such Indebtedness and the Parent
Guarantor is not the obligee, such Indebtedness must be unsecured and expressly subordinated in right of
payment to the Subsidiary Guarantee of such Subsidiary Guarantor;
(4) Indebtedness of the Parent Guarantor, the Issuer or any Restricted Subsidiary (Permitted
Refinancing Indebtedness) issued in exchange for, or the net proceeds of which are used to refinance or
refund, replace, exchange, renew, repay, defease, discharge or extend (collectively, refinance, and
refinances and refinanced shall have a correlative meaning), then-outstanding Indebtedness (or
Indebtedness repaid substantially concurrently with but in any case before the Incurrence of such Permitted
Refinancing Indebtedness) Incurred under clause (a) or clause (b)(1), (b)(2), (b)(4) or (b)(10) of this
covenant and any refinancings thereof in an amount not to exceed the amount so refinanced (plus premiums,
accrued interest, fees and expenses); provided that (A) Indebtedness the proceeds of which are used to
refinance the Notes or Indebtedness that is pari passu with, or subordinated in right of payment to, the Notes
or a Guarantee will only be permitted under this clause (b)(4) if (x) in case the Notes are refinanced in part
or the Indebtedness to be refinanced is pari passu with the Notes or a Guarantee, such new Indebtedness, by
its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is
outstanding, is expressly made pari passu with, or subordinated in right of payment to, the remaining Notes
or such Guarantee, or (y) in case the Indebtedness to be refinanced is subordinated in right of payment to the
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Notes or a Guarantee, such new Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is issued or remains outstanding, is expressly made subordinate in
right of payment to the Notes or such Guarantee at least to the extent that the Indebtedness to be refinanced
is subordinated to the Notes or such Guarantee, (B) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to the Stated Maturity of the Indebtedness to be
refinanced or refunded, and the Average Life of such new Indebtedness is at least equal to the remaining
Average Life of the Indebtedness to be refinanced, (C) in no event may Indebtedness of the Issuer or any
Guarantor be refinanced pursuant to this clause by means of any Indebtedness of any Restricted Subsidiary
that is not a Guarantor and (D) in no event may unsecured Indebtedness of the Issuer or any Guarantor be
refinanced pursuant to this clause with secured Indebtedness;
(5) Indebtedness Incurred by the Parent Guarantor or any Restricted Subsidiary pursuant to Hedging
Obligations entered into in the ordinary course of business (and not for speculation) and designed solely to
protect the Parent Guarantor or any of its Restricted Subsidiaries from fluctuations in interest rates,
currencies or the price of commodities and not for speculation, provided that the Parent Guarantor and any
Restricted Subsidiary may only enter into Hedging Agreement(s) to the extent that if the Hedging
Agreement entered into is a Commodity Hedging Agreement the aggregate notional volume (denominated
in tons) which is the subject of all Commodity Hedging Agreement(s) for any annual period is no greater
than 25.0% of the Parent Guarantors and its Restricted Subsidiaries gross coal production (denominated in
tonnes) for the applicable Four Quarter Period;
(6) Indebtedness Incurred by the Parent Guarantor or any Restricted Subsidiary (other than the Issuer)
arising from the honoring by a bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business in an aggregate principal amount at any time outstanding not to exceed US$10.0 million
(or the Dollar Equivalent thereof); provided, however, that such Indebtedness is repaid in full or otherwise
extinguished within seven Business Days of Incurrence;
(7) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price
or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing
any obligation of the Parent Guarantor or any Restricted Subsidiary pursuant to such agreements, in any
case, Incurred in connection with the disposition of any business, assets or Capital Stock of a Restricted
Subsidiary, other than guarantees of Indebtedness Incurred by any Person acquiring all or any portion of
such business, assets or Capital Stock of a Restricted Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds actually received by the Parent Guarantor or any Restricted Subsidiary in
connection with such disposition;
(8) Indebtedness Incurred by the Parent Guarantor or any Restricted Subsidiary constituting
reimbursement obligations with respect to workers compensation claims or self-insurance obligations or
bid, performance or surety bonds and completion guarantees (in each case other than for an obligation for
borrowed money);
(9) Indebtedness Incurred by the Parent Guarantor or any Subsidiary Guarantor constituting
reimbursement obligations with respect to letters of credit, trade guarantees, bid, surety or performance
bonds or bank guarantees issued in the ordinary course of business to the extent that such letters of credit,
trade guarantees, bid, surety or performance bonds or bank guarantees are not drawn upon or, if drawn upon,
to the extent such drawing is reimbursed no later than the seventh business day following receipt by the
Parent Guarantor or such Restricted Subsidiary of a demand for reimbursement; and
(10) Indebtedness of the Parent Guarantor or any Subsidiary Guarantor in an aggregate principal
amount at any time outstanding (together with refinancings thereof) not to exceed US$25.0 million (or the
Dollar Equivalent thereof).
(c) For purposes of determining compliance with this Limitation on Indebtedness covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described
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above, including under the proviso in the first paragraph of this covenant, the Parent Guarantor, in its sole
discretion, will classify, and from time to time may reclassify, such item of Indebtedness and only be required to
include the amount of such Indebtedness as one of such types and the Parent Guarantor will be entitled at the
time of such Incurrence to divide and classify an item of Indebtedness in more than one of the types of
Indebtedness described in paragraphs (a) and (b) above.
(d) The accrual of interest, the accretion or amortization of original issue discount, the payment of interest
on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of Preferred
Stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an
incurrence of Indebtedness; provided, in each such case, that the amount of any such accrual, accretion or
payment is included in the Consolidated Fixed Charges of the Parent Guarantor as accrued.
(e) Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the
Parent Guarantor or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be
exceeded solely as a result of fluctuations in exchange rates or currency values.
(f) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision
permitting such Indebtedness, but may be permitted in part by one such provision and in part by one or more
other provisions of this covenant permitting such Indebtedness.
Limitation on Restricted Payments
The Parent Guarantor will not, and will not permit any Restricted Subsidiary to, directly or indirectly (the
payments or any other actions described in clauses (1) through (4) below being collectively referred to as
Restricted Payments):
(1) declare or pay any dividend or make any distribution on or with respect to the Parent Guarantors or
any Restricted Subsidiarys Capital Stock (other than dividends or distributions payable solely in shares of
the Parent Guarantors or any Restricted Subsidiarys Capital Stock (other than Disqualified Stock or
Preferred Stock) or in options, warrants or other rights to acquire shares of such Capital Stock) held by
Persons other than the Issuer, the Parent Guarantor or any Restricted Subsidiary;
(2) purchase, call for redemption or redeem, retire or otherwise acquire for value any shares of Capital
Stock of the Parent Guarantor, any Restricted Subsidiary or any direct or indirect parent of the Parent
Guarantor (including options, warrants or other rights to acquire such shares of Capital Stock) held by any
Persons other than the Issuer, the Parent Guarantor or any Restricted Subsidiary;
(3) make any voluntary or optional principal payment, or voluntary or optional redemption, repurchase,
defeasance, or other acquisition or retirement for value, of Indebtedness that is subordinated in right of
payment to the Notes or any Guarantee (excluding (i) any Intercompany Loan or (ii) any intercompany
Indebtedness between or among the Parent Guarantor and any Subsidiary Guarantor); or
(4) make any Investment, other than a Permitted Investment;
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default has occurred and is continuing or would occur as a result of such Restricted
Payment;
(B) the Parent Guarantor could not Incur at least US$1.00 of Indebtedness under the proviso in
clause (a) of the covenant under the caption Limitation on Indebtedness;
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(C) such Restricted Payment, together with the aggregate amount of all Restricted Payments made
by the Parent Guarantor and its Restricted Subsidiaries after the Original Issue Date, would exceed the
sum of:
(1) 50% of the aggregate amount of the Consolidated Net Income of the Parent Guarantor
(or, if the Consolidated Net Income is a loss, minus 100% of the amount of such loss) accrued on
a cumulative basis during the period (taken as one accounting period) beginning on the first day of
the fiscal quarter in which the Notes are issued and ending on the last day of the Parent
Guarantors most recently ended fiscal quarter for which consolidated financial statements of the
Parent Guarantor (which the Parent Guarantor will use its reasonable best efforts to compile in a
timely manner) are available and have been provided to the Trustee at the time of such Restricted
Payment; plus
(2) 100% of the aggregate Net Cash Proceeds received by the Parent Guarantor after the
Original Issue Date as a capital contribution to its common equity or from the issuance and sale of
its Capital Stock (other than Disqualified Stock) to a Person who is not a Subsidiary of the Parent
Guarantor, including any such Net Cash Proceeds received upon the exercise by a Person who is
not a Subsidiary of the Parent Guarantor of any options, warrants or other rights to acquire Capital
Stock of the Parent Guarantor (other than Disqualified Stock), in each case after deducting the
amount of any such Net Cash Proceeds used to redeem, repurchase, defease or otherwise acquire
or retire for value any Subordinated Indebtedness or Capital Stock of the Parent Guarantor; plus
(3) the amount by which the debt (other than Subordinated Indebtedness) of the Parent
Guarantor or any Restricted Subsidiary is reduced on the Parent Guarantors consolidated balance
sheet after the Original Issue Date upon the conversion or exchange of such debt into Capital
Stock of the Parent Guarantor (other than Disqualified Stock) after deducting any attorneys fees,
accountants fees, underwriters or placement agents fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such conversion or exchange and
after deducting any taxes paid or payable as a result thereof; plus
(4) an amount equal to the net reduction in Investments (other than reductions in Permitted
Investments) that were made after the Original Issue Date in any Person resulting from
(a) payments of interest on Indebtedness, dividends or repayments of loans or advances by such
Person, in each case to the Parent Guarantor or any Restricted Subsidiary or from the Net Cash
Proceeds from the sale of any such Investment (except, in each case, to the extent any such
payment or proceeds are included in the calculation of Consolidated Net Income), or (b) from
redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case,
the amount of Investments previously made by the Parent Guarantor or a Restricted Subsidiary
after the Original Issue Date in any such Person; or
(D) the proposed Restricted Payment is not permitted under the Cash and Accounts Management
Agreement.
The foregoing provision will not be violated by reason of:
(1) the payment of any dividend or redemption of any Capital Stock within 60 days after the related
date of declaration or call for redemption if, at said date of declaration or call for redemption, such payment
or redemption would comply with the preceding paragraph;
(2) the redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated
Indebtedness with the proceeds of, or in exchange for, a substantially concurrent Incurrence of Permitted
Refinancing Indebtedness;
(3) the redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated
Indebtedness or Capital Stock of the Parent or any Subsidiary Guarantor (or options, warrants or other rights
to acquire such Capital Stock) in exchange for, or out of the Net Cash Proceeds of a substantially concurrent
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capital contribution or sale (other than a capital contribution by or sale to a Subsidiary of the Parent
Guarantor) of, shares of the Capital Stock (other than Disqualified Stock) of the Parent Guarantor (or
options, warrants or other rights to acquire such Capital Stock); provided that (x) such options, warrants or
other rights are not redeemable at the option of the holder, or required to be redeemed, prior to the Stated
Maturity of the Notes and (y) the amount of any such Net Cash Proceeds that are utilized for any such
Restricted Payment will be excluded from clause (C)(2) of the preceding paragraph;
(4) (w) the payment of any dividends or distributions declared, paid or made by a Restricted Subsidiary
payable, (x) the redemption, repurchase, defeasance or other acquisition by a Restricted Subsidiary of any
shares of its Capital Stock or (y) the making of any direct or indirect advance, loan or other extension of
credit by a Restricted Subsidiary (and the repayment, retirement or defeasance of any such advance, loan or
other extension of credit by a shareholder of such Restricted Subsidiary), in each case of clause (w), (x) or
(y) on a pro rata basis or on a basis more favorable to the Parent Guarantor, to (or by) all holders of any
class of Capital Stock of such Restricted Subsidiary, a majority of which is held, directly or indirectly
through Restricted Subsidiaries, by the Parent Guarantor;
(5) the purchase, redemption or other acquisition or retirement for value of Capital Stock of the Parent
Guarantor or any Restricted Subsidiary held by officers, directors, commissioners or employees or former
officers, directors, commissioners or employees (or their estates or beneficiaries under their estates), upon
death, disability, retirement, severance or termination of employment or pursuant to any agreement under
which the Capital Stock was issued, or deemed to occur upon the exercise of stock options, warrants or
other convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided
that the amount of purchases, redemptions or other acquisitions or retirements for value of Capital Stock
pursuant this clause does not exceed US$1.0 million (or the Dollar Equivalent thereof) in any calendar year;
(6) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other
convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided that
the amount of repurchases of Capital Stock deemed to occur pursuant this clause does not exceed
US$1.0 million (or the Dollar Equivalent thereof) in any calendar year;
(7) the declaration and payments of regularly scheduled or accrued dividends on Disqualified Stock
issued in accordance with the terms of the Indenture to the extent such dividends are included in the
definition of Consolidated Fixed Charges;
(8) cash payments in lieu of the issuance of fractional shares in connection with the exercise of
warrants, options or other securities convertible into or exchangeable for Capital Stock of the Parent
Guarantor; provided that the amount of payments made pursuant to this clause does not exceed
US$1.0 million (or the Dollar Equivalent thereof) in any calendar year;
(9) the application of the proceeds of the issuance of the Existing Notes and the proceeds from the
Senior Secured Credit Facility Indebtedness in accordance with the escrow agreement dated July 8, 2010
among the Issues, the Guarantors, the Trustee, the escrow agent named therein and the other parties thereto,
including the repayment of the loan by PT Bukit Mutiara to the Parent Guarantor and the various
transactions effected to complete the transactions contemplated in the offering circular relating to the
Existing Notes, dated June 30, 2010, under the section Use of Proceeds;
(10) upon the termination and release of Berau Coals former cash and accounts management
agreement, cash payments in an amount of all restricted cash under that cash and accounts management
agreement released to the company reserve account under the Cash and Accounts Management Agreement,
provided that such payments are made within six months after July 23, 2010; or
(11) cash payments of any amount that, together with any amount previously paid under the this clause,
shall in the aggregate not exceed US$5.0 million;
provided that in the case of clause (2) or (3) above, no Default will have occurred and be continuing or would
occur as a consequence of the actions or payments set forth therein and no failure by the Issuer to make a
required payment of interest on the Notes will have occurred and remain uncured.
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Each Restricted Payment permitted pursuant to the preceding paragraph (other than pursuant to clauses (2),
(3), (4)(w), (8), (9) or (10) thereof) will be included in calculating whether the conditions of clause (C) of the
first paragraph of this Limitation on Restricted Payments covenant have been met with respect to any
subsequent Restricted Payments, and the Net Cash Proceeds from any capital contribution or sale of Capital
Stock referred to in clause (3) of the preceding paragraph shall not be included in such calculation.
The amount of any Restricted Payments (other than cash) will be the Fair Market Value on the date of the
Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Parent Guarantor or
the Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The value of any assets or
securities that are required to be valued by this covenant will be the Fair Market Value. The Board of Directors
determination of the Fair Market Value of a Restricted Payment or any such assets or securities must be based
upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of recognized
international standing if the Fair Market Value exceeds US$10.0 million (or the Dollar Equivalent thereof).
Not later than the date of making any Restricted Payment in an amount in excess of US$10.0 million (or the
Dollar Equivalent thereof), the Parent Guarantor will deliver to the Trustee an Officers Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this
Limitation on Restricted Payments covenant were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture. The Trustee will have no duty to investigate or verify such certificate,
opinion or appraisal.
Notwithstanding any other provisions of the Notes or the Indenture, prior to Maple becoming a Subsidiary
Guarantor, the Parent Guarantor will not, and will not permit any Restricted Subsidiary to, make any payment or
transfer any item of value, directly or indirectly, to Maple.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
(a) Except as provided below, the Parent Guarantor will not, and will not permit any Restricted Subsidiary
to, create or otherwise cause or permit to exist or become effective any encumbrance or restriction of any kind on
the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on any Capital Stock of such Restricted Subsidiary
owned by the Parent Guarantor or any other Restricted Subsidiary;
(2) pay any Indebtedness or other obligation owed to the Parent Guarantor or any other Restricted
Subsidiary;
(3) make loans or advances to the Parent Guarantor or any other Restricted Subsidiary; or
(4) sell, lease or transfer any of its property or assets to the Parent Guarantor or any other Restricted
Subsidiary.
(b) The provisions of paragraph (a) do not apply to any encumbrances or restrictions:
(1) existing in agreements as in effect on the Original Issue Date, or in the Notes, the Guarantees, the
Indenture, the Intercreditor Agreement, the Security Documents, the Hedging Agreements, the Senior
Secured Credit Facility or the Cash and Accounts Management Agreement and any extensions, refinancings,
renewals or replacements of any of the foregoing agreements; provided that the encumbrances and
restrictions in any such extension, refinancing, renewal or replacement, taken as a whole, are no less
favorable in any material respect to the Holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced;
(2) existing under or by reason of applicable law, rule, regulation, license, concession, approval, decree
or order of any Governmental Instrumentality with jurisdiction over the relevant Restricted Subsidiary;
(3) existing with respect to any Person or the property or assets of such Person acquired by the Parent
Guarantor or any Restricted Subsidiary, existing at the time of such acquisition and not incurred in
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contemplation thereof, which encumbrances or restrictions are not applicable to any Person or the property
or assets of any Person other than such Person or the property or assets of such Person so acquired, and any
extensions, refinancings, renewals or replacements thereof; provided that the encumbrances and restrictions
in any such extension, refinancing, renewal or replacement, taken as a whole, are no less favorable in any
material respect to the Holders than those encumbrances or restrictions that are then in effect and that are
being extended, refinanced, renewed or replaced;
(4) that otherwise would be prohibited by the provision described in clause (a)(4) of this covenant if
they arise, or are agreed to, in the ordinary course of business and that (i) restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is subject to a lease or license, (ii) exist by
virtue of any Lien on, or agreement to transfer, option or similar right with respect to, any property or assets
of the Parent Guarantor or any Restricted Subsidiary not otherwise prohibited by the Indenture or (iii) do not
relate to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of
property or assets of the Parent Guarantor or any Restricted Subsidiary in any manner material to the Parent
Guarantor or any Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary and imposed pursuant to an agreement that has been entered
into for the sale or disposition of all or substantially all of the Capital Stock of, or property and assets of,
such Restricted Subsidiary that is permitted by the Limitation on Sales and Issuances of Capital Stock in
Restricted Subsidiaries, Limitation on Indebtedness and Limitation on Asset Sales covenants;
(6) (x) existing in purchase money obligations for property acquired in the ordinary course of business
and (y) Capitalized Lease Obligations permitted under the Indenture, in each case, that impose
encumbrances or restrictions of the nature described in clause (a)(4) of this covenant on the property so
acquired;
(7) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being refinanced;
(8) Liens permitted to be incurred under the provisions of the Limitation on Liens covenant that limit
the right of the debtor to dispose of the assets subject to such Liens; or
(9) restrictions on cash or other deposits or net worth requirements imposed by customers under
contracts entered into in the ordinary course of business;
(10) contained in indentures, credit agreements, financing agreements or other agreements or
instruments relating to Indebtedness Incurred by Restricted Subsidiaries subsequent to the Original Issue
Date pursuant to the covenant described above under the caption Limitation on Indebtedness (other
than Permitted Refinancing Indebtedness), if the encumbrances or restrictions are ordinary and customary
for a financing of that type and would not, at the time agreed to, be expected to materially and adversely
affect the ability of the Guarantors or the Issuer to make payments under the Guarantees or the Notes, as the
case may be;
(11) existing with respect to any Unrestricted Subsidiary or the property or assets of such Unrestricted
Subsidiary that is designated as a Restricted Subsidiary in accordance with the terms of the Indenture at the
time of such designation and not incurred in contemplation of such designation, which encumbrances or
restrictions are not applicable to any Person other than such Unrestricted Subsidiary or the property or assets
of such Unrestricted Subsidiary; and if the encumbrances or restrictions are ordinary and customary for the
business of such Unrestricted Subsidiary and would not, at the time agreed to, be expected to materially and
adversely affect the ability of the Guarantors or the Issuer to make payments under the Guarantees or the
Notes, as the case may be; or
(12) existing in customary provisions in joint venture agreements and other similar agreements
permitted under the Indenture, to the extent such encumbrance or restriction relates to the activities or assets
of a Restricted Subsidiary that is a party to such joint venture and if (as determined in good faith by the
Board of Commissioners of the Parent Guarantor) the encumbrances or restrictions are ordinary and
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customary for a joint venture or similar agreement of that type and could not, at the time agreed to, be
expected to materially and adversely affect the ability of the Guarantors or the Issuer to make payments
under the Guarantees or the Notes, as the case may be.
Limitation on Sales and Issuances of Capital Stock in Restricted Subsidiaries
The Parent Guarantor will not sell, and will not permit any Restricted Subsidiary, directly or indirectly, to
issue or sell, any shares of Capital Stock of a Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) except:
(1) to the Parent Guarantor, the Issuer or a Wholly Owned Restricted Subsidiary;
(2) to the extent such Capital Stock represents directors qualifying shares or is required by applicable
law to be held by a Person other than the Parent Guarantor or a Wholly Owned Restricted Subsidiary;
(3) for the sale of shares of all the Capital Stock of a Restricted Subsidiary if permitted under, and
made in accordance with, the Limitation on Asset Sales covenant and the other provisions of the
Indenture;
(4) for the issuance and sale of Capital Stock of a Restricted Subsidiary if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any remaining Investment in such Person would have been permitted to be made under the
Limitation on Restricted Payments covenant if made on the date of such issuance or sale and provided that
the Parent Guarantor complies with the Limitation on Asset Sales covenant; and
(5) for the issuance and sale of Capital Stock (other than Disqualified Stock) of a Restricted Subsidiary
which is not a Wholly Owned Restricted Subsidiary to the Parent Guarantor and all other holders of any
class of Capital Stock of such Restricted Subsidiary in proportion to their respective share ownership of
such Restricted Subsidiary.
Limitation on Issuances of Guarantees by Restricted Subsidiaries
The Parent Guarantor will not permit any Restricted Subsidiary which is not a Subsidiary Guarantor,
directly or indirectly, to guarantee, any Indebtedness (Guaranteed Indebtedness) of the Parent or any other
Restricted Subsidiary, unless (a) such Restricted Subsidiary, simultaneously executes and delivers a supplemental
indenture to the Indenture acceptable to the Trustee providing for an unsubordinated Subsidiary Guarantee of
payment of the Notes by such Restricted Subsidiary and (b) such Restricted Subsidiary waives and will not in
any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or
subrogation or any other rights against the Parent Guarantor or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Subsidiary Guarantee until the Notes have been paid in full.
If the Guaranteed Indebtedness (1) ranks pari passu in right of payment with the Notes or any Subsidiary
Guarantee, then the guarantee of such Guaranteed Indebtedness shall rank pari passu in right of payment with, or
subordinated to, the Subsidiary Guarantee or (2) is subordinated in right of payment to the Notes or any
Subsidiary Guarantee, then the guarantee of such Guaranteed Indebtedness shall be subordinated in right of
payment to the Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is subordinated to the
Notes or the Subsidiary Guarantee.
Limitation on Transactions with Shareholders and Affiliates
The Parent Guarantor will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter
into, renew or extend any transaction or arrangement (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with (x) any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of the Parent Guarantor or (y) any Affiliate of the Parent
Guarantor (each an Affiliate Transaction), unless:
(1) the Affiliate Transaction is on terms that, in the aggregate, are no less favorable to the Parent
Guarantor or such Restricted Subsidiary than those that could be obtained, at the time of such transaction or,
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if such transaction is pursuant to a written agreement, at the time of the execution of the agreement
providing therefor, in a comparable arms-length transaction by the Parent Guarantor or such Restricted
Subsidiary with a Person that is not such a holder or an Affiliate of the Parent Guarantor; and
(2) the Parent Guarantor delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of US$2.0 million (or the Dollar Equivalent thereof), a Board
Resolution set forth in an Officers Certificate certifying that such Affiliate Transaction complies with
this covenant and such Affiliate Transaction has been approved by the Board of Commissioners
including a majority of the disinterested members of the Board of Commissioners; and
(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of US$10.0 million (or the Dollar Equivalent thereof), in addition to
the Board Resolution required in clause (2)(a) above, an opinion as to the fairness to the Parent
Guarantor or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of recognized international standing.
In no event will the Trustee have a duty to investigate or verify such certificates, opinions or other
documents as described in 2(a) and 2(b) above.
The foregoing limitation does not limit, and will not apply to:
(1) the payment of reasonable and customary regular fees to commissioners or directors of the Parent
Guarantor or any Restricted Subsidiary who are not employees of the Parent Guarantor or any Restricted
Subsidiary;
(2) transactions otherwise permitted under the Indenture between or among the Parent Guarantor and
any Subsidiary Guarantors or between or among Subsidiary Guarantors;
(3) any Restricted Payment of the type described in clause (1), (2) or (3) of the first paragraph of the
covenant described under the caption Limitation on Restricted Payments if not prohibited by that
covenant;
(4) transactions or payments pursuant to any employee, officer or director compensation or benefit
plans or arrangements entered into in the ordinary course of business and approved by the Board of
Commissioners;
(5) transactions or payments pursuant to any contract or agreement as in effect on the Original Issue
Date, as amended, modified or renewed from time to time so long as such amended, modified or renewed
agreement is not less favorable to the Parent Guarantor and its Restricted Subsidiaries than the original
agreement as in effect on the Original Issue Date;
(6) the issuance or sale of any Capital Stock (other than Disqualified Stock) of the Parent Guarantor;
(7) loans or advances to officers, directors, commissioners and employees in the ordinary course of
business in accordance with the past practices of the Parent Guarantor or such Restricted Subsidiary, but in
any event not to exceed US$2.0 million (or the Dollar Equivalent thereof) in the aggregate outstanding at
any one time;
(8) any payment of fees or compensation made by a Restricted Subsidiary of the Parent Guarantor to its
shareholders for management, technical, consulting, general corporate or similar services; provided that
such payment is made to all holders of any class of Capital Stock of such Restricted Subsidiary on a
pro rata basis or on a basis more favorable to the Parent Guarantor and provided further that the amount of
payments made pursuant to this clause to Persons other than the Parent Guarantor or its Restricted
Subsidiaries does not exceed US$1.0 million (or the Dollar Equivalent thereof) in any calendar year;
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(9) any Restricted Payment not prohibited by the covenant under the caption Limitation on
Restricted Payments (other than a Permitted Investment); and
(10) the various transactions effected to complete the transactions contemplated in the offering circular
relating to the Existing Notes, dated June 30, 2010, under the section Use of Proceeds.
In addition, the requirements of clause (2) of the first paragraph of this covenant will not apply to
(a) Investments (other than Permitted Investments) not prohibited by the Limitation on Restricted Payments
covenant or (b) any transaction (i) between or among the Parent Guarantor, the Issuer or any Restricted
Subsidiary or (ii) between the Parent Guarantor or a Wholly Owned Subsidiary Guarantor and a Finance
Subsidiary that is not prohibited under the Indenture.
In addition, the requirements of clause (2)(b) of the first paragraph of this covenant will not apply to any
transaction or arrangement with a customer, client, supplier or purchaser or seller of goods or services, in each
case in the ordinary course of business of the Parent Guarantor or such Restricted Subsidiary and otherwise in
compliance with the terms of the Indenture, provided that in the good faith determination of a majority of the
disinterested members of the Board of Commissioners of the Parent Guarantor, such transaction or arrangement
is on terms that are no less favorable to the Parent Guarantor or such Restricted Subsidiary than those that would
have been obtained in a comparable transaction or arrangement by the Parent Guarantor or such Restricted
Subsidiary with an unrelated Person.
Limitation on Liens
The Parent Guarantor will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur,
assume or permit to exist any Lien on the Collateral (other than Permitted Liens).
The Parent Guarantor will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur,
assume or permit to exist any Lien (other than Permitted Liens) of any nature whatsoever on any of its assets or
properties of any kind (other than the Collateral), whether owned at the Original Issue Date or thereafter
acquired, unless the Notes are secured equally and ratably with (or, if the obligation to be secured by such Lien is
subordinated in right of payment to the Notes or any Guarantee, prior to) the obligations so secured for so long as
such obligations are so secured.
Limitation on Sale and Leaseback Transactions
The Parent Guarantor will not, and will not permit any Restricted Subsidiary to, enter into any Sale and
Leaseback Transaction; provided that the Parent Guarantor and any Restricted Subsidiary may enter into a Sale
and Leaseback Transaction if:
(1) the Parent Guarantor or such Restricted Subsidiary could have (a) incurred Indebtedness in an
amount equal to the Attributable Indebtedness relating to such Sale and Leaseback Transaction under the
covenant described above under Limitation on Indebtedness and (b) incurred a Lien to secure such
Indebtedness pursuant to the covenant described above under the caption Limitation on Liens, in which
case, the corresponding Indebtedness and Lien will be deemed incurred pursuant to those provisions;
(2) the gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the Fair Market
Value of the property that is the subject of such Sale and Leaseback Transaction; and
(3) the transfer of assets in that Sale and Leaseback Transaction is permitted by, and the Parent
Guarantor or such Restricted Subsidiary applies the proceeds of such transaction in compliance with, the
covenant described under the caption Limitation on Asset Sales.
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Limitation on Asset Sales

The Parent Guarantor will not, and will not permit any Restricted Subsidiary to, consummate any Asset
Sale, unless:
(1) no Default will have occurred and be continuing or would occur as a result of such Asset Sale;
(2) the consideration received by the Parent Guarantor or such Restricted Subsidiary, as the case may
be, is at least equal to the Fair Market Value of the assets sold or disposed of;
(3) in the case of an Asset Sale that constitutes an Asset Disposition, the Parent Guarantor could Incur
at least US$1.00 of Indebtedness under the proviso in clause (a) of the covenant under the caption
Limitation on Indebtedness prior to and after giving pro forma effect to such Asset Disposition;
(4) at least 75% of the consideration received consists of cash, Temporary Cash Investment or the
Replacement Assets; provided that in the case of an Asset Sale in which the Parent Guarantor or such
Restricted Subsidiary receives Replacement Assets involving aggregate consideration in excess of
US$10.0 million (or the Dollar Equivalent thereof), the Parent Guarantor or such Restricted Subsidiary shall
deliver to the Trustee an opinion of fairness to the Parent Guarantor or such Restricted Subsidiary of such
Asset Sale from a financial point of view issued by an accounting, appraisal or investment banking firm of
recognized international standing. The Trustee will have no duty to investigate or verify such opinion. For
purposes of this provision, each of the following will be deemed to be cash:
(a) any Indebtedness, as shown on the Parent Guarantors most recent consolidated balance sheet,
of the Parent Guarantor or any Restricted Subsidiary (other than Indebtedness that is contingent or by
its terms subordinated to the Notes or any Guarantee) that is assumed by the transferee of any such
assets pursuant to a customary assumption, assignment, novation or similar agreement that irrevocably
and unconditionally releases the Parent Guarantor or such Restricted Subsidiary from all liability under
such Indebtedness;
(b) any securities, notes or other obligations received by the Parent Guarantor or any Restricted
Subsidiary from such transferee that are promptly, but in any event within 45 days of closing,
converted by the Parent Guarantor or such Restricted Subsidiary into cash, to the extent of the cash
received in that conversion; and
(c) any Capital Stock or assets referred to in clauses (2) and (3) of the next paragraph.
Within 360 days after the receipt of any Net Cash Proceeds from an Asset Sale, the Parent Guarantor (or the
applicable Restricted Subsidiary, as the case may be) will apply such Net Cash Proceeds to:
(1) apply an amount equal to such Net Cash Proceeds to permanently repay any Indebtedness which
was secured by the assets sold in such Asset Sale (and, if such Indebtedness repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect thereto) in each case owing to a Person
other than the Parent Guarantor or an Affiliate of the Parent Guarantor;
(2) invest an equal amount, or the amount not so applied pursuant to clause (1) above, in properties or
assets (other than current assets) that will be used in the Permitted Businesses (Replacement Assets);
(3) acquire all or substantially all of the assets of, or any Capital Stock of, any entity involved in the
Permitted Business, if, after giving effect to any such acquisition of Capital Stock, such entity involved in
the Permitted Business is or becomes a Restricted Subsidiary; or
(4) make capital expenditures relating to properties or assets that are used in the Permitted Business.
Any Net Cash Proceeds from Asset Sales that are not applied or invested as provided in the immediately
preceding paragraph will constitute Excess Proceeds. Excess Proceeds of less than US$10.0 million (or the
Dollar Equivalent thereof) will be carried forward and accumulated. When accumulated Excess Proceeds exceed
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US$10.0 million (or the Dollar Equivalent thereof), within 10 days thereof, the Parent Guarantor or the Issuer
must make an Offer to Purchase Notes having a principal amount equal to:
(1) accumulated Excess Proceeds, multiplied by
(2) a fraction (x) the numerator of which is equal to the outstanding principal amount of the Notes and
(y) the denominator of which is equal to the outstanding principal amount of the Notes and all pari passu
Indebtedness similarly required to be repaid, redeemed or tendered for in connection with the Asset Sale,
rounded down to the nearest US$1,000.
The offer price in any Offer to Purchase will be equal to 100% of the principal amount plus accrued and
unpaid interest to the date of purchase, and will be payable in cash.
If any Excess Proceeds remain after consummation of an Offer to Purchase, such remaining Excess
Proceeds may be used for any general corporate purpose not prohibited by the Indenture. If the aggregate
principal amount of Notes (and any other pari passu Indebtedness) tendered in such Offer to Purchase exceeds
the amount of Excess Proceeds, the Trustee will select the Notes (and such other pari passu Indebtedness) to be
purchased on a pro rata basis unless otherwise required by law or applicable stock exchange requirements. Upon
completion of each Offer to Purchase, the amount of Excess Proceeds will be reset at zero.
Notwithstanding the provisions of this covenant Limitation on Asset Sales, the Issuer and the Parent
Guarantor will not, and will not permit any Restricted Subsidiary to, sell any Intercompany Loan.
Limitation on the Parent Guarantors Business Activities
The Parent Guarantor will not, and will not permit any Restricted Subsidiary to, directly or indirectly,
engage in any business other than Permitted Businesses and the making of Temporary Cash Investments;
provided, however, that the Parent Guarantor or any Restricted Subsidiary may own Capital Stock of, or
otherwise hold Investments in, an Unrestricted Subsidiary or joint venture or other entity that is engaged in a
business other than Permitted Businesses as long as any Investment therein was not prohibited when made by the
covenant under the caption Limitation on Restricted Payments.
Limitation on the Activities of the Issuer
Notwithstanding anything contained in the Indenture to the contrary, the Issuer will not engage in any
business activity or undertake any other activity, except any activity (a) relating to the offering, sale or issuance
of the Notes, the incurrence of Indebtedness represented by the Notes or any Additional Notes issued under the
Indenture (including lending the proceeds thereof to the Parent Guarantor or certain Restricted Subsidiaries under
the terms of the Intercompany Loans), and any other activities in connection therewith, (b) undertaken with the
purpose of fulfilling any obligations under the Notes, the Guarantees, the Indenture, the Security Documents, or
for purposes of consent solicitation or tender for the Notes or refinancing of the Notes or (c) directly related to
the establishment and/or maintenance of the Issuers corporate existence.
The Issuer will not (a) issue any Capital Stock other than the issuance of its ordinary shares to the Parent
Guarantor or (b) acquire or receive any property or assets (including, without limitation, any Capital Stock or
Indebtedness of any Person), other than (x) the Intercompany Loans or (y) cash for ongoing corporate activities
of the Issuer described in the preceding paragraph.
The Issuer will not create, incur, assume or suffer to exist any Lien (except for Permitted Liens of the
Issuer) of any kind against or upon any of its property or assets, or any proceeds therefrom other than under the
Security Documents.
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The Issuer will at all times remain a Wholly Owned Restricted Subsidiary of the Parent Guarantor.
Except as necessary to permit timely delivery to the Paying Agent of sums sufficient to pay principal and
interest when so becoming due under the Notes, the Issuer shall not at any time maintain cash balances in
amounts greater than the minimum amounts required by applicable law or regulation or in order to maintain or
reduce withholding or income taxes which may be applicable to or payable by the Issuer, the Parent Guarantor or
certain Restricted Subsidiaries in respect of the Intercompany Loans or the Notes. Whenever the Issuer receives a
payment or prepayment under any of the Intercompany Loans, it shall use the funds received solely to satisfy its
obligations (to the extent of the amount owing in respect of such obligations) under the Notes and the Indenture.
For so long as any Notes are outstanding, neither the Issuer nor the Parent Guarantor will commence or take
any action to cause a winding-up or liquidation of the Issuer except that the Issuer may be wound up or liquidated
subsequent to a consolidation, merger or transfer of assets conducted in accordance with the first paragraph of the
covenant described under the caption Consolidation, Merger and Sale of Assets.
Except as provided in the Indenture, the Issuer will not, and the Parent Guarantor will procure that the Issuer
does not, assign or novate its rights under any Intercompany Loan.
The Issuer has filed an election to be treated as a disregarded entity for U.S. federal income tax purposes and
will not change such election while any Notes are outstanding.
Amendments to or Prepayments of the Intercompany Loans
Without the consent of the Holders of at least a majority in aggregate principal amount of the Notes then
outstanding, the Issuer and the Parent Guarantor will not, and will not permit any Restricted Subsidiary to,
(i) prepay or otherwise reduce or permit the prepayment or reduction of any Intercompany Loan or (ii) amend,
modify or alter any Intercompany Loan in any manner adverse to the Holders; provided that, without the consent
of each Holder affected thereby, the Issuer and the Parent Guarantor will not, and will not permit any Restricted
Subsidiary to, amend, modify or alter any Intercompany Loan to:
(1) other than as permitted by a majority of the Holders pursuant to (i) above, change the Stated Maturity of
the principal of, or any installment of interest on such loan;
(2) reduce the rate of interest on such loan;
(3) change the currency for payment of principal or interest on such loan;
(4) reduce the above-stated percentage of Notes the consent of whose Holders is necessary to modify or
amend such loans;
(5) waive a default in the payment of any amount under such loan; or
(6) sell or transfer such loan other than pursuant to its terms.
Notwithstanding the foregoing, without the consent of any Holder, any Intercompany Loan may be amended
solely (x) to provide for the issuance of Additional Notes, and may be prepaid or reduced to facilitate or
otherwise accommodate or reflect a redemption, repurchase or exchange of outstanding Notes in accordance with
the terms of the Indenture or through any tender offer or exchange offer or (y) to reduce any withholding or
deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied by or within any jurisdiction in which the Issuer or the Parent Guarantor is
organized or resident for tax purposes or through which payment is made (or any political subdivision or taxing
authority thereof or therein); provided that in the case of clause (y), prior to such amendment, the Issuer or the
Parent Guarantor will (i) deliver to the Trustee an Opinion of Counsel or an opinion of a tax consultant of
recognized standing that such amendment will reduce such withholding or deduction, and (ii) will deliver to the
Trustee an opinion of counsel of recognized standing with respect to U.S. federal income tax matters that such
amendment will not result in adverse U.S. federal income tax consequences to beneficial owners of Notes and
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beneficial owners of Notes will be subject to the same U.S. federal income tax consequences as if such
amendment did not occur. In no event will the Trustee have a duty to investigate or verify such opinions as
described above.
The Issuer and the Parent Guarantor will not, and will not permit any Restricted Subsidiary to, sell any
Intercompany Loan or to directly or indirectly, incur, assume or permit to exist any Lien on any Intercompany
Loan, other than pursuant the Security Documents.
Maintenance of Insurance
The Parent Guarantor will, and will cause each Restricted Subsidiary to, maintain insurance with reputable
and financially sound carriers against such risks and in such amounts as is customarily carried by similarlysituated businesses, in the respective jurisdictions in which the Parent Guarantor and the Restricted Subsidiaries
conduct their business, including, without limitation, property and casualty insurance, so long as such insurance
coverage (including deductibles, retentions and self-insurance amounts) at all times complies with the insurance
coverage required under any applicable Contract of Work.
Designation of Restricted and Unrestricted Subsidiaries
The Board of Commissioners may designate any Restricted Subsidiary (other than Berau Coal or the Issuer)
to be an Unrestricted Subsidiary; provided that (i) such designation would not cause or result in a Default;
(ii) such Restricted Subsidiary does not own any Disqualified Stock of the Parent Guarantor or Disqualified or
Preferred Stock of another Restricted Subsidiary or hold any Indebtedness of, or any Lien on any property of, the
Parent Guarantor or any Restricted Subsidiary; (iii) such Restricted Subsidiary has no outstanding Indebtedness
that could trigger a cross-default to the Indebtedness of the Parent Guarantor or any other Restricted Subsidiary;
(iv) neither the Parent Guarantor nor any Restricted Subsidiary guarantees or provides credit support for the
Indebtedness or other liabilities of such Restricted Subsidiary; (v) such Restricted Subsidiary does not own any
Capital Stock of another Restricted Subsidiary, and all of its Subsidiaries are Unrestricted Subsidiaries or are
being concurrently designated to be Unrestricted Subsidiaries in accordance with this paragraph; (vi) the
Investment deemed to have been made thereby in such newly-designated Unrestricted Subsidiary and each other
newly-designated Unrestricted Subsidiary being concurrently redesignated would be permitted to be made by the
covenant described under Limitation on Restricted Payments; and (vii) such Unrestricted Subsidiary does
not own or operate or possess any material license, franchise or right used in connection with the ownership or
operation of any part of the Parent Guarantors or its Restricted Subsidiaries business, the loss of which by such
Subsidiary will not, after giving pro forma effect thereto, materially adversely affect the business, results of
operations or prospects of the Parent Guarantor and its Restricted Subsidiaries.
The Board of Commissioners may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that (i) such designation will not cause or result in a Default; (ii) any Indebtedness of such Unrestricted
Subsidiary outstanding at the time of such designation which will be deemed to have been Incurred by such
newly-designated Restricted Subsidiary as a result of such designation would be permitted to be Incurred by the
covenant described under the caption Limitation on Indebtedness; (iii) any Lien on the property of such
Unrestricted Subsidiary at the time of such designation which will be deemed to have been incurred by such
newly-designated Restricted Subsidiary as a result of such designation would be permitted to be incurred by the
covenant described under the caption Limitation on Liens; (iv) such Unrestricted Subsidiary is not a
Subsidiary of another Unrestricted Subsidiary (that is not concurrently being designated as a Restricted
Subsidiary); and (v) such Restricted Subsidiary will upon such designation execute and deliver to the Trustee a
supplemental indenture to the Indenture by which such Restricted Subsidiary will become a Subsidiary
Guarantor.
Anti-Layering
The Issuer will not Incur, and the Parent Guarantor will not and will not permit any Subsidiary Guarantor to
Incur, any Indebtedness if such Indebtedness is contractually subordinated in right of payment to any other
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Indebtedness of the Issuer, the Parent Guarantor or such Subsidiary Guarantor, as the case may be, unless such
Indebtedness is also contractually subordinated in right of payment to the Notes or the applicable Guarantee, on
substantially identical terms. This does not apply to distinctions between categories of Indebtedness that exist by
reason of any Liens or guarantees securing or in favor of some but not all of such Indebtedness.
Government Approvals and Licenses; Compliance With Law
The Parent Guarantor will and will cause each Restricted Subsidiary to (1) obtain and maintain in full force
and effect all governmental approvals, authorizations, consents, permits, concessions and licenses as are
necessary to engage in the Permitted Businesses, (2) preserve and maintain good and valid title to its properties
and assets (including land-use rights and mining rights) free and clear of any Liens other than Permitted Liens,
and (3) comply with all laws, regulations, orders, judgments and decrees of any governmental body, except to the
extent that failure so to obtain, maintain, preserve and comply would not reasonably be expected to have a
material adverse effect on (a) the business, results of operations or prospects of the Parent Guarantor and its
Restricted Subsidiaries, taken as a whole, or (b) the ability of the Parent Guarantor or any Subsidiary Guarantor
to perform its obligations under the Notes, the relevant Subsidiary Guarantee or the Indenture.
Limitation on Activities of Rognar
The Parent Guarantor will procure (1) that Rognar will not conduct any business other than those necessary
solely in order to maintain its corporate existence until it is wound up or liquidated or any claim against Aries
Investments Limited under an intercompany loan incurred in connection with the sale of its shares in Berau Coal
to Aries Investments Limited, (2) that such intercompany loan is subordinated in right of payment to the Notes
and Guarantees and (3) that none of the assets or property of the Parent Guarantor, the Issuer or any Restricted
Subsidiary shall be pledged to secure such intercompany loan.
Limitation on Activities of Maple
The Parent Guarantor will procure that Maple, at the time when it becomes a Restricted Subsidiary and
Subsidiary Guarantor, will not have any contingent liabilities or Indebtedness in an aggregate amount exceeding
US$500,000 (or the Dollar Equivalent thereof).
Restrictions on Transactions between CAMA Entities and Non-CAMA Entities
The Parent Guarantor will not, and will not permit any CAMA Entity to (i) transfer, directly or indirectly,
any of its businesses to a Non-CAMA Entity or (ii) permit any Non-CAMA Entity to conduct any business that is
substantially similar to any business conducted, at the Original Issue Date or at any time thereafter, by any
CAMA Entity; in any event, the Parent Guarantor will procure that, at all times, all direct and indirect revenues
and cash receipts from the production or sale of coal will be generated by CAMA Entities.
The Parent Guarantor will not, and will not permit any other CAMA Entity to, directly or indirectly, enter
into, renew or extend any transaction or arrangement (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any Non-CAMA Entity (each a CAMA
Related Transaction), unless:
(1) the CAMA Related Transaction is on fair and reasonable terms that are no less favorable to the
CAMA Entity than those that could be obtained, at the time of such transaction or, if such transaction is
pursuant to a written agreement, at the time of the execution of the agreement providing therefor, in a
comparable arms-length transaction by the CAMA Entity with a Person that is not an Affiliate of the Parent
Guarantor or such other CAMA Entity; and
(2) the Parent Guarantor delivers to the Trustee with respect to any CAMA Related Transaction or
series of related CAMA Related Transactions involving aggregate consideration in excess of US$2.0 million
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(or the Dollar Equivalent thereof), a Board Resolution set forth in an Officers Certificate certifying that
such CAMA Related Transaction complies with this covenant and such CAMA Related Transaction has
been approved by the Board of Commissioners.
Suspension of Certain Covenants
If on any date following the date of the Indenture, the Notes have an Investment Grade rating from both
Rating Agencies and no Default has occurred and is continuing (a Suspension Event), then, beginning on that
day and continuing until such time, if any, at which the Notes cease to have an Investment Grade rating from
either of the Rating Agencies, the provisions of the Indenture summarized under the following captions will be
suspended:
(1) Certain CovenantsLimitation on Indebtedness;
(2) Certain CovenantsLimitation on Restricted Payments;
(3) Certain CovenantsLimitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries;
(4) Certain CovenantsLimitation on Sales and Issuances of Capital Stock in Restricted
Subsidiaries;
(5) Certain CovenantsLimitation on Issuances of Guarantees by Subsidiaries;
(6) Certain CovenantsLimitation on Sale and Leaseback Transactions;
(7) Certain CovenantsLimitation on Asset Sales;
(8) Certain CovenantsLimitation on the Parent Guarantors Business Activities;
(9) Certain CovenantsMaintenance of Insurance;
(10) Certain CovenantsAnti-Layering;
(11) Certain CovenantsLimitation of Activities of Rognar;
(12) Certain CovenantsLimitation of Activities of Maple; and
(13) Certain CovenantsRestrictions on Transactions between CAMA Entities and Non-CAMA
Entities.
During any period that the foregoing covenants have been suspended, the Board of Directors may not
designate any of the Restricted Subsidiaries as Unrestricted Subsidiaries pursuant to the covenant summarized
under the caption Certain CovenantsDesignation of Restricted and Unrestricted Subsidiaries or the
definition of Unrestricted Subsidiary.
Such covenants will be reinstituted and apply according to their terms as of and from the first day on which
a Suspension Event ceases to be in effect. Such covenants will not, however, be of any effect with regard to
actions of the Parent Guarantor, the Issuer or any Restricted Subsidiary properly taken in compliance with the
provisions of the Indenture during the continuance of the Suspension Event, and following reinstatement the
calculations under the covenant summarized under Certain CovenantsLimitation on Restricted Payments
will be made as if such covenant had been in effect since the date of the Indenture except that no Default will be
deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended.
There can be no assurance that the Notes will ever achieve an Investment Grade rating or that any such rating
will be maintained.
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Provision of Financial Statements and Reports

(a) So long as any of the Notes remain outstanding, the Parent Guarantor will file with the Trustee and,
subject to compliance with applicable securities laws, make available to the Holders on the Parent Guarantors
web site:
(1) as soon as they are available, but in any event within 120 calendar days after the end of the fiscal
year of the Parent Guarantor or Berau Coal, respectively, copies of their respective financial statements (on
a consolidated basis) in respect of such financial year (including a statement of income, balance sheet and
cash flow statement) audited by a member firm of an internationally-recognized firm of independent
accountants;
(2) as soon as they are available, but in any event within 60 calendar days after the end of the second
fiscal quarter of the Parent Guarantor or Berau Coal, respectively, copies of their respective financial
statements (on a consolidated basis) in respect of such half-year period (including a statement of income,
balance sheet and cash flow statement) prepared on a basis consistent with the audited financial statements
of the Parent Guarantor or Berau Coal, as applicable, together with a certificate signed by the Person then
authorized to sign financial statements on behalf of the Parent Guarantor or Berau Coal, as applicable, to the
effect that such financial statements are true in all material respects and present fairly the financial position
of the Parent Guarantor or Berau Coal, as applicable, as at the end of, and the results of its operations for,
the relevant quarterly period;
(3) as soon as they are available, but in any event within 45 calendar days after the end of each of the
first and third fiscal quarters of the Parent Guarantor or Berau Coal, respectively, copies of their respective
unaudited financial statement (on a consolidated basis) in respect of such quarterly period (including a
statement of income, balance sheet and cash flow statement) prepared on a basis consistent with the audited
financial statements of the Parent Guarantor or Berau Coal, as applicable, together with a certificate signed
by the Person then authorized to sign financial statements on behalf of the Parent Guarantor or Berau Coal,
as applicable, to the effect that such financial statements are true in all material respects and present fairly
the financial position of the Parent Guarantor or Berau Coal, as applicable, as at the end of, and the results
of its operations for, the relevant quarterly period; and
(4) a reasonably detailed summary of the Parent Guarantors and Berau Coals risk management
policies as adopted by the Board of Directors or the board of directors of Berau Coal, as applicable, and as
currently in effect, promptly updated from time to time to reflect any material modification, amendment or
replacement thereof;
provided that if at any time the Common Stock of the Parent Guarantor is listed for trading on a recognized stock
exchange, the Parent Guarantor will additionally file with the Trustee, as soon as they are available but in any
event not more than 10 calendar days after any financial or other reports of the Parent Guarantor are filed with
any recognized exchange on which the Parent Guarantors Common Stock is at any time listed for trading, true
and correct copies of any financial or other report filed with such exchange.
(b) In addition, so long as any of the Notes remain outstanding, the Parent Guarantor will provide to the
Trustee (1) within 120 days after the end of each fiscal year, an Officers Certificate stating the Fixed Charge
Coverage Ratio with respect to the four most recent fiscal quarters and showing in reasonable detail the
calculation of the Fixed Charge Coverage Ratio, including the arithmetic computations of each component of the
Fixed Charge Coverage Ratio, with a certificate from the Parent Guarantors external auditors verifying the
accuracy and correctness of the calculation and arithmetic computation; and (2) as soon as possible and in any
event within 30 days after the Parent Guarantor becomes aware or should reasonably become aware of the
occurrence of a Default, an Officers Certificate setting forth the details of the Default, and the action which the
Parent Guarantor proposes to take with respect thereto.
Further, the Issuer and the Parent Guarantor have agreed that, during any period in which the Issuer, the
Parent Guarantor or any Subsidiary Guarantor is neither subject to Section 13 or 15(d) of the Securities Exchange
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Act of 1934, as amended (the U.S. Exchange Act), nor exempt from reporting pursuant to Rule 12g3-2(b)
thereunder, the Issuer or the Parent Guarantor, as the case may be, will supply to (i) any Holder or beneficial
owner of a Note or (ii) a prospective purchaser of a Note or a beneficial interest therein designated by such
Holder or beneficial owner, the information specified in, and meeting the requirements of Rule 144A(d)(4) under
the U.S. Securities Act upon the request of any Holder or beneficial owner of a Note.
Events of Default
The following events will be defined as Events of Default in the Indenture:
(a) default in the payment of principal of (or premium, if any, on) the Notes when the same becomes due
and payable at maturity, upon acceleration, redemption or otherwise;
(b) default in the payment of interest on any Note when the same becomes due and payable, and such
default continues for a period of 30 days;
(c) default in the performance or breach of the provisions of the covenant described under Consolidation,
Merger and Sale of Assets or the failure by the Issuer or the Parent Guarantor to comply with the provisions
described under the captions Repurchase of Notes Upon a Change of Control Triggering Event or
Certain Covenants Limitation on Asset Sales;
(d) the Parent Guarantor or any Restricted Subsidiary defaults in the performance of or breaches any other
covenant or agreement in the Indenture or under the Notes (other than a default specified in clause (a), (b) or
(c) above) and such default or breach continues for a period of 30 consecutive days after written notice by the
Trustee (acting on the instructions of the Holders of at least a majority in principal amount of the outstanding
Notes) or the Holders of 25% or more in aggregate principal amount of the Notes;
(e) there occurs with respect to any Indebtedness of the Parent Guarantor or any Restricted Subsidiary
having an outstanding principal amount of US$10.0 million (or the Dollar Equivalent thereof) or more in the
aggregate for all such Indebtedness of all such Persons, whether such Indebtedness now exists or will hereafter
be created, (A) an event of default that has caused the holder thereof to declare such Indebtedness to be due and
payable prior to its Stated Maturity or (B) the failure to make a payment of principal or interest or premium on
such Indebtedness when the same becomes due (subject to the applicable grace period in the relevant
documents);
(f) one or more final judgments or orders for the payment of money are rendered against the Parent
Guarantor or any of its Restricted Subsidiaries and are not paid or discharged, and there is a period of 60
consecutive days following entry of the final judgment or order that causes the aggregate amount for all such
final judgments or orders outstanding and not paid or discharged against all such Persons to exceed US$10.0
million (or the Dollar Equivalent thereof) during which a stay of enforcement, by reason of a pending appeal or
otherwise, is not in effect;
(g) an involuntary case or other proceeding is commenced against the Parent Guarantor or any Restricted
Subsidiary with respect to it or its debts under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Parent Guarantor or any Restricted Subsidiary or for any substantial part of the property
and assets of the Parent Guarantor or any Restricted Subsidiary and such involuntary case or other proceeding
remains undismissed and unstayed for a period of 60 consecutive days; or an order for relief is entered against
the Parent Guarantor or any Restricted Subsidiary under any applicable bankruptcy, insolvency or other similar
law as now or hereafter in effect;
(h) the Parent Guarantor or any Restricted Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for
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relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Parent Guarantor or any
Restricted Subsidiary or for all or substantially all of the property and assets of the Parent Guarantor or any
Restricted Subsidiary or (C) effects any general assignment for the benefit of creditors;
(i) any Guarantor denies or disaffirms its obligations under its Guarantee of the Notes or, except as
permitted by the Indenture, any Guarantee of the Notes is determined in any judicial proceeding to be
unenforceable or invalid or will for any reason cease to be in full force and effect;
(j) any default by the Parent Guarantor or any obligor under the Security Documents in the performance of
any of its obligations under the Security Documents or the Indenture, which adversely affects the enforceability,
validity, perfection or priority of the applicable Lien on the Collateral or which adversely affects the condition or
value of the Collateral, taken as a whole, in any material respect;
(k) the Parent Guarantor or any Restricted Subsidiary denies or disaffirms its obligations under any Security
Document or, other than in accordance with the Indenture and the Security Documents, any Security Document
ceases to be or is not in full force and effect or the Common Security Agent or the Trustee, as applicable, ceases
to have a first priority security interest in the Collateral (subject to any Permitted Liens);
(l) any breach of any provision of the Cash and Accounts Management Agreement relating to the
disbursement or collection of funds that is not cured within 30 days or any amendment of any provision of the
Cash and Accounts Management Agreement relating to the disbursement or collection of funds that is not
authorized by the Holders of at least 50% in aggregate principal amount of the then outstanding Notes, which in
either such case adversely affects the pari passu ranking and pro rata entitlement of the Notes in relation to the
other Common Secured Indebtedness or that otherwise materially and adversely affects any Holder; or
(m) revocation, termination, suspension or other cessation of effectiveness of the Contract of Work, which
results in the cessation or suspension of coal-mining operations for a period of more than 60 consecutive days.
In the event of a declaration of acceleration of the Notes because an Event of Default specified in clause
(e) under Events of Default has occurred and is continuing, the declaration of acceleration of the Notes shall be
automatically annulled if the event of default or payment default triggering such Event of Default pursuant to
clause (e) shall be remedied or cured by the Parent Guarantor or a Restricted Subsidiary or waived by the holders
of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto, and if (i) the
annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of
competent jurisdiction and (ii) all existing Events of Defaults, except nonpayment of principal, premium or
interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived.
If an Event of Default (other than an Event of Default specified in clause (g), (h) or (i) above) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes, then outstanding, by written notice to the Issuer (and to the Trustee if such notice is given by the Holders),
may, and the Trustee at the request of such Holders will, declare the principal of, premium, if any, and accrued
and unpaid interest on the Notes to be immediately due and payable. Upon a declaration of acceleration, such
principal of, premium, if any, and accrued and unpaid interest will be immediately due and payable. If an Event
of Default specified in clause (g), (h) or (i) above occurs, the principal of, premium, if any, and accrued and
unpaid interest on the Notes then outstanding will automatically become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder, provided, however, that the Trustee
shall not be obligated to take any such action as referred to in this paragraph unless it has first been indemnified
and/or secured by the Holders to its satisfaction.
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The Holders of at least a majority in principal amount of the outstanding Notes by written notice to the
Issuer and to the Trustee, may on behalf of all of the Holders waive all past defaults and rescind and annul a
declaration of acceleration and its consequences with respect to the Notes if:
(x) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and
interest on the Notes that have become due solely by such declaration of acceleration, have been cured or
waived, and
(y) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.
Upon such waiver, the Default will cease to exist, and any Event of Default arising therefrom will be
deemed to have been cured, but no such waiver will extend to any subsequent or other Default or impair any right
consequent thereon.
If an Event of Default occurs and is continuing, the Trustee may or shall upon the written instruction of
Holders of at least 25% in aggregate principal amount of the outstanding Notes, foreclose on the Notes Collateral
in accordance with the terms of the relevant Notes Security Documents and take such further action on behalf of
the Holders with respect to the Collateral in accordance with such written instruction and the relevant Security
Documents; provided that the Trustee will be under no obligation to foreclose or take any action unless such
Holders have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that might be incurred by it in compliance with such request.
The Holders of at least a majority in aggregate principal amount of the outstanding Notes may direct the
time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the
Notes or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the giving of
such direction and may take any other action it deems proper that is not inconsistent with any such direction
received from Holders; provided, however, that the Trustee shall not be obligated to take any such action as
referred to in this paragraph unless it has first been indemnified or secured by the Holders to its satisfaction.
A Holder may not institute any proceeding, judicial or otherwise, with respect to the Indenture or the Notes,
or for the appointment of a receiver or trustee, or for any other remedy under the Indenture or the Notes, unless:
(1) the Holder has previously given the Trustee written notice of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of outstanding Notes make a written
request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer the Trustee and the Common Security Agent indemnity satisfactory to
the Trustee against any costs, liability or expense to be incurred in compliance with such request;
(4) the Trustee does not comply with the request within 60 days after receipt of the request and the
offer of indemnity; and
(5) during such 60-day period, the Holders of a majority in aggregate principal amount of the
outstanding Notes do not give the Trustee a direction that is inconsistent with the request.
However, such limitations do not apply to the right of any Holder of a Note to receive payment of the
principal of, premium, if any, or interest, and Additional Amounts, if any, on, such Note or to bring suit for the
enforcement of any such payment, on or after the due date expressed in the Notes, which right will not be
impaired or affected without the consent of the Holder.
Officers of each of the Issuer and the Parent Guarantor must certify to the Trustee, on or before a date not
more than 120 days after the end of each fiscal year, that a review has been conducted of the activities of the
Parent Guarantor and its Restricted Subsidiaries and the Parent Guarantors and its Restricted Subsidiaries
performance under the Indenture, the Notes and the Security Documents and that each of the Issuer and the
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Parent Guarantor has fulfilled all obligations thereunder, and that no Default or Event of Default has occurred, or,
if there has been a default in the fulfillment of any such obligation, specifying each such default and the nature
and status thereof. The Issuer and the Parent Guarantor will also be obligated to notify the Trustee of any default
or defaults in the performance of any covenants or agreements under the Indenture. See Provision of
Financial Statements and Reports.
Consolidation, Merger and Sale of Assets
The Issuer will not consolidate with, merge with or into, another Person (other than the Parent Guarantor or
a Wholly Owned Subsidiary of the Parent Guarantor), permit any Person to merge with or into it, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its properties and assets to any Person (other than
the Parent Guarantor or a Wholly Owned Subsidiary of the Parent Guarantor); provided that, in the event the
Issuer so consolidates with, merges with or into, the Parent Guarantor or a Wholly Owned Subsidiary of the
Parent Guarantor or sells, conveys, transfers, leases or otherwise disposes of all or substantially all of its
properties and assets to the Parent Guarantor or a Wholly Owned Subsidiary of the Parent Guarantor, the Parent
Guarantor or a Wholly Owned Subsidiary of the Parent Guarantor, immediately after such transaction, will
(a) assume, by a supplemental indenture to the Indenture, executed and delivered to the Trustee, all the
obligations of the Issuer under the Indenture and the Notes, which shall remain in full force and effect (other than
those under Limitation on the Activities of the Issuer), (b) deliver to the Trustee an Officers Certificate and
an Opinion of Counsel, in each case stating that such transaction and such supplemental indenture complies with
this provision and that all conditions precedent provided for herein relating to such transaction have been
complied with and (c) deliver to the Trustee an opinion of counsel of recognized standing with respect to U.S.
federal income tax matters that the beneficial owners of the Notes will not recognize gain or loss for U.S. federal
income tax purposes as a result of such consolidation, merger, sale, conveyance, transfer, lease or other
disposition and will be subject to the same U.S. federal income tax consequences as if such consolidation,
merger, conveyance, transfer, lease or other disposition did not occur. In no event will the Trustee have a duty to
investigate such certificates, opinions or other documents delivered to it pursuant to this section.
The Parent Guarantor will not consolidate with, merge with or into another Person, permit any Person to
merge with or into it, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its and its
Restricted Subsidiaries properties and assets (computed on a consolidated basis) (as an entirety or substantially
an entirety in one transaction or a series of related transactions), unless:
(1) the Parent Guarantor will be the continuing Person, or the Person (if other than it) formed by such
consolidation or merger or that acquired or leased such property and assets (the Surviving Person) will be
a corporation organized and validly existing under the laws of Indonesia and will expressly assume, by a
supplemental indenture to the Indenture, executed and delivered to the Trustee, all the obligations of the
Parent Guarantor under the Indenture, the Notes and the Parent Guarantee, as the case may be, and the
Indenture, the Notes and the Parent Guarantee, as the case may be, will remain in full force and effect;
(2) immediately after giving effect to such transaction, no Default will have occurred and be
continuing;
(3) immediately after giving effect to such transaction on a pro forma basis, the Parent Guarantor or the
Surviving Person, as the case may be, could Incur at least US$1.00 of Indebtedness under the first paragraph
of the covenant under the caption Certain CovenantsLimitation on Indebtedness;
(4) the Issuer or the Parent Guarantor delivers to the Trustee (x) an Officers Certificate (attaching the
arithmetic computations to demonstrate compliance with clause (3) of this paragraph) and (y) an Opinion of
Counsel, in each case stating that such consolidation, merger or transfer and the relevant supplemental
indenture complies with this provision and that all conditions precedent provided for in the Indenture
relating to such transaction have been complied with and that the relevant supplemental indenture is
enforceable; and
(5) no Rating Decline will have occurred.
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No Subsidiary Guarantor will consolidate with, merge with or into another Person, permit any Person to
merge with or into it, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its and its
Restricted Subsidiaries properties and assets (computed on a consolidated basis) (as an entirety or substantially
an entirety in one transaction or a series of related transactions) to another Person (other than the Parent
Guarantor or another Subsidiary Guarantor), unless:
(1) such Subsidiary Guarantor will be the continuing Person, or the Person (if other than it) formed by
such consolidation or merger or that acquired or leased such property and assets will be the Parent
Guarantor or another Subsidiary Guarantor or will become a Subsidiary Guarantor concurrently with the
transaction;
(2) immediately after giving effect to such transaction, no Default will have occurred and be
continuing;
(3) immediately after giving effect to such transaction on a pro forma basis, the Parent Guarantor could
Incur at least US$1.00 of Indebtedness under the first paragraph of the covenant under the caption
Certain CovenantsLimitation on Indebtedness;
(4) the Issuer or the Parent Guarantor delivers to the Trustee (x) an Officers Certificate (attaching the
arithmetic computations to demonstrate compliance with clause (3) of this paragraph) and (y) an Opinion of
Counsel, in each case stating that such consolidation, merger or transfer and the relevant supplemental
indenture complies with this provision and that all conditions precedent provided for in the Indenture
relating to such transaction have been complied with and that the relevant supplemental indenture is
enforceable; and
(5) no Rating Decline will have occurred;
provided that this paragraph will not apply to (a) any sale or other disposition that complies with the Certain
CovenantsLimitation on Asset Sales covenant or any Subsidiary Guarantor whose Subsidiary Guarantee is
unconditionally released in accordance with the provisions described under The Subsidiary
GuaranteesRelease of the Subsidiary Guarantees and (b) a consolidation or merger of any Subsidiary
Guarantor with and into the Parent Guarantor or any other Subsidiary Guarantor, so long as the Parent Guarantor
or such Subsidiary Guarantor survives such consolidation or merger.
Although there is a limited body of case law interpreting the phrase substantially all, there is no precise
established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a
degree of uncertainty as to whether a particular transaction would involve all or substantially all of the property
or assets of a Person.
The foregoing provisions would not necessarily afford Holders protection in the event of highly-leveraged
or other transactions involving the Parent Guarantor that may adversely affect Holders.
Payments for Consents
The Parent Guarantor will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes
unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend
such term or provision within the time period set forth in the solicitation documents relating to such consent,
waiver or amendment.
Defeasance
Defeasance and Discharge
The Indenture provides that the Issuer will be deemed to have paid and will be discharged from any and all
obligations in respect of the Notes on the 183rd day after the deposit referred to below and payments of all
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amounts due to the Trustee, and the provisions of the Indenture will no longer be in effect with respect to the
Notes (except for, among other matters, certain obligations to register the transfer or exchange of the Notes, to
replace stolen, lost or mutilated Notes, to maintain paying agencies and to hold monies for payment in trust) if,
among other things:
(A) the Issuer has (1) deposited with the Trustee, in trust, cash in U.S. Dollars, U.S. Government
Obligations or a combination thereof that through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount sufficient to pay the principal
of, premium, if any, and accrued interest on the Notes on the Stated Maturity of such payments in
accordance with the terms of the Indenture and the Notes and (2) delivered to the Trustee a certificate
of an internationally-recognized firm of independent accountants to the effect that the amount
deposited by the Issuer is sufficient to provide payment for the principal of, premium, if any, and
accrued interest on, the Notes on the Stated Maturity of such payment in accordance with the terms of
the Indenture and the Notes and an Opinion of Counsel to the effect that the Holders have a valid,
perfected, exclusive security in such trust;
(B) the Issuer has delivered to the Trustee (1) either (x) an Opinion of Counsel of recognized
international standing with respect to U.S. federal income tax matters which is based on a change in
applicable U.S. federal income tax law occurring after the Original Issue Date to the effect that
beneficial owners will not recognize income, gain or loss for U.S. federal income tax purposes as a
result of the Issuers exercise of its option under this Defeasance provision and will be subject to
U.S. federal income tax on the same amount and in the same manner and at the same time as would
have been the case if such deposit, defeasance and discharge had not occurred or (y) a ruling directed to
the Parent Guarantor, the Issuer or the Trustee received from the U.S. Internal Revenue Service to the
same effect as the aforementioned Opinion of Counsel and (2) an Opinion of Counsel to the effect that
the creation of the defeasance trust does not violate the U.S. Investment Company Act of 1940, as
amended, and after the passage of 183 days following the deposit, the trust fund will not be subject to
the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor
and Creditor Law;
(C) the Issuer shall have delivered to the Trustee an Officers Certificate stating that the deposit
was not made by it with the intent of preferring the Holders over any other of its creditors or with the
intent of defeating, hindering, delaying or defrauding any other of its creditors or others; and
(D) immediately after giving effect to such deposit on a pro forma basis, no Event of Default, or
event that after the giving of notice or lapse of time or both would become an Event of Default, will
have occurred and be continuing on the date of such deposit or during the period ending on the 183rd
day after the date of such deposit, and such defeasance will not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the Parent Guarantor or any of
its Restricted Subsidiaries is a party or by which the Parent Guarantor or any of its Restricted
Subsidiaries is bound.
In no event will the Trustee have a duty to investigate or verify such certificates, opinions and other
documents as described in (A) through (D) above.
In the case of either discharge or defeasance of the Notes, the Guarantees of the Notes will terminate.
Defeasance of Certain Covenants
The Indenture further provides that the provisions of the Indenture will no longer be in effect with respect to
clauses (3) and (4)(x) under the second paragraph and third paragraph under Consolidation, Merger and Sale
of Assets and all the covenants described herein under Certain Covenants other than as described
Certain CovenantsAnti-Layering and Certain CovenantsLimitations on the Activities of the Issuer,
clause (c) under Events of Default with respect to such clauses (3) and (4)(x) under the second paragraph and
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third paragraph under Consolidation, Merger and Sale of Assets and with respect to the other events set forth
in such clause, clause (d) under Events of Default with respect to such other covenants and clauses (e), (f) and
(j) under Events of Default will be deemed not to be Events of Default upon, among other things, the deposit
with the Trustee, in trust, of U.S. Dollars, U.S. Government Obligations or a combination thereof that through the
payment of interest and principal in respect thereof in accordance with their terms will provide money in an
amount sufficient to pay the principal of, premium, if any, Additional Amounts, if any, and accrued interest on
the Notes on the Stated Maturity of such payments in accordance with the terms of the Indenture and the Notes,
the satisfaction of the provisions described in clause (B)(2) and (C) of the preceding paragraph and the delivery
by the Issuer to the Trustee of an Opinion of Counsel of recognized international standing with respect to U.S.
federal income tax matters to the effect that the beneficial owners of the Notes will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such deposit and defeasance of certain covenants and
Events of Default and will be subject to U.S. federal income tax on the same amount and in the same manner and
at the same time as would have been the case if such deposit and defeasance had not occurred.
Defeasance and Certain Other Events of Default
If in the event (i) the Issuer exercises its option to omit compliance with certain covenants and provisions of
the Indenture as described in the immediately preceding paragraph and the Notes are declared due and payable
because of the occurrence of an Event of Default that remains applicable and (ii) the amount of U.S. Dollars and/
or U.S. Government Obligations on deposit with the Trustee will be sufficient to pay amounts due on the Notes at
the time of their Stated Maturity but may not be sufficient to pay amounts due on the Notes at the time of the
acceleration resulting from such Event of Default, the obligations of the Issuer and the Guarantors under the
Indenture will be revived and no such defeasance will be deemed to have occurred.
Amendments and Waivers
Amendments Without Consent of Holders
The Indenture and any Security Document may be amended, without the consent of any Holder, to:
(1) cure any ambiguity, defect or inconsistency in the Indenture, the Notes, the Guarantees or any
Security Document;
(2) comply with the provisions described under Consolidation, Merger and Sale of Assets;
(3) evidence and provide for the acceptance of appointment by a successor Trustee or Common
Security Agent;
(4) add any Guarantor or any Guarantee or release any Guarantor from any Guarantee as provided or
permitted by the terms of the Indenture;
(5) provide for the issuance of Additional Notes in accordance with the limitations set forth in the
Indenture;
(6) in any other case where a supplemental indenture to the Indenture is required or permitted to be
entered into pursuant to the provisions of the Indenture without the consent of any Holder;
(7) effect any changes to the Indenture in a manner necessary to comply with the procedures of DTC;
(8) add additional Collateral to secure the Notes, the Parent Guarantee or any Subsidiary Guarantee;
(9) permit Permitted Pari Passu Secured Indebtedness (including, without limitation, permitting the
Trustee or the Common Security Agent to enter into any amendments to the Common Security Documents
or the Indenture and take any other action necessary to permit the creation and registration of Liens on the
Common Security to secure Permitted Pari Passu Secured Indebtedness, in accordance with the Indenture);
(10) make any other change that does not materially and adversely affect the rights of any Holder; or
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(11) conform the text of the Indenture, the Security Documents, the Notes or the Guarantees to any
provision of this Description of the Notes to the extent that such provision in this Description of the
Notes was intended to be a verbatim recitation of a provision of the Indenture, the Security Documents, the
Notes or the Guarantees.
Amendments With Consent of Holders
Except as provided below, amendments of the Indenture or any Security Document may be made by the
Issuer, the Parent Guarantor, the Subsidiary Guarantors and the Trustee with the consent of the Holders (and in
the case of the Trustee, at the direction of the Holders) of not less than a majority in aggregate principal amount
of the outstanding Notes, and the Holders of a majority in principal amount of the outstanding Notes may waive
future compliance by the Issuer, the Parent Guarantor or any Restricted Subsidiary with any provision of the
Indenture, the Notes or the Guarantees; provided, however, that no such modification, amendment or waiver
may, without the consent of each Holder:
(1) change the Stated Maturity of the principal of, or any installment of interest on, any Note;
(2) reduce the principal amount of, or premium, if any, or interest on, any Note;
(3) change the currency or place of payment of principal of, or premium, if any, or interest on, any
Note;
(4) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity
(or, in the case of a redemption, on or after the redemption date) of any Note;
(5) reduce the above stated percentage of outstanding Notes the consent of whose Holders is necessary
to modify or amend the Indenture;
(6) waive a default in the payment of principal of, premium, if any, or interest on the Notes;
(7) release any Guarantor from its Guarantee, except as provided in the Indenture;
(8) reduce the percentage or aggregate principal amount of outstanding Notes the consent of whose
Holders is necessary for waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults;
(9) amend, change or modify any Guarantee in a manner that adversely affects the Holders;
(10) reduce the amount payable upon a Change of Control Offer or an Offer to Purchase with the
Excess Proceeds from any Asset Sale or, change the time or manner by which a Change of Control Offer or
an Offer to Purchase with the Excess Proceeds or other proceeds from any Asset Sale may be made or by
which the Notes must be repurchased pursuant to a Change of Control Offer or an Offer to Purchase with
the Excess Proceeds or other proceeds from any Asset Sale;
(11) change the redemption date or the redemption price of the Notes from that stated under the
captions Optional Redemption or Redemption for Taxation Reasons;
(12) amend, change or modify the obligation of the Issuer or any Guarantor to pay Additional
Amounts;
(13) release any Collateral, except as provided in the Indenture and the Security Documents;
(14) amend, change or modify any provision of the Security Documents relating to the Collateral, or
any provision of the Indenture relating to the Collateral, in a manner that adversely affects the Holders,
except in accordance with the other provisions of the Security Documents or Indenture; or
(15) amend, change or modify any provision of the Indenture or the related definition affecting the
ranking of the Notes or any Guarantee in a manner which adversely affects the Holders.
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No Personal Liability of Incorporators, Shareholders, Officers, Directors or Employees

No recourse for the payment of the principal of, premium, if any, or interest on any of the Notes or for any
claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Issuer, the Parent Guarantor or any of the Subsidiary Guarantors in the Indenture, or in any of
the Notes or the Guarantees or because of the creation of any Indebtedness represented thereby, will be had
against any incorporator, shareholder, officer, commissioner, director, employee or controlling person of the
Issuer, the Parent Guarantor or any of the Subsidiary Guarantors or of any successor Person thereof. Each
Holder, by accepting the Notes, waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Guarantees. Such waiver may not be effective to waive
liabilities under the applicable securities laws.
Concerning the Trustee and the Paying Agent
HSBC Bank USA, National Association has been appointed as Trustee under the Indenture and as registrar
and paying agent (the Paying Agent) with regard to the Notes. For so long as the Notes are listed on the
SGX-ST and the rules of the SGX-ST so require, the Issuer shall appoint and maintain a paying agent in
Singapore, where the Notes may be presented or surrendered for payment or redemption, in the event that a
Global Note is exchanged for definitive Notes. In addition, in the event that a Global Note is exchanged for
definitive Notes, an announcement of such exchange shall be made by or on behalf of the Issuer through the
SGX-ST and such announcement will include all material information with respect to the delivery of the
definitive Notes, including details of the paying agent in Singapore. If an Event of Default has occurred and is
continuing, the Trustee will use the same degree of care and skill in its exercise of the rights and powers vested in
it under the Indenture as a prudent person would exercise under the circumstances in the conduct of such
persons own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any rights or
powers conferred under the Indenture for the benefit of the Holders unless such Holders have offered to the
Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense and then only to the
extent required by the terms of the Indenture.
The Indenture contains limitations on the rights of the Trustee, should it become a creditor of the Issuer, the
Parent Guarantor or any of the Subsidiary Guarantors, to obtain payment of claims in certain cases or to realize
on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions with the Parent Guarantor and its Affiliates; provided, however, that if it acquires
any conflicting interest, it must eliminate such conflict or resign.
Book-Entry; Delivery and Form
The certificates representing the Notes will be issued in fully registered form without interest coupons,
Notes sold in offshore transactions in reliance on Regulation S under the U.S. Securities Act will initially be
represented by one or more permanent global notes in definitive, fully registered form without interest coupons
(each a Regulation S Global Note) and will be deposited with HSBC Bank USA, National Association as
custodian for, and registered in the name of a nominee of, DTC for the accounts of Euroclear and Clearstream.
Notes sold in reliance on Rule 144A will be represented by one or more permanent global notes in
definitive, fully registered form without interest coupons (each a Restricted Global Note; and together with the
Regulation S Global Notes, the Global Notes) and will be deposited with HSBC Bank USA, National
Association as custodian for, and registered in the name of a nominee of, DTC.
Each Global Note (and any Notes issued for exchange therefor) will be subject to certain restrictions on
transfer set forth therein as described under Transfer Restrictions.
Ownership of beneficial interests in a Global Note will be limited to persons who have accounts with DTC
(participants) or persons who hold interests through participants. Ownership of beneficial interests in a Global
Note will be shown on, and the transfer of that ownership will be effected only through, records maintained by
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DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to
interests of persons other than participants). Beneficial owners may hold their interests in a Global Note directly
through DTC if they are participants in such system, or indirectly through organizations which are participants in
such system.
Euroclear and Clearstream will hold interests in the Global Notes on behalf of their participants through
DTC.
So long as DTC, or its nominee, is the registered owner or holder of a Global Note, DTC or such nominee,
as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note for
all purposes under the Indenture and the Notes. No beneficial owner of an interest in a Global Note will be able
to transfer that interest except in accordance with DTCs applicable procedures, in addition to those provided for
under the Indenture and, if applicable, those of Euroclear and Clearstream.
Payments of the principal of, and interest on, a Global Note will be made to DTC or its nominee, as the case
may be, as the registered owner thereof. Neither the Issuer, nor any of the Guarantors, the Trustee nor any Paying
Agent will have any responsibility or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Issuer expects that DTC or its nominee, upon receipt of any payment of principal or interest in respect
of a Global Note, will credit participants accounts with payments in amounts proportionate to their respective
beneficial interests in the principal amount of such Global Note as shown on the records of DTC or its nominee.
The Issuer also expects that payments by participants to owners of beneficial interests in such Global Note held
through such participants will be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of nominees for such customers. Such
payments will be the responsibility of such participants.
The Issuer expects that DTC will take any action permitted to be taken by a Holder (including the
presentation of Notes for exchange as described below) only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of such portion of the aggregate
principal amount of Notes as to which such participant or participants has or have given such direction. However,
if there is an Event of Default under the Notes, DTC will exchange the applicable Global Note for Certificated
Notes, which it will distribute to its participants and which may be legended as set forth under the heading
Transfer Restrictions.
Although DTC, Euroclear and Clearstream are expected to follow the foregoing procedures in order to
facilitate transfers of interests in a Global Note among participants of DTC, Euroclear and Clearstream, they are
under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued
at any time. None of the Issuer, the Parent Guarantor, any of the Subsidiary Guarantors, the Trustee or any
Paying Agent will have any responsibility for the performance by DTC, Euroclear or Clearstream or their
respective participants or indirect participants of their respective obligations under the rules and procedures
governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for the Global Notes and a successor
depositary is not appointed by the Issuer within 90 days, the Issuer will issue Certificated Notes in registered
form, which may bear the legend referred to under Transfer Restrictions, in exchange for the Global Notes.
Holders of an interest in a Global Note may receive Certificated Notes, which may bear the legend referred to
under Transfer Restrictions, in accordance with the DTCs rules and procedures in addition to those provided
for under the Indenture.
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The Clearing Systems

General
DTC, Euroclear and Clearstream have advised the Issuer as follows:
DTC. DTC is a limited-purpose trust company organized under the laws of the State of New York, a
banking organization within the meaning of New York Banking Law, a member of the Federal Reserve
System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a
clearing agency registered pursuant to the provisions of Section 17A of the U.S. Exchange Act. DTC was
created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions
among its participants in such securities through electronic book-entry changes in accounts of its participants,
thereby eliminating the need for physical movement of securities certificates. DTCs participants include
securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations,
some of whom own DTC, and may include the initial purchaser. Indirect access to the DTC system is also
available to others that clear through or maintain a custodial relationship with a DTC participant, either directly
or indirectly (indirect participants). Transfers of ownership or other interests in Notes in DTC may be made
only through DTC participants. In addition, beneficial owners of Notes in DTC will receive all distributions of
principal of and interest on the Notes from the Trustee through such DTC participant.
Euroclear and Clearstream. Euroclear and Clearstream hold securities for participating organizations and
facilitate the clearance and settlement of securities transactions between their respective participants through
electronic book-entry changes in accounts of such participants. Euroclear and Clearstream provide to their
participants, among other things, services for safekeeping, administration, clearance and settlement of
internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream interface with
domestic securities markets. Euroclear and Clearstream participants are financial institutions such as
underwriters, securities brokers and dealers, banks, trust companies and certain other organizations. Indirect
access to Euroclear or Clearstream is also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Euroclear or Clearstream participant, either directly
or indirectly.
Initial Settlement
All Notes issued in the form of Global Notes will be deposited with HSBC Bank USA, National
Association, as custodian for DTC. Investors interests in Notes held in book-entry form by DTC will be
represented through financial institutions acting on their behalf as direct and indirect participants in DTC. As a
result, Euroclear and Clearstream will hold positions on behalf of their participants through DTC.
Investors electing to hold their Notes through DTC (other than through accounts at Euroclear or
Clearstream) must follow the settlement practices applicable to United States corporate debt obligations. The
securities custody accounts of investors will be credited with their holdings against payment in same day funds
on the settlement date.
Investors electing to hold their Notes through Euroclear or Clearstream accounts will follow the settlement
procedures applicable to conventional Eurobonds in registered form. Notes will be credited to the securities
custody accounts of Euroclear Holders and of Clearstream Holders on the business day following the settlement
date against payment for value on the settlement date.
Secondary Market Trading
Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC
rules. Secondary market trading between Clearstream participants and/or Euroclear participants will occur in the
ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear and
will be settled using the procedures applicable to conventional eurobonds.
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Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and
directly or indirectly through Clearstream participants or Euroclear participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its U.S.
depositary; however, such cross-market transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European international clearing system will, if a
transaction meets its settlement requirements, deliver instructions to its U.S. depositary to take action to effect
final settlement on its behalf by delivering or receiving Notes in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream participants
and Euroclear participants may not deliver instructions directly to the U.S. depositaries.
Because of time zone differences, credits of Notes received in Clearstream or Euroclear as a result of a
transaction with a DTC participant will be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions in such Notes settled during
such processing will be reported to the relevant Clearstream participants or Euroclear participants on such
business day. Cash received in Clearstream or Euroclear as a result of sales of Notes by or through a Clearstream
participant or a Euroclear participant to a DTC participant will be received with value on the DTC settlement
date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day
following settlement in DTC.
Notices
All notices or demands required or permitted by the terms of the Notes or the Indenture to be given to or by
the Holders are required to be in writing (in English) and may be given or served by being sent by prepaid courier
or by being deposited, first-class postage prepaid, in the United States mails (if intended for the Issuer, the Parent
Guarantor or any Subsidiary Guarantor or the Trustee) addressed to the Issuer, the Parent Guarantor, such
Subsidiary Guarantor or the Trustee, as the case may be, at the corporate trust office of the Trustee; and (if
intended for any Holder) addressed to such Holder at such Holders last address as it appears in the Note register.
Any such notice or demand will be deemed to have been sufficiently given or served when so sent or
deposited and, if to the Holders, when delivered in accordance with the applicable rules and procedures of DTC.
Any such notice will be deemed to have been delivered on the day such notice is delivered to DTC or if by mail,
when so sent or deposited.
Consent to Jurisdiction; Service of Process
The Issuer, the Parent Guarantor and each of the Subsidiary Guarantors will irrevocably (i) submit to the
non-exclusive jurisdiction of any U.S. federal or New York state court located in the Borough of Manhattan, The
City of New York in connection with any suit, action or proceeding arising out of, or relating to, the Notes, any
Guarantee or the Indenture or any transaction contemplated thereby and (ii) designate and appoint Law
Debenture Corporate Services Inc. for receipt of service of process in any such suit, action or proceeding.
Governing Law
Each of the Notes and the Guarantees (other than the Indonesian Law Guarantees) provides that such
instrument will be governed by, and construed in accordance with, the laws of the State of New York. The
Indenture is governed by, and construed in accordance with, the laws of the State of New York. The Indonesian
Law Guarantees provide that such instruments will be governed by, and construed in accordance with, the laws
of the Republic of Indonesia.
Definitions
Set forth below are defined terms used in the covenants and other provisions of the Indenture. Reference is
made to the Indenture for other capitalized terms used in this Description of the Notes for which no definition
is provided.
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Account Manager means each of The Hongkong and Shanghai Banking Corporation Limited, The
Hongkong and Shanghai Banking Corporation Limited, Jakarta Branch, PT ANZ Panin Bank and their respective
successors.
Acquired Indebtedness means Indebtedness of a Person existing at the time such Person becomes a
Restricted Subsidiary or Indebtedness of a Restricted Subsidiary assumed in connection with an Asset
Acquisition by such Restricted Subsidiary and not Incurred in connection with, or in contemplation of, the Person
merging with or into or becoming a Restricted Subsidiary or such Asset Acquisition.
Affiliate means, with respect to any Person, any other Person (i) directly or indirectly controlling,
controlled by, or under direct or indirect common control with, such Person, (ii) who is a director, commissioner
or officer of such Person or any Subsidiary of such Person or of any Person referred to in clause (i) of this
definition or (iii) who is a spouse or any person cohabiting as a spouse, child, parent, brother, sister of a Person
described in clause (i) or (ii). For purposes of this definition, control (including, with correlative meanings, the
terms controlling, controlled by and under common control with), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or otherwise; provided that, for the
avoidance of doubt, a Person shall not be deemed to be an Affiliate of another Person solely as a result of it
having an officer, a director or a commissioner in common with such other Person.
Applicable Premium means, with respect to any Note on any redemption date, the greater of:
(1) 1.00% of the principal amount of the Note; or
(2) the excess of:
(a) the present value at such redemption date of (i) the redemption price of the Note at July 8,
2013 (such redemption price being set forth in the table appearing above under the caption Optional
Redemption exclusive of any accrued interest) plus (ii) all required remaining scheduled interest
payments due on the Note through July 8, 2013 (but excluding accrued and unpaid interest to the
redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date
plus 50 basis points; over
(b) the principal amount of the Note.
Asset Acquisition means (1) an investment by the Parent Guarantor or any of its Restricted Subsidiaries in
any other Person pursuant to which such Person will become a Restricted Subsidiary or will be merged into or
consolidated with the Parent Guarantor or any of its Restricted Subsidiaries, or (2) an acquisition by the Parent
Guarantor or any of its Restricted Subsidiaries of the property and assets of any Person other than the Parent
Guarantor or any of its Restricted Subsidiaries that constitute substantially all of a division or line of business of
such Person.
Asset Disposition means the sale or other disposition by the Parent Guarantor or any of its Restricted
Subsidiaries (other than to the Parent Guarantor or another Restricted Subsidiary) of (1) all or substantially all of
the Capital Stock of any Restricted Subsidiary or (2) all or substantially all of the assets that constitute a division
or line of business of the Parent Guarantor or any of its Restricted Subsidiaries.
Asset Sale means any sale, transfer or other disposition (including by way of merger, consolidation or
Sale and Leaseback Transaction) of any of its property or assets (including any sale or issuance of Capital Stock
by a Restricted Subsidiary) in one transaction or a series of related transactions by the Parent Guarantor or any
Restricted Subsidiary to any Person other than the Parent Guarantor or any Subsidiary Guarantor; provided that
Asset Sale will not include:
(a) sales or other dispositions of inventory, receivables and other current assets in the ordinary
course of business;
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(b) sales, transfers or other dispositions of assets constituting a Permitted Investment or Restricted
Payment permitted to be made under the Certain CovenantsLimitation on Restricted Payments
covenant;
(c) sales, transfers or other dispositions of assets with a Fair Market Value not in excess of US$1.0
million (or the Dollar Equivalent thereof) in any transaction or series of related transactions;
(d) any sale, transfer, assignment or other disposition of any property or equipment that has
become damaged, worn out, obsolete or otherwise unsuitable for use in connection with the business of
the Parent Guarantor or its Restricted Subsidiaries;
(e) any transfer, assignment or other disposition deemed to occur in connection with creating or
granting any Permitted Lien;
(f) a transaction covered by the covenant under the caption Consolidation, Merger and Sale of
Assets; and
(g) an issuance of Capital Stock by a Restricted Subsidiary to the Parent Guarantor or to a
Subsidiary Guarantor.
Attributable Indebtedness means, in respect of a Sale and Leaseback Transaction, the present value at the
time of determination, discounted at the interest rate implicit in the Sale and Leaseback Transaction, of the total
obligations of the lessee for rental payments during the remaining term of the lease in the Sale and Leaseback
Transaction, including any period for which such lease has been extended or may, at the option of lessor, be
extended, determined in accordance with GAAP; provided, however, that if such Sale and Leaseback Transaction
results in Capitalized Lease Obligations, the amount of Indebtedness represented thereby will be determined in
accordance with the definition of Capitalized Lease Obligations.
Average Life means, at any date of determination with respect to any Indebtedness, the quotient obtained
by dividing (1) the sum of the products of (a) the number of years from such date of determination to the dates of
each successive scheduled principal payment of such Indebtedness and (b) the amount of such principal payment
by (2) the sum of all such principal payments.
Board of Commissioners means the board of commissioners of the Parent Guarantor elected or appointed
by the stockholders of the Parent Guarantor.
Board of Directors means the board of directors of the Parent Guarantor elected or appointed by the
stockholders of the Parent Guarantor to manage the business of the Parent Guarantor or any committee of such
board duly authorized to take the action purported to be taken by such committee.
Board Resolution means any resolution of the Board of Directors taking an action which it is authorized to
take and adopted at a meeting duly called and held at which a quorum of disinterested members (if so required)
was present and acting throughout or adopted by written resolution executed by a majority of the Board of
Directors.
Business Day means any day which is not a Saturday, Sunday, legal holiday or other day on which
banking institutions in The City of New York, Hong Kong, Indonesia or Singapore (or in any other place in
which payments on the Notes are to be made) are authorized by law or governmental regulation to close.
CAMA Entities means the Parent Guarantor, any Restricted Subsidiaries existing on the Original Issue
Date and Maple.
Capital Stock means, with respect to any Person, any and all shares, interests, participations or other
equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on
the Original Issue Date or issued thereafter, including, without limitation, all Common Stock and Preferred
Stock.
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Capitalized Lease means, with respect to any Person, any lease of any property (whether real, personal or
mixed) of which the discounted present value of rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
Capitalized Lease Obligations means the discounted present value of the rental obligations under a
Capitalized Lease.
Cash and Accounts Management Agreement means the cash and accounts management agreement dated
July 20, 2010 among the Issuer, the Parent Guarantor, Berau Coal, the Common Security Agent and the other
parties thereto, as amended from time to time.
Change of Control means the occurrence of one or more of the following events:
(1) the merger, amalgamation, or consolidation of the Parent Guarantor with or into another Person or
the merger or amalgamation of another Person with or into the Parent Guarantor, or the sale of all or
substantially all the assets of the Parent Guarantor to another Person, other than Permitted Holders;
(2) the Permitted Holders are the beneficial owners of less than 50.1% of the total voting power of the
Voting Stock of the Parent Guarantor;
(3) individuals who on the Original Issue Date constituted the Board of Directors, together with any
new directors whose election was approved by a vote of at least a majority of the directors then still in office
who were either directors or whose election was previously so approved, cease for any reason to constitute a
majority of the Board of Directors then in office; or
(4) the adoption of a plan relating to the liquidation or dissolution of the Parent Guarantor.
Change of Control Triggering Event means the occurrence of a Change of Control.
Clearstream means Clearstream Banking, socit anonyme, Luxembourg or any successor thereof.
Collateral means the Notes Collateral and the Common Security.
Commodity Hedging Agreement means any spot, forward, option, future, cap, collar, floor, swap,
commodity price protection agreements or other similar agreement or arrangement designed to protect against
fluctuations in commodity prices and not for speculation, including an agreement in the form of an offtake,
supply or other similar agreement and includes any master agreement, confirmation or other document (including
any credit support agreement) entered into in connection therewith.
Common Security Documents means the Cash and Accounts Management Agreement, the Intercreditor
Agreement, all security agreements, pledge agreements, assignments, mortgages, deeds of trust, security trustee
or collateral agency agreements, control agreements or other grants or transfers of security executed and
delivered by the Issuer, the Guarantors or any other Pledgor creating (or purporting to create) a Lien upon the
Common Security in favor of the Common Security Agent, in each case, as amended, modified, renewed,
restated or replaced, in whole or in part, from time to time, in accordance with the terms and the provisions of the
Intercreditor Agreement, including:
(1) pledges of all the shares in the Issuer and certain other Subsidiaries of the Parent Guarantor;
(2) Liens over certain bank accounts and cash receivables of the Parent Guarantor and its Restricted
Subsidiaries;
(3) various fiducia security comprising the Indonesian security documents over certain material assets
of the Parent Guarantor and its Restricted Subsidiaries, including moveable and immoveable assets,
insurances, inventory, cash receivables under relevant principal agreements (including coal supply
agreements) and intercompany loan agreements or advances governed by Indonesian law;
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(4) assignment of certain principal operating agreements (including coal supply agreements) of the
Parent Guarantor and its Restricted Subsidiaries; and
(5) pledges of certain intercompany loans or advances/notes payable to the Issuer or any Guarantor.
Common Stock means, with respect to any Person, any and all shares, interests or other participations in,
and other equivalents (however designated and whether voting or non-voting) of such Persons common stock or
ordinary shares, whether or not outstanding on the Original Issue Date, and include, without limitation, all series
and classes of such common stock or ordinary shares.
Comparable Treasury Issue means the United States Treasury security or securities selected by an
Independent Investment Bank as having an actual or interpolated maturity comparable to July 8, 2013 that would
be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of
corporate debt securities with a maturity comparable to July 8, 2013.
Comparable Treasury Price means, with respect to any redemption date (A) the average of the Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such quotations.
Consolidated EBITDA means, for any period, Consolidated Net Income for such period plus, to the extent
such amount was deducted in calculating such Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) income taxes (other than income taxes attributable to extraordinary and non-recurring gains (or
losses) or sales of assets);
(3) depreciation expense;
(4) amortization expense; and
(5) all other non-cash items reducing Consolidated Net Income (other than non-cash items in a period
which reflect cash expenses paid or to be paid in another period), less all non-cash items increasing
Consolidated Net Income,
all as determined on a consolidated basis for the Parent Guarantor and its Restricted Subsidiaries in conformity
with GAAP; provided that if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA will be reduced (to the extent not otherwise reduced in accordance with GAAP) by an
amount equal to (A) the amount of the Consolidated Net Income attributable to such Restricted Subsidiary
multiplied by (B) the percentage ownership interest in the income of such Restricted Subsidiary not owned on the
last day of such period by the Parent Guarantor or any Restricted Subsidiary.
Consolidated Fixed Charges means, for any period, the sum (without duplication) of (i) Consolidated
Interest Expense for such period and (ii) all cash and non-cash dividends paid, declared, accrued or accumulated
during such period on any Disqualified Stock or Preferred Stock of the Parent Guarantor or any Restricted
Subsidiary held by Persons other than the Parent Guarantor or any Wholly Owned Restricted Subsidiary, except
for dividends payable in the Parent Guarantors Capital Stock (other than Disqualified Stock).
Consolidated Interest Expense means, for any period, the amount that would be included in gross interest
expense on a consolidated income statement prepared in accordance with GAAP for such period of the Parent
Guarantor and its Restricted Subsidiaries, plus, to the extent not included in such gross interest expense, and to
the extent incurred, accrued or payable during such period by the Parent Guarantor and its Restricted
Subsidiaries, without duplication, (i) interest expense attributable to Capitalized Lease Obligations,
(ii) amortization of debt issuance costs and original issue discount expense and non-cash interest payments in
respect of any Indebtedness, (iii) the interest portion of any deferred payment obligation, (iv) all commissions,
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discounts and other fees and charges with respect to letters of credit or similar instruments issued for financing
purposes or in respect of any Indebtedness, (v) the net costs associated with Hedging Obligations (including the
amortization of fees), (vi) interest accruing on Indebtedness of any other Person that is guaranteed by the Parent
Guarantor or any Restricted Subsidiary or secured by a Lien on assets of the Parent Guarantor or any Restricted
Subsidiary, (vii) any capitalized interest and (viii) all other non-cash interest expense; provided that interest
expense attributable to interest on any Indebtedness bearing a floating interest rate will be computed on a pro
forma basis as if the rate in effect on the date of determination had been the applicable rate for the entire relevant
period.
Consolidated Net Income means, with respect to any specified Person for any period, the aggregate of the
net income (or loss) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis,
determined in conformity with GAAP; provided that the following items will be excluded in computing
Consolidated Net Income (without duplication):
(1) the net income (or loss) of any Person that is not a Restricted Subsidiary or that is accounted for by
the equity method of accounting except to the extent of the amount of net income actually paid in cash to, or
the amount of loss actually funded in cash by, the specified Person or a Restricted Subsidiary of the Person
during such period;
(2) the net income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary
or is merged into or consolidated with the Parent Guarantor or any Restricted Subsidiary or all or
substantially all of the property and assets of such Person are acquired by the Parent Guarantor or any
Restricted Subsidiary;
(3) the net income (but not loss) of any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Restricted Subsidiary of such net income is not at the
time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Restricted Subsidiary;
(4) the cumulative effect of a change in accounting principles;
(5) any net after tax gains or losses realized on the sale or other disposition of (A) any property or
assets of the Parent Guarantor or any Restricted Subsidiary which is not sold in the ordinary course of its
business or (B) any Capital Stock of any Person (including any gains or losses by the Parent Guarantor
realized on sales of Capital Stock of the Parent Guarantor or Restricted Subsidiaries);
(6) any translation gains or losses due solely to fluctuations in currency values and related tax effects;
and
(7) any net after-tax extraordinary or non-recurring gains or, solely for purposes of calculating Fixed
Charge Coverage Ratio, losses.
Contract of Work means the Coal Contract of Work No. J2/J1.DU/12/83 dated April 26, 1983 between
Berau Coal and Perusahaan Negara Tambang Batubara, a state-owned company in Indonesia with the authority
to grant coal mining concessions, as amended from time to time.
Currency Agreement means any foreign exchange forward contract, currency swap agreement or other
similar agreement or arrangement designed to protect against fluctuations in foreign exchange rates and not for
speculation.
Default means any event that is, or after notice or passage of time or both would be, an Event of Default.
Disqualified Stock means any class or series of Capital Stock of any Person that by its terms or otherwise
is (1) required to be redeemed on or prior to the date that is 366 days after the Stated Maturity of the Notes,
(2) redeemable at the option of the holder of such class or series of Capital Stock at any time on or prior to the
date that is 366 days after the Stated Maturity of the Notes or (3) convertible into or exchangeable for Capital
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Stock referred to in clause (1) or (2) above or Indebtedness having a scheduled maturity on or prior to the date
that is 366 days after the Stated Maturity of the Notes; provided that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase
or redeem such Capital Stock upon the occurrence of an asset sale or change of control occurring prior to the
Stated Maturity of the Notes will not constitute Disqualified Stock if the asset sale or change of control
provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the
provisions contained in Certain CovenantsLimitation on Asset Sales and Repurchase of Notes upon a
Change of Control Triggering Event covenants and such Capital Stock specifically provides that such Person
will not repurchase or redeem any such stock pursuant to such provision prior to the Issuers repurchase of such
Notes as are required to be repurchased pursuant to the Certain CovenantsLimitation on Asset Sales and
Repurchase of Notes upon a Change of Control Triggering Event covenants.
Dollar Equivalent means, with respect to any monetary amount in a currency other than U.S. Dollars, at
any time for the determination thereof, the amount of U.S. Dollars obtained by converting such foreign currency
involved in such computation into U.S. Dollars at the base rate for the purchase of U.S. Dollars with the
applicable foreign currency as quoted by the Federal Reserve Bank of New York on the date of determination.
DTC means The Depository Trust Company and its successors.
Equity Offering means any underwritten public or private offering or any other sales of Common Stock of
the Parent Guarantor or any direct or indirect parent of the Parent Guarantor (the proceeds of which have been
transferred to the Parent Guarantor) after the Original Issue Date (other than to any Affiliate thereof or the
Permitted Holders); provided that the aggregate gross cash proceeds received by or transferred to the Parent
Guarantor from such offering or sales will be no less than US$25.0 million (or the Dollar Equivalent thereof).
Euroclear means Euroclear Bank S.A./N.V., as operator of the Euroclear System, or any successor
thereof.
Fair Market Value means the price that would be paid in an arms-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as
determined in good faith by the Board of Commissioners, whose determination will be conclusive if evidenced
by a Board Resolution.
Finance Subsidiary means a Subsidiary of the Parent Guarantor or another Finance Subsidiary (including
the Issuer) (i) whose operations are comprised of Incurring Indebtedness to Persons other than the Parent
Guarantor, any Restricted Subsidiary or their respective Affiliates from time to time to finance the operations of
the Parent Guarantor and/or its Subsidiaries and (ii) which conducts no business and owns no material assets
other than any equity interests in a Finance Subsidiary or intercompany Indebtedness incurred in connection with
the Indebtedness described in clause (i).
Fixed Charge Coverage Ratio means, on any Transaction Date, the ratio of (1) the aggregate amount of
Consolidated EBITDA for the Four Quarter Period with respect to such Transaction Date to (2) the aggregate
Consolidated Fixed Charges during such Four Quarter Period. In making the foregoing calculation:
(A) pro forma effect will be given to any Indebtedness or Preferred Stock Incurred, repaid or
redeemed during the Reference Period relating to such Four Quarter Period in each case as if such
Indebtedness or Preferred Stock had been Incurred, repaid or redeemed on the first day of such
Reference Period; provided that, in the event of any such repayment or redemption, Consolidated
EBITDA for such period will be calculated as if the Parent Guarantor or such Restricted Subsidiary had
not earned any interest income actually earned during such period in respect of the funds used to repay
such Indebtedness;
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(B) Consolidated Interest Expense attributable to interest on any Indebtedness (whether existing or
being Incurred) computed on a pro forma basis and bearing a floating interest rate will be computed as
if the rate in effect on the Transaction Date (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12
months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable
rate for the entire period;
(C) pro forma effect will be given to the creation, designation or redesignation of Restricted and
Unrestricted Subsidiaries during the Reference Period (as if such creation, designation or redesignation
had occurred on the first day of such Reference Period);
(D) pro forma effect will be given to Asset Dispositions and Asset Acquisitions (including giving
pro forma effect to the application of proceeds of any Asset Disposition) that occur during such
Reference Period as if they had occurred and such proceeds had been applied on the first day of such
Reference Period; and
(E) pro forma effect will be given to asset dispositions and asset acquisitions (including giving pro
forma effect to the application of proceeds of any asset disposition) that have been made by any Person
that has become a Restricted Subsidiary or has been merged with or into the Parent Guarantor or any
Restricted Subsidiary during such Reference Period and that would have constituted Asset Dispositions
or Asset Acquisitions had such transactions occurred when such Person was a Restricted Subsidiary as
if such asset dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions that
occurred on the first day of such Reference Period;
provided that to the extent that clause (D) or (E) of this sentence requires that pro forma effect be given to an
Asset Acquisition or Asset Disposition (or asset acquisition or asset disposition), such pro forma calculation will
be based upon the four full fiscal quarters immediately preceding the Transaction Date of the Person, or division
or line of business of the Person, that is acquired or disposed for which financial information is available.
Four Quarter Period means, as of any Transaction Date, the then most recent four fiscal quarters prior to
such Transaction Date for which consolidated financial statements of the Parent Guarantor (which the Parent
Guarantor will use its reasonable best efforts to compile in a timely manner) are available and have been
provided to the Trustee.
GAAP means generally accepted accounting principles in Indonesia as in effect from time to time.
Governmental Instrumentality means any national, state or local government (whether domestic or
foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or
statutory instrumentality, authority, body, agency, court, tribunal, commission, bureau or entity or any arbitrator
with authority to bind a party at law.
guarantee means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing
any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of such Person (1) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (2) entered into for
purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term
guarantee will not include endorsements for collection or deposit in the ordinary course of business. The term
guarantee used as a verb has a corresponding meaning.
Hedging Agreement means any Commodity Hedging Agreement, Currency Agreement or Interest Rate
Agreement.
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Hedging Obligation of any Person means the obligations of such Person pursuant to any Hedging
Agreement.
Holder means the Person in whose name a Note is registered in the Note register.
Incur means, with respect to any Indebtedness or Capital Stock, to incur, create, issue, assume, guarantee
or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or
otherwise, such Indebtedness or Capital Stock; provided that (1) any Indebtedness and Capital Stock of a Person
existing at the time such Person becomes a Restricted Subsidiary (or fails to meet the qualifications necessary to
remain an Unrestricted Subsidiary) will be deemed to be Incurred by such Restricted Subsidiary at the time it
becomes a Restricted Subsidiary and (2) the accretion of original issue discount will not be considered an
Incurrence of Indebtedness. The terms Incurrence, Incurred and Incurring have meanings correlative with
the foregoing.
Indebtedness means, with respect to any Person at any date of determination (without duplication):
(1) all indebtedness of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;
(3) all obligations of such Person in respect of letters of credit, bankers acceptances or other similar
instruments (or reimbursement obligations with respect thereto);
(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services,
except trade payables due within 90 days arising in the ordinary course of business;
(5) all Capitalized Lease Obligations and Attributable Indebtedness;
(6) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not
such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness will be the
lesser of (A) the Fair Market Value of such asset at such date of determination and (B) the amount of such
Indebtedness;
(7) all Indebtedness of other Persons guaranteed by such Person to the extent such Indebtedness is
guaranteed by such Person;
(8) all non-contingent reimbursement obligations of such Person in respect of trade letters of credit
entered into in the ordinary course of business;
(9) to the extent not otherwise included in this definition, Hedging Obligations;
(10) all Disqualified Stock issued by such Person with the amount of Indebtedness represented by such
Disqualified Stock being equal to the greater of its voluntary or involuntary liquidation preference and its
maximum fixed repurchase price;
(11) all obligations of such Person under conditional sale or other title retention agreements relating to
assets purchased by such Person; and
(12) with respect to any Subsidiary of the Parent Guarantor, the amount of Indebtedness represented by
Preferred Stock issued by such Subsidiary being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price.
The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all
unconditional obligations as described above (as determined in conformity with GAAP to the extent applicable)
and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligations; provided
(A) that the amount outstanding at any time of any Indebtedness issued with original issue
discount is the face amount of such Indebtedness less the remaining unamortized portion of the original
issue discount of such Indebtedness at such time as determined in conformity with GAAP,
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(B) that money borrowed and set aside at the time of the Incurrence of any Indebtedness in order
to prefund the payment of the interest on such Indebtedness will not be deemed to be Indebtedness so
long as such money is held to secure the payment of such interest, and
(C) that the amount of Indebtedness with respect to any Hedging Agreement will be equal to the
net amount payable if such Hedging Agreement terminated at that time due to default by such Person.
Notwithstanding the foregoing, in connection with the purchase by the Parent Guarantor or any Restricted
Subsidiary of any business, the term Indebtedness will exclude post-closing payment amounts to which the
seller may become entitled to the extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided, however, that, at the time of
closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes
fixed and determined, the amount is paid within 180 days thereafter.
Independent Investment Bank means one of the Reference Treasury Dealers appointed by the Trustee
after consultation with the Issuer.
Indonesian Law Guarantees means the guarantees of the obligations of the Issuer under the Indenture and
the Notes by Berau Coal Energy, PT Armadian Tritunggal and Berau Coal that will be governed by the laws of
the Republic of Indonesia.
Intercompany Loans means any loan extended by the Issuer in U.S. Dollars with the Issuer as obligee, to
lend the proceeds of the offering of the Notes or any Additional Notes to the Parent Guarantor or a Subsidiary
Guarantor as obligor pursuant to intercompany loans (and any novation thereof), which shall be at all times,
following July 23, 2010, in the aggregate at a minimum for the aggregate principal amount of the Notes or
Additional Notes then outstanding.
Interest Rate Agreement means any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement
designed to protect against fluctuations in interest rates and not for speculation.
International Bank means a bank or trust company which is organized under the laws of the United States
of America, any state thereof, any member state of the European Union, Hong Kong, Singapore or Japan.
Investment means:
(i) any direct or indirect advance, loan or other extension of credit to another Person;
(ii) any capital contribution to another Person (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of others);
(iii) any purchase or acquisition of Capital Stock (or options, warrants or other rights to acquire
such Capital Stock), Indebtedness, bonds, notes, debentures or other similar instruments or securities
issued by another Person;
(iv) any guarantee of any obligation of another Person; or
(v) all other items that would be classified as investments (including purchases of assets outside
the ordinary course of business) on a balance sheet of such Person prepared in accordance with GAAP.
For the purposes of the provisions of the covenants set forth under Certain CovenantsDesignation of
Restricted and Unrestricted Subsidiaries and Certain CovenantsLimitation on Restricted Payments:
(i) the Parent Guarantor will be deemed to have made an Investment in an Unrestricted Subsidiary in an amount
equal to the Fair Market Value of the Parent Guarantors proportionate interest in the assets (net of the Parent
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Guarantors proportionate interest in the liabilities owed to any Person other than the Parent Guarantor or a
Restricted Subsidiary and that are not guaranteed by the Parent Guarantor or a Restricted Subsidiary) of a
Restricted Subsidiary that is designated an Unrestricted Subsidiary at the time of such designation, and (ii) any
property transferred to or from any Person will be valued at its Fair Market Value at the time of such transfer, as
determined in good faith by the Board of Directors.
Investment Grade means a rating of AAA, AA, A or BBB, as modified by a + or - indication,
or an equivalent rating representing one of the four highest Rating Categories, by S&P or any of its successors or
assigns or a rating of Aaa, Aa, A or Baa, as modified by a 1, 2 or 3 indication, or an equivalent
rating representing one of the four highest Rating Categories, by Moodys, or any of its successors or assigns; or
the equivalent ratings of any internationally recognized rating agency or agencies, as the case may be, which will
have been designated by the Parent Guarantor as having been substituted for S&P or Moodys or both, as the
case may be.
Lien means any mortgage, pledge, fiduciary security, security interest, encumbrance, lien or charge of any
kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature
thereof or any agreement to create any mortgage, pledge, security interest, lien, charge, easement or encumbrance
of any kind).
Maple means Maple Holdings Limited, a private company with limited liability incorporated under the
laws of Labuan.
Moodys means Moodys Investors Service, Inc. and its successors.
Net Cash Proceeds means:
(a) with respect to any Asset Sale (other than the issuance or sale of Capital Stock), the proceeds of
such Asset Sale in the form of cash or cash equivalents, including payments in respect of deferred payment
obligations (to the extent corresponding to the principal, but not interest, component thereof) when received
in the form of cash or cash equivalents and proceeds from the conversion of other property received when
converted to cash or cash equivalents, net of:
(1) brokerage commissions and other fees and expenses (including fees and expenses of counsel
and investment banks) related to such Asset Sale;
(2) provisions for all taxes (whether or not such taxes will actually be paid or are payable) as a
result of such Asset Sale without regard to the consolidated results of operations of the Parent
Guarantor and its Restricted Subsidiaries, taken as a whole;
(3) payments made to repay Indebtedness or any other obligation outstanding at the time of such
Asset Sale that either (x) is secured by a Lien on the property or assets sold or (y) is required to be paid
as a result of such sale;
(4) appropriate amounts to be provided by the Parent Guarantor or any Restricted Subsidiary as a
reserve against any liabilities associated with such Asset Sale, including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale, all as determined in conformity
with GAAP and reflected in an Officers Certificate delivered to the Trustee;
(5) all distributions and other payments required to be made to minority shareholders; and
(6) any portion of the purchase price placed in escrow (until the termination of such escrow and up
to the amount of funds released from such escrow); and
(b) with respect to any issuance or sale of Capital Stock, the proceeds of such issuance or sale in the
form of cash or cash equivalents, including payments in respect of deferred payment obligations (to the
extent corresponding to the principal, but not interest, component thereof) when received in the form of cash
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or cash equivalents and proceeds from the conversion of other property received when converted to cash or
cash equivalents, net of attorneys fees, accountants fees, underwriters or placement agents fees,
discounts or commissions and brokerage, consultant and other fees incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof and net of the amount of any such Net
Cash Proceeds used to redeem, repurchase or otherwise acquire or retire for value any Indebtedness of the
Parent Guarantor or any Restricted Subsidiary.
New York Business Day means any day which is not a Saturday, Sunday, legal holiday or other day on
which banking institutions in The City of New York (or in any other place in which payments on the Notes are to
be made) are authorized by law or governmental regulation to close.
Non-CAMA Entities means any Restricted Subsidiary that is not a CAMA Entity.
Notes Documents means the Indenture, the Notes, the Guarantees and the Security Documents.
Notes Security Documents means all security agreements, pledge agreements, assignments, mortgages,
deeds of trust, security trustee or collateral agency agreements, control agreements or other grants or transfers of
security executed and delivered by the Issuer, the Guarantors or any other Pledgor creating (or purporting to
create) a Lien upon the Notes Collateral in favor of the Trustee, in each case, as amended, modified, renewed,
restated or replaced, in whole or in part, from time to time.
Offer to Purchase means an offer to purchase Notes by the Issuer or the Parent Guarantor from the
Holders commenced by the Issuer or the Parent Guarantor mailing a notice by first class mail, postage prepaid, to
the Trustee and each Holder at its last address appearing in the Note register stating:
(1) the provision of the Indenture pursuant to which the offer is being made and that all Notes validly
tendered will be accepted for payment on a pro rata basis;
(2) the purchase price and the date of purchase (which will be a New York Business Day no earlier
than 30 days nor later than 60 days from the date such notice is mailed) (the Offer to Purchase Payment
Date);
(3) that any Note not tendered will continue to accrue interest pursuant to its terms;
(4) that, unless the Issuer or the Parent Guarantor defaults in the payment of the purchase price, any
Note accepted for payment pursuant to the Offer to Purchase will cease to accrue interest on and after the
Offer to Purchase Payment Date;
(5) that Holders electing to have a Note purchased pursuant to the Offer to Purchase will be required to
surrender the Note, together with the form entitled Option of the Holder to Elect Purchase on the reverse
side of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Offer to Purchase Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than
the close of business on the third Business Day immediately preceding the Offer to Purchase Payment Date,
a facsimile transmission or letter setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes
purchased; and
(7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased
and each new Note issued will be in a principal amount of US$100,000 or integral multiples of US$1,000 in
excess thereof.
One Business Day prior to the Offer to Purchase Payment Date, the Issuer or the Parent Guarantor will
deposit with the Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof to be
accepted by the Issuer or the Parent Guarantor for payment on the Offer to Purchase Payment Date. On the Offer
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to Purchase Payment Date, the Issuer or the Parent Guarantor will (a) accept for payment on a pro rata basis
Notes or portions thereof tendered pursuant to an Offer to Purchase; and (b) deliver, or cause to be delivered, to
the Trustee all Notes or portions thereof so accepted together with an Officers Certificate specifying the Notes
or portions thereof accepted for payment by the Issuer or the Parent Guarantor. The Paying Agent will promptly
mail to the Holders so accepted payment in an amount equal to the purchase price, and the Trustee will promptly
authenticate and mail to such Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered; provided that each Note purchased and each new Note issued will be in a principal amount of
US$100,000 or integral multiples of US$1,000 in excess thereof. The Issuer or the Parent Guarantor will publicly
announce the results of an Offer to Purchase as soon as practicable after the Offer to Purchase Payment Date. The
Issuer or the Parent Guarantor will comply with Rule l4e-l under the U.S. Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that the Issuer
or the Parent Guarantor is required to repurchase Notes pursuant to an Offer to Purchase.
The offer is required to contain or incorporate by reference information concerning the business of the
Parent Guarantor and its Subsidiaries which the Issuer or the Parent Guarantor in good faith believes will assist
such Holders to make an informed decision with respect to the Offer to Purchase, including a brief description of
the events requiring the Issuer or the Parent Guarantor to make the Offer to Purchase, and any other information
required by applicable law to be included therein. The offer is required to contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Offer to Purchase. To the extent that the
provisions of any securities laws or regulations conflict with the requirements of the relevant Offer to Purchase,
the Parent Guarantor and the Issuer will comply with the applicable securities laws and regulations and shall not
be deemed to have breached their obligations under the Notes, the Indenture and the Guarantees by virtue of their
compliance with such securities laws or regulations.
Officer means one of the executive officers or directors of the Issuer or the Parent Guarantor, as the case
may be or, in the case of a Subsidiary Guarantor, one of the directors or officers of such Subsidiary Guarantor
and for any entity incorporated under the laws of the Republic of Indonesia, any commissioner of such entity.
Officers Certificate means a certificate signed by an Officer.
Opinion of Counsel means a written opinion from legal counsel which opinion is reasonably acceptable to
the Trustee that meets the requirements of the Indenture; provided that legal counsel shall be entitled to rely on
certificates of the Parent Guarantor and any Subsidiary of the Parent Guarantor as to matters of fact.
Original Issue Date means July 8, 2010.
Pari Passu Guarantee means a guarantee by the Parent Guarantor or any Subsidiary Guarantor of
Indebtedness of the Issuer, the Parent Guarantor or any Finance Subsidiary (including Additional Notes);
provided that (1) the Issuer, the Parent Guarantor or such Finance Subsidiary was permitted to Incur such
Indebtedness under the covenant under the caption Limitation on Indebtedness and (2) such guarantee ranks
pari passu with any outstanding Guarantee of the Parent Guarantor or such Subsidiary Guarantor.
Permitted Business means any business conducted or proposed to be conducted (as described in this
offering circular) by the Parent Guarantor and the Restricted Subsidiaries on the Original Issue Date and other
businesses reasonably related or ancillary thereto.
Permitted Holders means any or all of the following:
(1) PT Recapital Advisors;
(2) any Affiliate (other than an Affiliate as defined in clause (ii) or (iii) of the definition of Affiliate) of
the Person specified in clause (1); and
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(3) any Person both the Capital Stock and the Voting Stock of which (or in the case of a trust, the
beneficial interests in which) are owned 80% by Persons specified in clauses (1) and (2).
Permitted Investment means:
(1) any Investment in the Parent Guarantor, the Issuer or a Subsidiary Guarantor that is primarily
engaged in the Permitted Business or in or to acquire a Person which will, upon the making of such
Investment, become a Subsidiary Guarantor that is primarily engaged in the Permitted Business or be
merged or consolidated with or into or transfer or convey all or substantially all its assets to, the Parent
Guarantor or a Subsidiary Guarantor that is primarily engaged in a Permitted Business;
(2) cash and Temporary Cash Investments;
(3) payroll, travel and other loans or advances to directors, commissioners, officers and employees, in
each case in the ordinary course of business and covering matters that are expected at the time of such
advances ultimately to be treated as expenses in accordance with GAAP, and not in excess of US$1.0
million outstanding at any time;
(4) stock, obligations or securities received in compromise or settlement of debts created in the
ordinary course of business, or by reason of a composition or readjustment of debts or reorganization of
another Person, or in satisfaction of claims or judgments;
(5) an Investment in an Unrestricted Subsidiary consisting solely of an Investment in another
Unrestricted Subsidiary;
(6) any Investment pursuant to a Hedging Obligation otherwise permitted under the Indenture;
(7) receivables owing to the Parent Guarantor or any Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with customary trade terms;
(8) any securities or other Investments received as consideration in, or retained in connection with,
sales or other dispositions of property or assets, including Asset Dispositions made in compliance with the
covenant described under Certain CovenantsLimitation on Asset Sales;
(9) repurchases of the Notes;
(10) pledges or deposits (x) with respect to leases or utilities provided to third parties in the ordinary
course of business or (y) otherwise described in the definition of Permitted Liens or made in connection
with Liens permitted under the covenant described under Certain CovenantsLimitation on Liens;
(11) extensions of credit to customers and suppliers in the ordinary course of business; and
(12) guarantees not prohibited by Certain CovenantsLimitations on Indebtedness and Preferred
Stock.
Permitted Liens means:
(1) Liens for taxes, assessments, governmental charges or claims that are being contested in good faith
by appropriate legal or administrative proceedings promptly instituted and diligently conducted and for
which a reserve or other appropriate provision, if any, as will be required in conformity with GAAP will
have been made;
(2) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers or
repairmen, or other similar Liens in each case arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate legal or administrative
proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate
provision, if any, as required in conformity with GAAP will have been made;
(3) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or
regulatory obligations, bankers acceptances, surety and appeal bonds, government contracts, performance
and return-of-money bonds and other obligations of a similar nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money);
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(4) leases or subleases granted to others that do not materially interfere with the ordinary course of
business of the Parent Guarantor and its Restricted Subsidiaries, taken as a whole;
(5) Liens encumbering property or assets under construction arising from progress or partial payments
by a customer of the Parent Guarantor or its Restricted Subsidiaries relating to such property or assets;
(6) Liens on property of, or on shares of Capital Stock or Indebtedness of, any Person existing at the
time such Person becomes, or becomes a part of, any Restricted Subsidiary; provided that such Liens do not
extend to or cover any property or assets of the Parent Guarantor or any Restricted Subsidiary other than the
property or assets acquired; provided further that such Liens were not created in contemplation of or in
connection with the transactions or series of transactions pursuant to which such Person became a Restricted
Subsidiary;
(7) Liens in favor of the Parent Guarantor, the Issuer or any Subsidiary Guarantor;
(8) Liens arising from the rendering of a final judgment or order against the Parent Guarantor or any
Restricted Subsidiary that does not give rise to an Event of Default;
(9) Liens securing reimbursement obligations with respect to letters of credit that encumber documents
and other property relating to such letters of credit and the products and proceeds thereof or Liens in favor
of any bank having a right of setoff, revocation, refund or chargeback with respect to money or instruments
of the Parent Guarantor or any Restricted Subsidiary on deposit with or in the possession of such bank;
(10) Liens existing on the Original Issue Date;
(11) Liens securing Indebtedness which is Incurred to refinance secured Indebtedness which is
permitted to be Incurred under clause (4) of the second paragraph of the covenant described under the
caption entitled Certain CovenantsLimitation on Indebtedness; provided that such Liens do not
extend to or cover any property or assets of the Parent Guarantor or any Restricted Subsidiary other than the
property or assets securing the Indebtedness being refinanced;
(12) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others
for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes,
or zoning or other restrictions as to the use of real property, not interfering in any material respect with the
conduct of the business of the Parent Guarantor and its Restricted Subsidiaries;
(13) Liens under the Security Documents;
(14) Liens securing Indebtedness Incurred by the Parent Guarantor or any Restricted Subsidiary
relating to bid, performance or surety bonds or letters of credit, trade guarantees or bank guarantees issued
in the ordinary course of business in an aggregate amount not to exceed the greater of (i) US$25.0 million
and (ii) 5.0% of the total consolidated revenues of the Parent Guarantor and the Restricted Subsidiaries for
the four fiscal quarters immediately preceding the fiscal quarter during which such Liens are incurred;
(15) other Liens securing obligations in an aggregate amount not exceeding US$2.0 million (or the
Dollar Equivalent thereof);
(16) Liens on Capital Stock of a Finance Subsidiary (other than the Issuer) and any intercompany loans
or advances from such Finance Subsidiary to the Parent Guarantor or any Subsidiary Guarantor, in each
case, securing Indebtedness of such Finance Subsidiary (and guarantees by the Parent Guarantor or
Restricted Subsidiaries of such Indebtedness) permitted under the covenant Certain Covenants
Limitation on Indebtedness;
(17) Liens on a debt service account securing Permitted Pari Passu Secured Indebtedness for the sole
benefit of the holders of such Permitted Pari Passu Secured Indebtedness;
(18) Liens encumbering customary initial deposits and margin deposits, and other Liens that are
customary in the industry, in each case, securing Indebtedness under Hedging Obligations permitted by
clause (b)(5) of the covenant under the caption Certain CovenantsLimitation on Indebtedness;
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(19) pledges or deposits under workers compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts or leases, or to secure public or
statutory obligations, bid, performance or surety bonds, bank guarantees, letters of credit, customs duties
and the like, or for the payment of rent, in each case incurred in the ordinary course of business;
(20) licenses or leases or subleases as licensor, lessor or sublessor of any of its property, including
intellectual property, in the ordinary course of business;
(21) Liens encumbering customary cash deposits with a bank or other financial institution securing
Indebtedness owed to such bank or other financial institution permitted to be Incurred under clause (b)(6) of
the covenant under the caption Certain CovenantsLimitation on Indebtedness;
(22) Liens incurred in the ordinary course of business not securing Indebtedness and not in the
aggregate materially detracting from the value of the properties or their use in the operation of the business
of the Parent Guarantor and its Restricted Subsidiaries; and
(23) Liens on shares of Capital Stock of a Finance Subsidiary and any intercompany loans or advances
from such Finance Subsidiary to the Parent Guarantor or any Subsidiary of the Parent Guarantor, in each
case securing Indebtedness permitted under the covenant under the caption Certain Covenants
Limitation on Indebtedness;
provided that, with respect to Liens on the property or assets of the Issuer, Permitted Liens will include only
Liens described in paragraphs (1), (2), (8) and (13) above and provided further that, with respect to the
Collateral, Permitted Liens shall only refer to the Liens described in clauses (1), (2), (10), (12) and (13) of this
definition.
Person means any individual, corporation, partnership, limited liability company, joint venture, trust,
unincorporated organization or government or any agency or political subdivision thereof.
Pledgors means the Issuer, the Guarantors and any other Person that provides Collateral.
Preferred Stock as applied to the Capital Stock of any Person means Capital Stock of any class or classes
that by its term is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such
Person.
Rating Agencies means (i) S&P, (ii) Moodys and (iii) if one or more of S&P or Moodys will not make a
rating of the Notes publicly available, one or more nationally recognized statistical rating organizations, as the
case may be, within the meaning of Rule l5c3-l(c)(2)(vi)(F) under the U.S. Exchange Act, selected by the Parent
Guarantor, which will be substituted for S&P or Moodys or any combination thereof, as the case may be.
Rating Category means (i) with respect to S&P, any of the following categories: BB, B, CCC,
CC, C and D (or equivalent successor categories); (ii) with respect to Moodys, any of the following
categories: Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the equivalent of
any such category of S&P or Moodys used by another Rating Agency. In determining whether the rating of the
Notes has decreased by one or more gradations, gradations within Rating Categories (+ and - for S&P; 1,
2 and 3 for Moodys; or the equivalent gradations for another Rating Agency) will be taken into account
(e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from B to B- will constitute
a decrease of one gradation).
Rating Date means (i) in connection with a Change of Control Triggering Event, that date which is 90
days prior to the earlier of (x) a Change of Control and (y) a public notice of the occurrence of a Change of
Control or of the intention by the Parent Guarantor or any other Person or Persons to effect a Change of Control
or (ii) in connection with actions contemplated under the caption Consolidation, Merger and Sale of Assets,
that date which is 90 days prior to the earlier of (x) the occurrence of any such actions as set forth therein and
(y) a public notice of the occurrence of any such actions.
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Rating Decline means (i) in connection with a Change of Control Triggering Event, the occurrence on, or
within six months after, the date, or public notice of the occurrence of, a Change of Control or the intention by
the Parent Guarantor or any other Person or Persons to effect a Change of Control (which period will be extended
so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the
Rating Agencies) of any of the events listed below, or (ii) in connection with actions contemplated under the
caption Consolidation, Merger and Sale of Assets, the notification by any of the Rating Agencies that such
proposed actions will result in any of the events listed below:
(a) in the event the Notes are rated by both Moodys and S&P on the Rating Date as Investment Grade,
the rating of the Notes by either Rating Agency will be below Investment Grade;
(b) in the event the Notes are rated by either, but not both, of the Rating Agencies on the Rating Date as
Investment Grade, the rating of the Notes by such Rating Agency will be below Investment Grade; or
(c) in the event the Notes are rated below Investment Grade by both Rating Agencies on the Rating
Date, the rating of the Notes by either Rating Agency will be decreased by one or more gradations
(including gradations within Rating Categories as well as between Rating Categories).
Reference Period means, as of any Transaction Date, the period commencing on and including the first
day of the Four Quarter Period with respect to such Transaction Date and ending on and including the
Transaction Date.
Reference Treasury Dealer means each of any three investment banks of recognized standing that is a
primary U.S. Government securities dealer in The City of New York, selected by the Issuer in good faith.
Reference Treasury Dealer Quotations means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount), quoted in writing to the Trustee
by such Reference Treasury Dealer at 5:00 p.m. on the third New York Business Day preceding such redemption
date.
Restricted Subsidiary means any Subsidiary of the Parent Guarantor other than an Unrestricted
Subsidiary.
S&P means Standard & Poors Ratings Services and its successors.
Sale and Leaseback Transaction means any direct or indirect arrangement relating to property (whether
real, personal or mixed), now owned or hereafter acquired whereby the Parent Guarantor or any Restricted
Subsidiary transfers such property to another Person and the Parent Guarantor or any Restricted Subsidiary leases
it from such Person.
Security Documents means the Notes Security Documents and the Common Security Documents.
Senior Secured Credit Facility means the credit agreement dated July 23, 2010 for the Parent Guarantor
arranged by Credit Suisse AG, Singapore Branch with Credit Suisse, Singapore Branch as Facility and Security
Agent, as amended from time to time.
Senior Secured Credit Facility Indebtedness means Indebtedness incurred by the Parent Guarantor under
the Senior Secured Credit Facility, provided that the aggregate amount of Senior Secured Credit Facility
Indebtedness outstanding at any one time shall not exceed US$425 million (or the Dollar Equivalent thereof) and
such amount shall be reduced by the aggregate amount of Permitted Refinancing Indebtedness Incurred to
refinance the Senior Secured Credit Facility Indebtedness.
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Stated Maturity means, (1) with respect to any Indebtedness, the date specified in such debt security as the
fixed date on which the final installment of principal of such Indebtedness is due and payable as set forth in the
documentation governing such Indebtedness and (2) with respect to any scheduled installment of principal of or
interest on any Indebtedness, the date specified as the fixed date on which such installment is due and payable as
set forth in the documentation governing such Indebtedness.
Subordinated Indebtedness means any Indebtedness of the Issuer, the Parent Guarantor or any Subsidiary
Guarantor which is contractually subordinated or junior in right of payment to the Notes, the Parent Guarantee or
any Subsidiary Guarantee, as applicable, pursuant to a written agreement to such effect.
Subsidiary means, with respect to any Person, any corporation, association or other business entity of
which more than 50% of the voting power of the outstanding Voting Stock is owned, directly or indirectly, by
such Person and one or more other Subsidiaries of such Person.
Subsidiary Guarantee means any guarantee of the obligations of the Issuer under the Indenture and the
Notes by any Subsidiary Guarantor (including its Indonesian Law Guarantee).
Subsidiary Guarantor means any Restricted Subsidiary which guarantees the payment of the Notes
pursuant to the Indenture and the Notes; provided that Subsidiary Guarantor will not include any Person whose
Subsidiary Guarantee has been released in accordance with the Indenture and the Notes.
Temporary Cash Investment means any of the following:
(1) direct obligations of the United States of America, Japan, the United Kingdom, Hong Kong,
Singapore or any agency thereof or obligations fully and unconditionally guaranteed by the United States of
America, Japan, the United Kingdom, Hong Kong, Singapore or any agency thereof, in each case maturing
within one year;
(2) time deposit accounts, certificates of deposit and money market deposits maturing within 180 days
of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof, Indonesia, Japan, the United Kingdom or Singapore, and which
bank or trust company has capital, surplus and undivided profits aggregating in excess of US$500 million
(or the Dollar Equivalent thereof) and has outstanding debt which is rated A (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436
under the U.S. Securities Act);
(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types
described in clause (1) above entered into with a bank or trust company meeting the qualifications described
in clause (2) above;
(4) commercial paper, maturing not more than one year after the date of acquisition, issued by a
corporation (other than an Affiliate of the Parent Guarantor) organized and in existence under the laws of
the United States of America, any state thereof or any foreign country recognized by the United States of
America with a rating at the time as of which any investment therein is made of P-1 (or higher) according
to Moodys or A-1 (or higher) according to S&P;
(5) securities with maturities of six months or less from the date of acquisition issued or fully and
unconditionally guaranteed by any state, commonwealth or territory of the United States of America, or by
Japan or the United Kingdom, or by any political subdivision or taxing authority thereof, and rated at least
A by S&P or Moodys;
(6) any money market fund that has at least 95% of its assets continuously invested in investments of
the types described in clauses (1) through (5) above; and
(7) time deposit accounts, certificates of deposit and money market deposits issued by any Indonesia
branch of an International Bank, provided that such International Bank has capital, surplus and undivided
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profits aggregating in excess of US$100 million (or the Dollar Equivalent thereof) and has outstanding longterm debt which is rated at least A by S&P or Moodys and provided further that such accounts,
certificates of deposit or money market deposits, respectively, are unconditionally guaranteed by such
International Bank; and
(8) time deposit accounts, certificates of deposit and money market deposits maturing within 180 days
of the date of acquisition thereof issued by PT ANZ Panin Bank, PT Bank Central Asia Tbk., PT Bank
CIMB Niaga Tbk., PT Bank Eksekutif Internasional or PT Bank Kesejahteraan Ekonomi or any successor to
any of them; provided, however, that such Temporary Cash Investments shall not exceed US$25.0 million
(or the Dollar Equivalent thereof) in any one such bank at any date of determination.
Transaction Date means, with (i) respect to the Incurrence of any Indebtedness, the date such
Indebtedness is to be Incurred, and (ii) with respect to any Restricted Payment, the date such Restricted Payment
is to be made.
Treasury Rate means, with respect to any redemption date, the rate per annum equal to the semi-annual
equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.
Unrestricted Subsidiary means (1) any Subsidiary of the Parent Guarantor that at the time of
determination will be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided in
the Indenture; and (2) any Subsidiary of an Unrestricted Subsidiary.
U.S. Government Obligations means securities that are (1) direct obligations of the United States of
America for the payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof at any time prior to the Stated Maturity of
the Notes, and will also include a depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of the holder of a depository receipt; provided
that (except as required by law) such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.
Voting Stock means, with respect to any Person, Capital Stock of any class or kind ordinarily having the
power to vote for the election of directors, managers or other voting members of the governing body of such
Person.
Wholly Owned means, with respect to any Subsidiary of any Person, the ownership of all of the
outstanding Capital Stock of such Subsidiary (other than any directors qualifying shares or Investments by
foreign nationals mandated by applicable law or a minimum number of shares owned by a second shareholder as
mandated by applicable law) by such Person or one or more Wholly Owned Subsidiaries of such Person.
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TAXATION
The discussion below is not intended to constitute a complete analysis of all tax consequences relating to
ownership of the notes. Prospective purchasers of the notes should consult their own tax advisors concerning the
tax consequences of their particular situations. This description is based on current laws, regulations and
interpretations. These laws, regulations and interpretations, however, may change at any time, and any change
could be retroactive to the date of issuance of the notes. These laws and regulations are also subject to various
interpretations and the relevant tax authorities or the courts could later disagree with the explanations or
conclusions set out below.
Singapore Taxation
The statements below are general in nature and are based on certain aspects of current tax laws in Singapore,
and administrative guidelines issued by the MAS in force as at the date of this offering circular. They are subject
to changes in law or administrative guidelines, or the interpretation of those laws or guidelines, occurring after
such date, where changes could be made on a retroactive basis. Neither these statements nor any other statements
in this offering circular are to be regarded as advice on the tax position of any noteholder or of any person
acquiring, selling or otherwise dealing with the notes or on any tax implications arising from the acquisition, sale
or other dealings in respect of the notes. The statements do not purport to be a comprehensive description of all
the tax considerations that may be relevant to a decision to purchase, own or dispose of the notes and do not
purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers
in securities) may be subject to special rules.
Interest and Other Payments
Currently, the following income derived from Singapore by any individual is exempt from tax:
(a) any interest from debt securities;
(b) any discount from debt securities; and
(c) any prepayment fee, redemption premium or break cost from debt securities,
except where such income is derived through a partnership in Singapore or is derived from the carrying on of a
trade, business or profession.
Under Section 12(6) of the Income Tax Act Chapter 134, 2008 Ed. of Singapore (ITA), the following
payments are deemed to be derived from Singapore:
(a) interest, commission, fee or any other payment in connection with any loan or indebtedness or with any
arrangement, management, guarantee, or service relating to any loan or indebtedness which is
(i) borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in
Singapore, except in respect of any business carried on outside Singapore through a permanent
establishment outside Singapore or any immovable property situated outside Singapore; or
(ii) deductible against any income accruing in or derived from Singapore; or
(b) income derived from loans where the funds provided by such loans are brought into or used in
Singapore.
Section 12(6A) of the ITA states that Section 12(6) shall not apply to any payment for(a) any arrangement, management or service relating to any loan or indebtedness, where such arrangement,
management or service is performed outside Singapore for or on behalf of a person resident in
Singapore or a permanent establishment in Singapore by a non-resident person who(i) in the event the non-resident person is not an individual, is not incorporated, formed or registered
in Singapore; and
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(ii) in any event

(A) does not by himself or in association with others, carry on a business in Singapore and does
not have a permanent establishment in Singapore; or
(B) carries on a business in Singapore (by himself or in association with others) or has a
permanent establishment in Singapore, but the arrangement, management or service is not
performed through that business carried on in Singapore or that permanent establishment;
and
(b) any guarantee relating to any loan or indebtedness, where the guarantee is provided for or on behalf of
a person resident in Singapore or a permanent establishment in Singapore by a guarantor who is a
non-resident person who(i) in the event the non-resident person is not an individual, is not incorporated, formed or registered
in Singapore; and
(ii) in any event
(A) does not by himself or in association with others, carry on a business in Singapore and does
not have a permanent establishment in Singapore; or
(B) carries on a business in Singapore (by himself or in association with others) or has a
permanent establishment in Singapore, but the giving of the guarantee is not effectively
connected with that business carried on in Singapore or that permanent establishment.
Where payments falling within Section 12(6) and chargeable to tax under the ITA are made to persons not
known to the paying party to be a resident of Singapore for tax purposes, such payments are subject to
withholding tax in Singapore at the prevailing corporate tax rate (17% with effect from year of assessment 2010).
However, this rate will be reduced to 15% if such payment is derived by a person not resident in Singapore from
sources other than from any trade, business, profession or vocation carried on or exercised by such person in
Singapore and which is not effectively connected with any permanent establishment in Singapore of that person.
The rate of 15% may be further reduced under applicable tax treaties.
Subject to certain prescribed conditions being fulfilled, as the notes are arranged by Credit Suisse
(Singapore) Limited and Deutsche Bank AG, Singapore Branch (as joint lead managers), both Financial Sector
IncentiveBond Market Companies (for the purposes of the ITA), and are issued before December 31, 2013, the
notes will qualify as qualifying debt securities for the purposes of the ITA.
The following tax treatment will therefore apply:
(i) interest, discount, prepayment fee, redemption premium or break cost (collectively referred to as
qualifying income) on such notes is exempt from Singapore tax when derived by a holder who is not
resident in Singapore and (a) who does not have any permanent establishment in Singapore; or (b) who
carries on any operation in Singapore through a permanent establishment in Singapore but the funds
used by that person to acquire such notes are not obtained from such operation;
(ii) qualifying income on such notes derived by any body of persons or a company operating in Singapore
is subject to tax at a concessionary rate of 10%; and
(iii) qualifying income derived from such notes is not subject to withholding of tax by the issuer.
The above tax treatment is subject to the following conditions:
(i) the furnishing by the issuer, or such other person as the Comptroller of Income Tax in Singapore (the
Comptroller) may direct, of a return on the debt securities within such period as the Comptroller may
specify and such other particulars in connection with such notes as the Comptroller may require, to the
Comptroller and the MAS; and
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(ii) the inclusion of the following statements in all offering documents:

where qualifying income is derived from any qualifying debt securities issued during the period from
the date of the offering document to December 31, 2013 by a person who is not resident in Singapore
and who carries on any operation in Singapore through a permanent establishment in Singapore, the
tax exemption will not apply if such person acquires such securities using funds from Singapore
operations; and
where the qualifying income is not exempt from tax, the person deriving the qualifying income must
include such income in his Singapore tax returns.
The term offering documents means the prospectuses, offering circulars, information memoranda, pricing
supplements or other documents issued to investors in connection with an issue of securities.
However, notwithstanding the foregoing:
(a) if during the primary launch of the notes, the notes are issued to fewer than four persons and 50% or
more of the issue of such notes is beneficially held or funded, directly or indirectly, by related parties
of the issuer, such notes would not (unless otherwise approved by the Minister for Finance or such
person as he may appoint) qualify as qualifying debt securities; and
(b) even though the notes are qualifying debt securities at the time of issue, if at any time during the tenure
of such notes, 50% or more of the issue of such notes is beneficially held or funded, directly or
indirectly, by related parties of the issuer, the qualifying income derived by:
(i) any related party of the issuer; or
(ii) any other person where the funds used by such person to acquire the notes are obtained, directly or
indirectly, from any related party of the issuer,
shall not be eligible for the tax exemption or the concessionary rate of tax of 10%, as the case may be.
The term related party, in relation to a person, means any other person who, directly or indirectly, controls
that person, or is controlled, directly or indirectly, by that person, or where he and that other person, directly or
indirectly, are under the control of a common person.
Notwithstanding that the issuer is permitted to pay the qualifying income in respect of the notes qualifying
as qualifying debt securities without deduction or withholding for tax under Section 45 or Section 45A of the
ITA, any person whose qualifying income derived from such notes is not exempt from tax is required to include
such income in a return of income made under the ITA.
Adoption of Financial Reporting Standard 39 treatment for Singapore Income Tax Purposes
On December 30, 2005, the Comptroller issued a circular entitled Income Tax Implications arising from
the adoption of Financial Reporting Standard 39 Financial Instruments: Recognition and Measurement (the
Circular). Amendments have been enacted to the ITA to give effect to the Circular (the FRS 39 tax
treatment).
The FRS 39 tax treatment generally applies, subject to certain opt-out provisions, to taxpayers who are
required to comply with FRS 39 for financial reporting purposes.
Holders of the notes who may be subject to the FRS 39 tax treatment should consult their own accounting
and tax advisors regarding the Singapore income tax treatment consequences of their acquisition, holding or
disposal of the notes.
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Gains on Disposal of Notes

There is no capital gains tax in Singapore. Accordingly, any gains derived from a sale of the notes will not
be taxable in Singapore except where the gains constitute receipts from any trade, business, profession or
vocation carried on by that person in Singapore.
Holders of the notes who are taxable on the gains in Singapore and who are subject to the FRS 39 tax
treatment may be required to recognize any gains or losses, irrespective of disposal, in accordance with FRS 39.
In that event, the holders will not need to make book to tax adjustments, if any, for the notes which are held as
revenue assets, unless they have elected not to adopt the accounting treatment for tax reporting. Therefore, if the
Noteholder follows FRS 39 accounting treatment for tax purposes, the timing of taxation of the gains/losses will
depend on how it is accounted for in its financial statements.
Indonesian Taxation
The following is a summary of the principal Indonesian tax consequences relevant to prospective noteholders who are not tax residents of Indonesia and have no permanent establishment in Indonesia. The summary
only covers taxes imposed by the Republic of Indonesia under Indonesian tax laws and their implementing
regulations. The summary does not address any laws other than the tax laws of Indonesia in force as of the date
of this offering circular.
The summary represents a general guide only. The summary does not constitute tax advice and should not
be relied upon by individual or corporate noteholders. It is recommended that noteholders seek independent tax
advice relevant to their facts and circumstances.
General
In general, an individual is considered to be a non-resident of Indonesia if the individual does not reside in
Indonesia or does not stay in Indonesia for more than 183 days within a twelve month period. A company will be
considered as a non-resident of Indonesia if the company is not established or domiciled in Indonesia. In
determining the residency and tax status of an individual or corporation, consideration will also be given to the
provision of any applicable double tax treaty which Indonesia has concluded with other countries. In this section,
both a non-resident individual and a non-resident company will be referred to as non-resident taxpayers.
Subject to the provisions of any applicable agreement for the avoidance of double taxation (tax treaty),
non-resident taxpayers, namely individuals or corporations not domiciled or established in Indonesia, which
derive income sourced in Indonesia from, among other things, the sale or transfer of assets situated in Indonesia,
interest (including any payment in the nature of interest), royalty and dividends, are subject to a final withholding
tax on that income at the rate of 20.0%, as long as the income is not effectively connected with a permanent
establishment of such individuals or corporations in Indonesia. If the income is effectively connected with a
permanent establishment in Indonesia, the income is subject to branch profit tax of 20.0% imposed on the net
profit after being deducted with income tax applicable for permanent establishment (the income tax rate being
25.0% starting from 2010 onwards). With regard to asset sales or transfers, income tax is imposed on the
estimated net income.
Taxation on Interest
Payments of principal and payments of interest and premium, if any by the Issuer under the notes are not
subject to Indonesian withholding tax. The amount of any payment (or accruals) by an Indonesian resident
guarantor under the relevant guarantee attributable to interest payable (or treated as interest) on the notes will be
subject to final withholding tax in Indonesia at the statutory rate of 20% or the relevant reduced rate under an
applicable tax treaty if the payment is made to a non-resident taxpayer with no permanent establishment in
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Indonesia. The reduced withholding tax rate applicable to a non-resident taxpayer who resides in a treaty country
is subject to satisfying the eligibility and reporting requirements under the relevant tax treaty and domestic tax
regulations, including that the interest recipient is the beneficial owner of the interest income. Under the tax
treaty between Indonesia and U.S., the withholding tax rate generally is 10.0%, provided that the tax treaty and
relevant domestic tax requirements can be satisfied.
Payments (or accruals) of interest made by Berau Coal Energy to the Issuer with respect to the loans from
the issuer to Berau Coal Energy will be subject to withholding tax in Indonesia. The statutory rate of such
withholding is 20.0%. However, the tax treaty between Indonesia and Singapore provides for a reduced rate of
withholding of 10.0%, provided the tax treaty and relevant domestic tax requirements can be satisfied. One of
these requirements is that the interest recipient is the beneficial owner of the interest.
According to the new Indonesian Income Tax Law that came into effect as of January 1, 2009, a beneficial
owner is defined as the person (an individual or a corporation) entitled to directly enjoy the benefits of such
income. The domicile country of the beneficial owner is determined on the basis of the actual residence of the
individual or the place of establishment of the corporation (i.e., the country where the owners are domiciled or
where the shareholders representing more than 50.0% of the total interest are domiciled or where the effective
management is located).
On November 5, 2009 the Indonesian Directorate General of Tax (DGT) issued two regulations aimed at
preventing tax treaties being used in an abusive manner, i.e. DGT Regulation No. 61/PJ./2009 (DGT61)
regarding the administrative procedures to apply a double tax treaty and DGT Regulation No. 62/PJ./2009
(DGT62) regarding the avoidance of double tax treaty abuse. On December 15, 2009, the DGT amended
DGT61. Further, on April 30, 2010, the DGT issued two new regulations, DGT Regulation No. 24/PJ./2010
(DGT24) and DGT Regulation No. 25/PJ./2010 (DGT25) to amend DGT61 and DGT62,
respectively. Both the new regulations and their amendments were effective from January 1, 2010. Under DGT
61 and DGT62, if it is determined that:
an income recipient is not the beneficial owner of the income (e.g., the income recipient is merely an
agent or a nominee or a conduit company);
a transaction does not have economic substance and is structured with the sole purpose of enjoying tax
treaty benefits; or
a transaction is structured such that the legal form is different to the economic substance for the sole
purpose of enjoying tax treaty benefits,
a taxpayer is considered to have participated in tax treaty abuse and therefore can not enjoy reduced withholding
tax benefits. In such circumstances the 20.0% statutory withholding tax rate will be applied.
Under the regulations and amendments thereto, a company is not regarded as abusing a tax treaty and can
therefore qualify for benefits allowed under applicable tax treaties if they are able to satisfy all of the following
test(s):
a) for income where the relevant tax treaty requires the company to be the beneficial owner of that income
to enjoy treaty benefits (which is generally the case for interest income) the following conditions must satisfied:
the companys incorporation and transactions are not merely motivated to take advantage of tax treaty
benefits;
the company has its own management to conduct the business and the management has an independent
discretion;
the company employs sufficient qualified employees;
the company is engaged in active trade or business;
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any revenue sourced in Indonesia is subject to tax in the country where the company is residing; and
the company does not use more than 50.0% of its total income to satisfy claims by other parties in the
form of interest, royalty or other fees (excluding salary paid to its employees, other expenses normally
incurred by the foreign taxpayer in running the business, and dividend distributions to shareholders).
b) for income that is not subject to a beneficial ownership test under the relevant tax treaty, the company can
only enjoy treaty benefits if the company was not established in the tax treaty country, or the structural
arrangements of the transactions concerned were not implemented, to take advantage of the tax treaty.
For a tax treaty to apply, the foreign income recipient will be required to provide the Indonesian payer of the
income with a valid Certificate of Residence. Based on DGT61 and DGT62, the amendments thereto, and
along with DGT Circular Letter No. SE-114/PJ/2009, the foreign income recipient the issuer would be required
to provide a Certificate of Residence in the form of Form DGT1 (note banking institutions are required to use
Form DGT2). The first page of Form DGT1 needs to be certified by a competent tax authority where the
foreign income recipient (including the Issuer) resides. However as an alternative to certification, a standard
Certificate of Domicile issued by the competent tax authority can be used to satisfy the certification requirement,
subject to it meeting certain conditions. The certification or Certificate of Domicile is to confirm that the foreign
income recipient (including the issuer) is a tax resident of the foreign country. The first page of Form DGT1
must still be completed in other respects. The second page of Form DGT1 requires the foreign income
recipient (including the issuer) to confirm that it satisfies the relevant test(s), as well as to provide details on the
amounts and types of income. The second page does not require any certification by a competent tax authority.
The first page of Form DGT1 is valid for 12 months since the date of issue and must be renewed subsequently.
However, the second page of Form DGT1 shall be produced by the foreign income recipient (including the
issuer) in respect of each payment of income.
Payments (or accruals) of interest by Berau Coal, as an Indonesian resident guarantor, will be subject to
10% withholding tax, regardless of whether the tax treaty requirements are met, because Berau Coal operates
under a coal contract of work entered into with the Government of Indonesia and therefore is subject to special
taxation rules.
Payments (or accruals) of interest by Seacoast Offshore Inc. (a British Virgin Islands company) to the issuer
will not be subject to Indonesian withholding tax.
Taxation on Gains of Disposal of the Notes
Income derived by a non-resident taxpayer, without a permanent establishment in Indonesia, from the
disposal of notes to another non-resident taxpayer, without a permanent establishment in Indonesia is not subject
to Indonesian income tax.
However, under Government Regulation No. 16/2009, which took effect on January 1, 2009 (Tax
Regulation No. 16), non-resident individuals and corporations without a permanent establishment in Indonesia
may be subject to Indonesian withholding tax on any gain derived from the sale or other disposal of notes to an
Indonesian resident individual or corporation, including any purchase of the notes by Indonesian guarantors.
Under Tax Regulation No. 16, a gain on such sales would be subject to Indonesian withholding tax because it
would be deemed to be Indonesian-sourced interest. Therefore, any gain from the sale of notes to an Indonesian
tax resident by an investor that is not an Indonesian tax resident where the transaction is conducted through a
securities company, dealer or bank in Indonesia (either as intermediary or buyer), will be subject to the 20.0%
Indonesian withholding tax normally applicable to Indonesian-sourced interest. However, if the non-resident
investor is a tax resident of a country that has a tax treaty with Indonesia, relief from the imposition of such
withholding tax may be available if under the relevant treaty the gain is only taxable in the country in which the
investor is resident for tax purposes, rather than treating the gain as interest. The reduced or exempted
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withholding tax rate applicable to non-resident taxpayer who resides in a treaty country is also subject to the
satisfaction of eligibility and reporting requirements under the relevant tax treaty and domestic tax regulations.
Under the tax treaty between Indonesia and U.S., capital gains derived by an eligible US investor from the
disposition of notes generally will be exempt from Indonesian income tax, provided that the tax treaty and
relevant domestic tax requirements can be satisfied. The position is complex, therefore non-resident investors
should consult their own tax advisors regarding the application of Indonesian withholding tax on any gain on the
sale or other disposal of notes.
Other Indonesian Taxes
There are no Indonesian estate, inheritance, succession, or gift taxes generally applicable to the acquisition,
ownership or disposition of the notes. There are no Indonesian issues, registration or similar taxes payable by the
noteholders.
Certain United States Federal Income Tax Considerations for U.S. Holders
TO COMPLY WITH TREASURY DEPARTMENT CIRCULAR 230, PROSPECTIVE INVESTORS
ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES CONTAINED
OR REFERRED TO IN THIS OFFERING CIRCULAR IS NOT INTENDED OR WRITTEN TO BE
USED, AND CANNOT BE USED BY ANY TAXPAYER, FOR THE PURPOSE OF AVOIDING
PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER UNDER THE UNITED STATES
INTERNAL REVENUE CODE; (B) ANY SUCH DISCUSSION IS INCLUDED HEREIN IN
CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF
CIRCULAR 230) OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) A
TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYERS PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
The following discussion is a summary of certain material U.S. federal income tax consequences of the
purchase, ownership and disposition of the notes by a U.S. holder (as defined below), but does not purport to be a
complete analysis of all potential tax effects and does not address the effects of any state, local or non-U.S. tax
laws. This discussion is based upon the U.S. Internal Revenue Code of 1986, as amended (the Code), Treasury
regulations issued thereunder, and judicial and administrative interpretations thereof, each as publicly available
and in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. No
rulings from the Internal Revenue Service (IRS) have been or are expected to be sought with respect to the
matters discussed below. There can be no assurance that the IRS will not take a different position concerning the
tax consequences of the purchase, ownership or disposition of the notes or that any such position would not be
sustained.
This discussion does not address all of the U.S. federal income tax consequences that might be relevant to a
holder in light of such holders particular circumstances or to holders subject to special rules, such as certain
financial institutions, U.S. expatriates, insurance companies, dealers in securities, traders in securities, U.S.
holders whose functional currency is not the U.S. dollar, tax-exempt organizations, regulated investment
companies, real estate investment trusts, partnerships or other pass through entities (or investors in such entities),
persons liable for alternative minimum tax and persons holding the notes as part of a straddle, hedge,
conversion transaction or other integrated transaction. In addition, this discussion is limited to persons who
purchase the notes for cash pursuant to this offering and who hold the notes as capital assets within the meaning
of section 1221 of the Code.
For purposes of this discussion, a U.S. holder is a beneficial owner of a note that is, for U.S. federal
income tax purposes, (i) an individual who is a citizen or resident of the United States; (ii) a corporation or any
entity taxable as a corporation created or organized in the United States or under the laws of the United States or
any state thereof or the District of Columbia; (iii) any estate the income of which is subject to U.S. federal
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income taxation regardless of its source; or (iv) any trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust, or if a valid election is in place to treat the trust as a U.S. person.
If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds the
notes, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the
activities of the partnership. A holder that is a partnership, and partners in such partnerships, should consult their
tax advisors regarding the tax consequences of the purchase, ownership and disposition of the notes.
Prospective purchasers of the notes should consult their tax advisors concerning the tax consequences
of holding notes in light of their particular circumstances, including the application of the U.S. federal
income tax considerations discussed below, as well as the application of state, local, foreign or other tax
laws.
Characterization of the notes
The proper characterization of instruments such as the notes for U.S. federal income tax purposes is not
entirely clear. It is possible that the notes could, for example, be treated as debt of the issuer or the parent
guarantor or as an equity interest in the issuer. The issuer has filed an election to be treated as an entity
disregarded as separate from its owner for U.S. federal income tax purposes, with an effective date prior to the
date of the issuance of the existing notes. The issuer intends to take the position that the notes should be
characterized as indebtedness for U.S. federal income tax purposes. However, the issuers determination is not
binding on the IRS. The remainder of this discussion assumes the notes will be characterized as debt for U.S.
federal income tax purposes.
In certain circumstances (see Description of the NotesOptional Redemption, Description of the
NotesRepurchase of Notes Upon a Change of Control Triggering Event, and Description of the Notes
Additional Amounts) we might be obligated to make payments on the notes in excess of stated principal and
interest. We intend to take the position that the foregoing contingencies should not cause the notes to be treated
as contingent payment debt instruments. Assuming such position is respected, a U.S. holder would be required to
include in income the amount of any such additional payments at the time such payments are received or accrued
in accordance with such U.S. holders method of accounting for U.S. federal income tax purposes. Our position
is binding on a holder, unless the holder discloses in the proper manner to the IRS that it is taking a different
position. If the IRS successfully challenged this position, and the notes were treated as contingent payment debt
instruments, all U.S. holders (including cash-basis U.S. holders) could be required to include the interest in
income as it accrues and to treat as ordinary income, rather than capital gain, any gain recognized on a sale,
exchange, retirement or redemption of a note. This disclosure assumes that the notes will not be considered
contingent payment debt instruments.
Prospective purchasers of the notes are urged to consult their tax advisors regarding the
characterization of the notes and the potential tax consequences in the event the notes are recharacterized
as equity for U.S. federal income tax purposes as well as the potential application to the notes of the
contingent payment debt instrument rules and the consequences thereof.
Payments of interest
Payments of stated interest on the notes generally will be taxable to a U.S. holder as ordinary income at the
time that such payments are received or accrued, in accordance with such U.S. holders method of accounting for
U.S. federal income tax purposes. A portion of the purchase price of the notes is attributable to interest accrued
for the period starting from July 8, 2010, through the date the notes are issued, which we refer to as pre-issuance
accrued interest. A portion of the interest received on the first interest payment date equal to the pre-issuance
accrued interest should be treated as a return of pre-issuance accrued interest and not as a payment of interest on
the note. Amounts treated as a return of pre-issuance accrued interest should not be taxable when received but
should reduce the holders adjusted tax basis in the note by a corresponding amount.
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Interest income on a note generally will be foreign source passive category income or, in the case of
certain U.S. holders, general category income for purposes of computing the foreign tax credit allowable to
U.S. holders under U.S. federal income tax laws.
Should any non-U.S. tax be withheld, the amount withheld and the gross amount of any additional amounts
paid to a U.S. holder (see Description of the NotesAdditional Amounts) will be included in such holders
income at the time such amount is received or accrued in accordance with such holders method of accounting
for U.S. federal income tax purposes. Non-U.S. withholding tax paid at the rate applicable to a U.S. holder
(taking into account any applicable income tax treaty) would, subject to limitations and conditions, be treated as
foreign income tax eligible for credit against such holders U.S. federal income tax liability or, at such holders
election, eligible for deduction in computing such holders U.S. federal taxable income. U.S. holders should
consult their tax advisors regarding the creditability or deductibility of any withholding taxes. Any additional
amounts would generally constitute foreign source income.
Bond Premium
U.S. holders will be considered to have purchased the notes at a premium equal to the excess, if any, of the
purchase price (excluding any amount properly allocable to pre-issuance accrued interest) over the principal
amount and may elect to amortize any such premium as an offset to interest income, using a constant yield
method, over the remaining term of the notes. If a U.S. holder makes this election, the election generally will
apply to all taxable debt instruments held during or after such U.S. holders taxable year for which the election is
made. In addition, a U.S. holder may not revoke the election without the consent of the IRS. If a U.S. holder
elects to amortize the premium, such U.S. holder will be required to reduce such holders tax basis in the note by
the amount of the premium amortized during such holders holding period. If a U.S. holder does not elect to
amortize premium, the amount of premium will be included in the holders tax basis in the note and will decrease
the gain or increase the loss otherwise recognized upon the disposition of the note. Therefore, if a U.S. holder
does not elect to amortize premium and holds the note to maturity, such U.S. holder generally will be required to
treat the premium as capital loss when the note matures.
Sale, exchange, retirement or other taxable disposition of notes
Upon the sale, exchange, retirement or other taxable disposition of a note, a U.S. holder generally will
recognize U.S. source gain or loss equal to the difference between the amount realized upon the sale, exchange,
retirement or other disposition (less an amount equal to any accrued but unpaid interest, which will be taxable as
interest income as discussed above to the extent not previously included in income by the U.S. holder) and the
adjusted tax basis of the note. A U.S. holders adjusted tax basis in a note will, in general, be its cost for that note,
decreased by (i) any amortized bond premium on the note and (ii) amounts properly allocable to pre-issuance
accrued interest.
Any gain or loss will be capital gain or loss. Capital gains of noncorporate U.S. holders (including
individuals) derived in respect of capital assets held for more than one year are eligible for reduced rates of
taxation. The deductibility of capital losses is subject to limitations.
In the event a U.S. holder is subject to non-U.S. tax upon the disposition of a note, such U.S. holder will
likely not be able to credit such non-U.S. tax against its U.S. federal income tax liability with respect to any gain
realized by the U.S. holder upon the disposition. U.S. holders should consult their tax advisors regarding the
creditability of any such tax.
Information reporting and backup withholding
In general, information reporting requirements will apply to certain payments of principal and interest paid
on the notes and to the proceeds of the sale or other disposition of a note paid to a U.S. holder unless such U.S.
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holder is an exempt recipient that, when required, demonstrates this fact. Backup withholding might apply to
such payments if the U.S. holder fails to provide a taxpayer identification number or otherwise fails to comply
with applicable certification requirements.
Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules
may be allowed as a refund or a credit against a U.S. holders U.S. federal income tax liability provided the
required information is timely furnished to the IRS.
New legislation
Newly enacted legislation requires certain U.S. holders who are individuals, estates or trusts to pay an
additional 3.8% tax on, among other things, interest and capital gains from the sale or other disposition of notes
for taxable years beginning after December 31, 2012. U.S. holders are urged to consult their tax advisers
regarding the effect, if any, of new U.S. federal income tax legislation on their ownership and disposition of our
notes.
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PLAN OF DISTRIBUTION
We intend to offer the notes through the initial purchasers. Subject to the terms and conditions of a purchase
agreement dated the date of this offering circular entered into between the issuer, the parent guarantor, Berau
Coal and the initial purchasers, the issuer has agreed to sell to the initial purchasers and the initial purchasers
have agreed to purchase from the issuer the following respective principal amount of the notes.
Initial Purchaser
Principal Amount
Credit Suisse (Singapore) Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deutsche Bank AG, Singapore Branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US$ 70,000,000
US$ 30,000,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US$100,000,000
The initial purchasers have agreed to purchase all of the notes being sold pursuant to the purchase agreement
if any of the notes are purchased. The initial purchasers will initially purchase the notes from the issuer pursuant
to the purchase agreement at a price equal to the issue price less a customary discount.
We have agreed in the purchase agreement to indemnify the initial purchasers against certain liabilities,
including liabilities under the U.S. Securities Act, or to contribute to payments the initial purchasers may be
required to make in respect of those liabilities.
The initial purchasers are offering the notes, subject to prior sale, when, as and if issued to and accepted by
them, subject to approval of legal matters by their counsel, including the validity of the notes, and other
conditions contained in the purchase agreement, such as the receipt by the initial purchasers of officers
certificates and legal opinions. The initial purchasers reserve the right to withdraw, cancel or modify offers to
investors and to reject orders in whole or in part.
We have agreed that, for a period of 90 days after the date of this offering circular, we will not offer, sell,
issue, contract to sell, pledge, or otherwise dispose of, directly or indirectly, or file with the U.S. SEC a
registration statement under the U.S. Securities Act relating to any United States dollar-denominated debt
securities issued or guaranteed by us and having a maturity of more than one year from the date of issuance, or
publicly disclose the intention to make any such offer, sale, pledge, disposition or filing, without the prior written
consent of the initial purchasers. We have also agreed that we will not at any time offer, sell, issue, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any securities under circumstances in which such offer,
sale, pledge, contract or disposition would cause the exemption afforded by Section 4(2) of the U.S. Securities
Act or the safe harbor of Regulation S under the U.S. Securities Act to cease to be applicable to the offer and sale
of the notes.
The expenses of this offering, including the initial purchasers discount, are estimated to be US$3 million
and are payable by us.
No Registration Under the U.S. Securities Act
The notes and the guarantees have not been and will not be registered under the U.S. Securities Act, and
may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in
certain transactions exempt from the registration requirements of the U.S. Securities Act. Terms used in this
paragraph have the meanings given to them by Regulation S.
The notes and the guarantees are being offered and sold outside of the United States in offshore transactions
in reliance on Regulation S. The purchase agreement provides that the initial purchasers may directly, or through
its U.S. broker-dealer affiliate, arrange for the offer and resale of the notes and the guarantees within the United
States only to qualified institutional buyers in reliance on Rule 144A.
Each purchaser of the notes will be deemed to have made the acknowledgements, representations and
agreements as described under Transfer Restrictions.
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No Active Trading Market for the Notes

There is no established trading market for the notes. We have received approval-in-principle for the listing
of the notes on the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements
made or opinions or reports contained in this offering circular. We cannot guarantee that the notes will be listed
on the SGX-ST. We do not intend to apply for listing of the notes on any national securities exchange in the
United States or for quotation of the notes on any automated dealer quotation system in the United States. The
initial purchasers have advised us that they presently intend to make a market in the notes after completion of this
offering. However, they are under no obligation to do so and may discontinue any market-making activities at
any time without any notice.
If an active trading market for the notes does not develop or is not maintained, the market price and liquidity
of the notes may be adversely affected. If the notes are traded, they may trade at a discount from their initial
offering price, depending on prevailing interest rates, the market for similar securities, our performance and other
factors.
Delivery, Payment and Settlement
We expect that delivery of the notes will be made against payment therefore on or about the date specified
on the cover page of this offering circular, which will be the third business day following the pricing of the notes
(this settlement cycle being referred to as T+3).
Certain Relationships
The initial purchasers or their respective affiliates from time to time have provided in the past and may
provide in the future investment banking, commercial lending, consulting and financial advisory services to us
and our affiliates in the ordinary course of business for which they may receive customary advisory and
transaction fees and expense reimbursement. In particular, Credit Suisse AG, Singapore Branch acted as the
financial advisor to Recapital in connection with the acquisition by PT Bukit Mutiara of Berau Coal Energy, and
was an arranger and a lender of financing for the acquisition. Credit Suisse AG, Singapore Branch is also one of
the lenders and the arranger, facility agent and security agent under the Senior Secured Credit Facility and the
common security agent under the cash and accounts management agreement and the Intercreditor Agreement.
See Risk FactorsRisks Relating to Berau Coal Energy and Third Party Interests in Berau CoalCertain
business relationships, and interests relating thereto, among some of the parties involved in this offering, may
adversely affect the investments made in the notes.
Price Stabilization, Short Positions and Penalty Bids
In connection with this offering, certain persons participating in the offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the notes. Specifically, the initial purchasers may bid for and
purchase notes in the open market to stabilize the price of the notes. The initial purchasers may also over allot the
offering, creating syndicate short positions. In addition, the initial purchasers may bid for and may stabilize or
maintain the market price of the notes above market levels that might otherwise prevail. The initial purchasers
are not required to engage in these activities, and may end these activities at any time.
Neither we nor the initial purchasers makes any representation or prediction as to the direction or magnitude
of any effect that the transactions described above may have on the price of the notes. In addition, neither we nor
the initial purchasers makes any representation that the initial purchasers will engage in such transactions or that
any such transaction, once commenced, will not be discontinued without notice.
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Selling Restrictions
General
The initial purchasers have undertaken to us that they will comply with all applicable laws and regulations in each
country or jurisdiction in which they purchase, offer, sell or deliver the notes or have in their possession or distributes
this offering circular (in preliminary, proof or final form) or any other offering material related to the notes and the
guarantees.
No action has been or will be taken in any jurisdiction by us or the initial purchasers that would, or is
intended to, permit a public offering of the notes, or possession or distribution of this offering circular (in
preliminary, proof or final form) or any other offering material relating to the notes and the guarantees, in any
country or jurisdiction where action for that purpose is required. Persons into whose possession this offering
circular comes are required to comply with all applicable laws and regulations in each country or jurisdiction in
which they purchase, offer, sell or deliver the notes and guarantees or have in their possession, distribute or
publish this offering circular (in preliminary, proof or final form) or any other offering material relating to the
notes and the guarantees, in all cases at their own expense.
United States
The initial purchasers have agreed to resell the notes (i) to persons they reasonably believe to be qualified
institutional buyers (as defined in Rule 144A under the U.S. Securities Act) in reliance on Rule 144A under the
U.S. Securities Act; and (ii) to certain eligible investors outside the United States in compliance with Regulation
S under the U.S. Securities Act. See Notice to Investors and Transfer Restrictions. The notes will initially be
offered at the price indicated on the cover page hereof. After the initial offering of the notes, the offering price
and other selling terms of the notes may from time to time be varied by the initial purchasers without notice.
The notes and the guarantees have not been and will not be registered under the U.S. Securities Act or the
securities laws of any state of the United States and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with the requirements of the U.S. Securities Act
and any other applicable law.
In addition, until 40 days after the commencement of this offering, an offer or sale of the notes within the
United States by a broker-dealer (whether or not it is participating in this offering), may violate the registration
requirements of the U.S. Securities Act if such offer or sale is made otherwise than pursuant to Rule 144A under
the U.S. Securities Act.
European Economic Area
In relation to each Member State of the European Economic Area that has implemented the Prospectus
Directive (each, a Relevant Member State), with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State (the relevant implementation date), an offer of the
notes described in this offering circular may not be made to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the notes that has been approved by the competent authority in that
Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the
competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that,
with effect from and including the relevant implementation date, an offer of securities may be offered to the
public in that Relevant Member State at any time:
to any legal entity that is authorized or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to invest in securities; or
to any legal entity that has two or more of (1) an average of at least 250 employees during the last
financial year; (2) a total balance sheet of more than 43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or consolidated accounts; or
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in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the
Prospectus Directive.
Each purchaser of notes described in this offering circular located within a Relevant Member State will be
deemed to have represented, acknowledged and agreed that it is a qualified investor within the meaning of
Article 2(1)(e) of the Prospectus Directive. For purposes of this provision, the expression an offer to the public
in any Relevant Member State means the communication in any form and by any means of sufficient information
on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe
for the notes, as the same may be varied in that Member State by any measure implementing the Prospectus
Directive in that Member State, and the expression Prospectus Directive means Directive 2003/71/EC and
includes any relevant implementing measure in each Relevant Member State.
United Kingdom
The initial purchasers have represented and agreed that (i) they have only communicated or caused to be
communicated and will only communicate or cause to be communicated an invitation or inducement to engage in
investment activity (within the meaning of Section 21 of the Financial Services and Market Act 2000 (the FSMA))
received by them in connection with the issue or sale of the notes in circumstances in which Section 21(1) of the
FSMA does not apply to us or the guarantors; and (ii) they have complied and will comply with all applicable
provisions of the FSMA with respect to anything done by them in relation to the notes in, from or otherwise involving
the United Kingdom.
Switzerland
Neither this offering circular nor any documents related to the notes constitute a prospectus within the
meaning of Articles 652a and 1156 of the Swiss Code of Obligations. The notes will not be listed on the SIX
Swiss Exchange or any other regulated securities market in Switzerland, and consequently, the information
presented in this offering circular does not necessarily comply with the information standards set out in the
listing rules of SIX Swiss Exchange. Accordingly, the notes have not been and may not be publicly offered or
sold in Switzerland, as such term is defined or interpreted under the Swiss Code of Obligations. In addition, the
notes do not constitute a participation in a collective investment scheme in the meaning of the Swiss Collective
Investment Schemes Act and they are neither subject to approval nor supervision by the Swiss Federal Banking
Commission. Therefore, investors in the notes do not benefit from protection under the Swiss Collective
Investment Schemes Act or supervision by the Swiss Federal Banking Commission or any other regulatory
authority in Switzerland.
Indonesia
This offering does not constitute a public offering in Indonesia under Law Number 8 of 1995 regarding
Capital Markets. This offering circular may not be distributed in Indonesia and the notes may not be offered or
sold in Indonesia or to Indonesian citizens wherever they are domiciled, or to Indonesian residents in a manner
which constitutes a public offer under the laws of Indonesia.
Singapore
This offering circular has not been registered as a prospectus with the MAS. Accordingly, this offering
circular and any other document or material in connection with the offer or sale, or invitation for subscription or
purchase, of the notes may not be circulated or distributed, nor may the notes be offered or sold, or be made the
subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other
than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to
Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in
Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA.
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Where the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share capital of which is owned by one or more
individuals, each of whom is an accredited investor; or
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and
each beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest
(howsoever described) in that trust shall not be transferred within six months after that corporation or that trust
has acquired the notes pursuant to an offer made under Section 275 of the SFA except:
(1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any
person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(2) where no consideration is or will be given for the transfer;
(3) where the transfer is by operation of law; or
(4) as specified in Section 276(7) of the SFA.
Hong Kong
The notes may not be offered or sold in Hong Kong by means of any document other than to
(1) professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571) of the laws of
Hong Kong and any rules made thereunder, or (2) in circumstances that do not result in the document being a
prospectus as defined in the Companies Ordinance (Cap. 32) of the laws of Hong Kong or that do not
constitute an offer to the public within the meaning of that Ordinance. No invitation, advertisement or document
relating to the notes may be issued, whether in Hong Kong or elsewhere, that is directed at, or the contents of
which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the
securities laws of Hong Kong) other than with respect to the notes that are intended to be disposed of only to
persons outside of Hong Kong or only to professional investors, as defined under the Securities and Futures
Ordinance (Cap. 571) of the laws of Hong Kong and any rule made thereunder.
Japan
The notes have not been and will not be registered under the Financial Instruments and Exchange Law of
Japan, and may not be offered or sold in Japan or to, or for the account or benefit of, any resident of Japan (which
term as used herein means any person resident in Japan, including any corporation or other entity organized
under the laws of Japan) or to, or for the account or benefit of, any person for reoffering or resale, directly or
indirectly, in Japan or to, or for the account or benefit of, any resident of Japan, except pursuant to an exemption
from the registration requirements of, or otherwise in compliance with, the Financial instruments and Exchange
Law of Japan, and in compliance with the other relevant laws and regulations of Japan.
Australia
This offering circular has not been and will not be lodged with the Australian Securities and Investments
Commission or the Australian Stock Exchange and is not a disclosure document for the purposes of Australian
law. This offering circular may not be issued or distributed in Australia and no offer or invitation may be made in
relation to the issue, sale or purchase of any notes in Australia (including an offer or invitation received by a
person in Australia) and no notes may be sold in Australia, unless the offer or invitation does not need disclosure
to investors under Part 6D.2 or Division 2 of Part 7.9 of the Corporations Act 2001.
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TRANSFER RESTRICTIONS
Because of the following restrictions, purchasers are advised to consult their legal counsel prior to making
any offer, sale, resale, pledge or other transfer of the notes.
The notes have not been and will not be registered under the U.S. Securities Act and may not be offered,
sold or delivered within the United States (as defined in Regulation S under the U.S. Securities Act) except
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S.
Securities Act. Accordingly, the notes are being offered and sold only (1) to QIBs in compliance with Rule 144A
and (2) outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities
Act.
By its purchase of the notes, each purchaser of the notes will be deemed to have made the following
acknowledgements and representations to, and agreements with, the issuer, the parent guarantor, each subsidiary
guarantor and the initial purchasers that:
1. it is purchasing the notes for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is: (i) a QIB, and is aware that the sale to it is
being made in reliance on Rule 144A; or (ii) a purchaser that is outside the United States;
2. the notes and the guarantees have not been and will not be registered under the U.S. Securities Act and
may not be offered or sold within the United State except as set forth below;
3. if it is a purchaser other than a purchaser outside the United States and if it should resell or otherwise
transfer the notes, it will do so only: (a) if such purchaser is an initial investor, (i) to us or any
subsidiary thereof; (ii) inside the United States to a QIB in compliance with Rule 144A; (iii) outside
the United States in an offshore transaction in compliance with Rule 904 under the U.S. Securities Act
(if available); or (iv) pursuant to an exemption from registration under the U.S. Securities Act provided
by Rule 144 (if available), in each case in accordance with any applicable securities law of any State of
the United States or (b) pursuant to an effective registration statement under the U.S. Securities Act;
4. it will inform each person to whom it transfers the notes of any restrictions on transfer of such notes;
5. if it is a purchaser outside the United States, the notes will be represented by the Regulation S Global
Note and that transfers thereto are restricted as described under Description of the NotesBookEntry; Delivery and Form. If it is a QIB, it understands that the notes offered in reliance on Rule 144A
will be represented by the Restricted Global Note. Before any interest in the Restricted Global Note
may be offered, sold, charged or otherwise transferred to a person who is not a QIB, the transferee will
be required to provide the trustee with a written certification (the form of which certification can be
obtained from the trustee) as to compliance with the transfer restriction referred to above;
6. each note sold within the United States will bear a legend to the following effect unless otherwise
agreed by us and the holder thereof (unless such note has been sold pursuant to a registration statement
that has been declared effective under the U.S. Securities Act):
This note and the guarantees related to this note have not been registered under the
Securities Act, and accordingly, this note may not be offered or sold within the United States
except as set forth in the following sentence. By its acquisition hereof, the holder (1) represents
that (a) it is a qualified institutional buyer (as defined in Rule 144A under the Securities Act)
or (b) it is acquiring this note in an offshore transaction in compliance with Regulation S under
the Securities Act, (2) agrees that it will not, within the time period referred to in Rule 144 under
the Securities Act as in effect with respect to such transfer, resell or otherwise transfer this note
except (a) if such purchaser is an initial investor, (i) to the issuer, any guarantor or any of their
respective subsidiaries; (ii) inside the United States to a qualified institutional buyer in
compliance with Rule 144A under the Securities Act; (iii) outside the United States in an offshore
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transaction in compliance with Rule 904 under the Securities Act; or (iv) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if available); or
(b) pursuant to an effective registration statement under the Securities Act and (3) agrees that it
will deliver to each person to whom this note is transferred a notice substantially to the effect of
this legend. In connection with any transfer of this note within the time period referred to above,
the holder must check the appropriate box set forth on the reverse hereof relating to the manner
of such transfer and submit this certificate to the trustee. As used herein, the terms offshore
transaction and United States have the meanings given to them by Regulation S under the
Securities Act. The indenture contains a provision requiring the trustee and the paying and
transfer agent to refuse to register any transfer of this note in violation of the foregoing
restrictions; and
7. we, the paying agent, the initial purchasers and others will rely upon the truth and accuracy of the
foregoing acknowledgements, representations and agreements, and agree that if any of the
acknowledgements, representations or agreements deemed to have been made by its purchase of the
notes are no longer accurate, it shall promptly notify the issuer, the parent guarantor, the paying agent
and the initial purchasers. If it is acquiring any notes as a fiduciary or agent for one or more investor
accounts, it represents that it has sole investment discretion with respect to each such account and it has
full power to make the foregoing acknowledgements, representations and agreements on behalf of each
such account.
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LEGAL MATTERS
Certain legal matters with respect to the notes will be passed upon for us by Latham & Watkins with respect
to matters of U.S. federal securities and New York laws, Assegaf Hamzah & Partners with respect to matters of
Indonesian law and Latham & Watkins LLP with respect to matters of Singapore law. Certain legal matters will
be passed upon for the initial purchasers by Davis Polk & Wardwell LLP with respect to matters of U.S. federal
securities and New York laws and Hiswara Bunjamin & Tandjung with respect to matters of Indonesian law.
INDEPENDENT PUBLIC ACCOUNTANTS

The financial statements of Berau Coal Energy as of and for the years ended December 31, 2007, 2008 and
2009 included in this offering circular and the financial statements of Berau Coal as of and for the years ended
December 31, 2008 and 2009 included in this offering circular, which have been prepared in accordance with
Indonesian GAAP, have been audited in accordance with auditing standards established by the Indonesian
Institute of Certified Public Accountants by KAP Tjiendradjaja and Handoko Tomo (formerly Handoko Tomo),
independent public accountants, as stated in their reports included in this offering circular. The financial
statements of Berau Coal Energy as of and for the three months ended March 31, 2009 and 2010 included in this
offering circular and the financial statements of Berau Coal as of and for the three months ended March 31, 2009
and 2010 included in this offering circular, which have been prepared in accordance with Indonesian GAAP,
have been reviewed in accordance with standards established by the Indonesian Institute of Certified Public
Accountants by KAP Tjiendradjaja and Handoko Tomo, as stated in their reports included in this offering
circular.
The financial statements of Berau Coal as of and for the year ended December 31, 2007 included in this
offering circular, which have been prepared in accordance with Indonesian GAAP, have been audited in
accordance with auditing standards established by the Indonesian Institute of Certified Public Accountants by
KAP Jimmy Budhi & Rekan, independent public accountants, as stated in their report included in this offering
circular.
INDEPENDENT MINE CONSULTANT

Berau Coals proved and probable coal reserves figures presented in this offering circular are estimates
reported by MMC, an independent mine consultant. MMC has given and has not withdrawn its written consent to
the issue of this offering circular with the inclusion herein of their name and all references thereto and to the
inclusion of the Reserve Statement in Appendix A to this offering circular.
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SUMMARY OF CERTAIN PRINCIPAL DIFFERENCES BETWEEN INDONESIAN GAAP AND U.S. GAAP
Our consolidated financial statements included in this offering circular have been prepared in conformity
with Indonesian GAAP, which differs in certain significant respects from U.S. GAAP. This summary is not an
exhaustive list of all the differences between Indonesian GAAP and U.S. GAAP. We have not attempted to
identify all disclosure, presentation or classification differences that would affect the manner in which
transactions or events are presented in our consolidated financial statements (or notes thereto). Certain of those
differences that may have a material effect on our financial statements are summarized below. Our management
has not quantified the effects of the differences discussed below. Accordingly, our consolidated financial
statements could be materially different if prepared in accordance with U.S. GAAP.
Regulatory bodies that promulgate Indonesian GAAP and U.S. GAAP have significant on-going projects
that could affect the differences between Indonesian GAAP and U.S. GAAP described below and the impact that
these differences could have on our financial statements in the future. In making an investment decision,
investors must rely upon their own examination of us, the terms of the offering and our financial information.
Deferred Exploration and Development Costs
Under Indonesian GAAP, exploration expenditure incurred is capitalized and carried forward, on an area of
interest basis, provided one of the following conditions is met: (i) such costs are expected to be recouped through
successful development and exploitation of the area of interest or, alternatively, by its sale; or (ii) exploration
activities in the area of interest have not yet reached the stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves, and active and significant operations in or in
relation to the area are continuing. Deferred exploration and development costs incorporates costs related to
general surveys, exploration, borrowing costs, refinancing, feasibility studies and development of the mine
incurred prior to the commencement of operations. Borrowing costs include interest expense, foreign exchange
difference, swap premium amortization and other borrowing costs. Deferred exploration and development costs
is amortized on a straight-line basis from the date of commercial production of the respective area of interest,
over the life of the mine or the remaining term of the coal contract of work, whichever is shorter. The net
carrying value of the deferred exploration and development cost of each area of interest is reviewed regularly and
to the extent this value exceeds its recoverable value, the excess is expensed or written-off in the period the
decision is made.
Under U.S. GAAP, exploration and development costs are expensed in the period incurred. Once it has been
determined that a mineral property can be economically developed upon establishing proven and probable
reserves, such costs incurred to develop such property (including initial costs to delineate the ore body and
remove overburden in order to expose the ore body), are capitalized. Such costs are amortized using the
units-of-production method over the estimated life of the ore body based on proven and probable reserves.
Under U.S. GAAP, significant payments related to the acquisition of land and mineral rights are capitalized.
Prior to acquiring such land or mineral rights, a company generally makes a preliminary evaluation to determine
that the property has significant potential to develop an economic ore body. The time between initial acquisition
and full evaluation of a propertys potential is variable and is determined by several factors, including the
location relative to existing infrastructure, the propertys stage of development, geological controls and ore
prices. If an ore body is determined to be economically mineable, acquisition and development costs are
amortized when production begins using the units-of-production method based on proven and probable reserves.
If no economically mineable ore body is determined, such costs are expensed in the period in which it is
determined that the property has no future economic value.
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Environmental Protection and Rehabilitation CostsAsset Retirement Obligation

Under Indonesian GAAP, estimated rehabilitation and reclamation costs are charged to expense over the
expected operating life of the mine although an entity can opt to apply treatments similar to those under U.S.
GAAP. However, there is only limited guidance provided on asset retirement obligations.
The Financial Accounting Standards Board (DSAK) of the Indonesian Institute of Accountants (IAI)
has approved and issued the revised Pernyataan Standar Akundansi Keuangan (PSAK) No. 16 Fixed Assets
(Revised 2007) which was effective from January 1, 2008. Under the revised PSAK No. 16, the initial estimate
of the cost of dismantling and removing the long-lived assets and restoring the site on which the long-lived assets
are located, where the entity has an obligation for rehabilitation of the site on which the assets are located, and
where such obligation is incurred either when the long-lived assets are acquired or as a consequence of having
used the long-lived assets during a particular period for purposes other than to produce inventories during that
period, is capitalized as part of the carrying amount of the long-lived assets.
Under U.S. GAAP, ASC 410 Asset Retirement and Environmental Obligations (formerly addressed under
Statement of Financial Accounting Standards (SFAS) No. 143 Accounting for Assets Retirement
Obligations) requires that a liability for an asset retirement obligation that results from the acquisition,
construction, development and/or the normal operation of a long-lived asset is recognized in the period in which
it is incurred and must be initially measured at fair value. The asset retirement cost is capitalized as part of the
carrying amount of the related long-lived asset and subsequently allocated to expense over the assets useful life.
Changes in the liability due to the passage of time are recognized as an increase in the carrying amount of the
liability and as an expense classified as an operating item in the statement of income (referred to as accretion
expense). Changes resulting from revisions to either the timing or the amount of the original estimate of
undiscounted cash flows are recognized as an increase (decrease) in the carrying amount of the liability and the
related capitalized asset retirement costs as part of the carrying amount of the related long-lived asset.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of
Under Indonesian GAAP, an entity should assess at each balance sheet date whether there are any
indications that an asset may be impaired. If there is any such indication, the assets must be tested for
impairment. Impairment is a one-step approach and is assessed on the basis of discounted cash flows. An
impairment loss may be offset against revaluation surpluses to the extent that it relates to the same asset; any
uncovered deficit is recorded in the income statement. Reversal of impairment losses is required in certain
circumstances where the loss ceases to exist. The amount written up is reduced by the amount that would have
been recognized as depreciation had the impairment not occurred.
Under Indonesian GAAP, there is no specific guidance for assets held for disposal. Under U.S. GAAP, longlived assets held and used and certain identifiable finite-lived intangible assets of an entity are to be reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of the relevant asset
may not be recoverable and the impairment test is a two-step approach. Firstly, impairment is assessed on the
basis of undiscounted cash flows that are expected to result from the use and eventual disposal of the asset. If
such undiscounted cash flows are less than the carrying amount, the impairment loss is measured as the amount
by which the carrying amount exceeds fair value. ASC 360 Property, Plant, and Equipment (formerly
addressed under SFAS No. 144 Accounting for the impairment or disposal of long-lived assets) also requires
that long-lived assets to be disposed of by sale be reported at the lower of carrying amount or fair value less cost
to sell and to cease depreciation or amortization. Under U.S. GAAP, if an impairment loss is recognized, the
adjusted carrying amount becomes the new cost basis of the long-lived asset to be depreciated over its remaining
useful life. Reversal of impairment losses is prohibited.
Further, additional guidance has been provided under ASC 930 Extractive Activities-Mining (formerly
addressed under EITF 04-3, Mining Assets: Impairment and Business Combinations), that an entity should
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include the cash flows associated with (value beyond proved and probable reserves) (VBPP) in estimates of
future cash flows (both undiscounted and discounted) used for determining whether a mining asset is impaired
under ASC 360; that estimated cash flows also should include the estimated cash outflows required to develop
and extract the VBPP. An entity should also consider the effects of anticipated fluctuations in the market price of
minerals when estimating future cash flows (both undiscounted and discounted) used for determining whether a
mining asset is impaired under ASC 360. Generally, an entity should consider all available information including
current prices, historical averages and forward pricing curves. Those marketplace assumptions typically should
be consistent with a companys operating plans and financial projections underlying other aspects of the
impairment analysis.
Finance Leases
DSAK has approved and issued the revised PSAK No. 30 Accounting for Leases (Revised 2007) which
became effective from January 1, 2008. Under the revised standard, a lease is a finance lease if substantially all
risks and rewards of ownership are transferred. Substance rather than form is important. Several factors usually
indicate a finance lease including (i) ownership is transferred to the lessee at the end of the lease term; (ii) a
bargain purchase option exists; (iii) the lease term is for the majority of the leased assets economic life; (iv) the
present value of minimum lease payments is equal to substantially all the fair value of the leased asset; and
(v) the leased assets are of a specialized nature such that only the lessee can use them without major
modification. Several factors could also indicate a finance lease including (i) on cancellation, the lessors losses
are borne by the lessee; (ii) gains and losses from the fluctuation in the fair value of the residual fall to the lessee;
and (iii) the lessee has the ability to continue the lease for a secondary period at below market rental. At the
commencement of the lease term, lessees shall recognize finance leases as assets and liabilities in their balance
sheets at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum
lease payments, each determined at the inception of the lease. Minimum lease payments shall be apportioned
between the finance charge and the reduction of the outstanding liability. The asset is depreciated over its useful
life or the lease term if shorter. However, the latter is only permitted if there is no reasonable certainty of the
lessee obtaining ownership of the asset. We have applied PSAK No. 30. Leases that transfer substantially all the
risks and benefits incidental to ownership of the leased item to the lessee are classified as finance leases. Finance
leases are capitalized at the inception of the lease at the fair value of the leased assets or at the present value of
the minimum lease payments if the present value is lower than the fair value. Lease payments are apportioned
between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recorded in our consolidated statements of income. Leased
assets held by the lessee under finance leases are included in fixed assets and depreciated over the estimated
useful life of the assets or the lease term, whichever is shorter, if there is no reasonable certainty that the lessee
will obtain ownership by the end of the lease term. Leases that do not transfer substantially all the risks and
benefits incidental to ownership of the leased item are classified as operating leases.
Under U.S. GAAP, financial or capital leases are recognized if one of the following criteria is met:
(i) ownership of the leased asset transfers to the lessee at the end of the lease term; (ii) the lease contains a
bargain purchase option; (iii) the lease term is equal to 75% or more of the estimated useful life of the asset; or
(iv) the net present value of the minimum lease payments equals or exceeds 90% of the underlying fair value of
the leased asset less any investment tax credit retained by the lessor. If the lease meets the criterion of either
(i) or (ii) above, the asset is amortized in a manner consistent with the lessees normal depreciation policy for
owned fixed assets. If the lease does not meet the criterion (i) or (ii) above, the asset is amortized in a manner
consistent with the lessees normal depreciation policy, except that the period of amortization shall be the lease
term. This asset shall be amortized to its expected value, if any, to the lessee at the end of the lease term. For
leases not meeting any of the four criteria for a capital lease above, lease payments are expensed as incurred
(operating lease) on a straight-line basis.
Under U.S. GAAP, ASC 840 Lease (formerly addressed under SFAS No. 13 Accounting for leases)
defines a lease as an agreement conveying the right to use property, plant or equipment for a stated period of
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time. As provided in Emerging Issue Task Force (EITF) 01-08 Determining whether an arrangement contains a
lease, the service agreement with the mining contractors may be accounted for as a leasing arrangement, as
opposed to a service contract, if the substance conveys a right to use the underlying property, plant and
equipment.
There is currently no accounting standard to specifically address this type of arrangement under Indonesian
GAAP.
Inventories
Under Indonesian GAAP, inventories are stated at the lower of cost or net realizable value. Net realizable
value is defined as the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale. Under Indonesian GAAP, inventory is carried at
the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price less the
estimated costs of completion and the estimated costs necessary to complete the sale. Inventories of producers
and dealers of mineral ores are allowed to be carried at net realizable value even if above cost with changes in
that value recognized in the profit and loss in the period of change. First-in-first-out (FIFO) and weighted
average method is permitted for determining cost. Berau Coals inventories are stated at the lower of cost or net
realizable value (NRV). The cost of coal inventories is determined by the weighted average method, while the
cost of spare parts inventories is determined by the average method. NRV is the estimated selling price in the
ordinary course of business, or the price in accordance with the price determined under the long-term supply
agreements referred to in Note 37c to our financial statements as of and for the years ended December 31, 2007,
2008 and 2009 and Note 36c to our financial statements as of and for the three months ended March 31, 2010.
U.S. GAAP is similar to Indonesian GAAP. Inventories are stated at the lower of cost or market value, with
market value being the current replacement cost limited to an amount that is not more than net realizable value or
less than net realizable value less a normal profit margin.
Accounting for inventory write-downs under Indonesian GAAP and U.S. GAAP is substantially similar. The
principal difference is that under Indonesian GAAP, inventory provisions can be written back up resulting in a
reduction in expense in the period in which the reversal occurs. Under U.S. GAAP, a provision to write down
inventories to the lower of cost or market cannot be reversed should the market value recover prior to sale or
disposition. As a result, under U.S. GAAP, write-downs of inventory can only be recovered through sale or
disposition.
Pension Costs and Employee BenefitsDefined Benefit Plans
Under Indonesian GAAP, the liability recognized in the balance sheet in respect of defined benefit plans is
the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets,
together with adjustments for unrecognized actuarial gains or losses and past service cost. Projected unit credit
method is used to determine the benefit obligation. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows using interest rates or market yields of high-quality
corporate bonds that are denominated in the currency in which the benefit will be paid, and that have terms to
maturity approximating the terms of the related pension liability. Government bond yields are used where there is
no deep market in high-quality corporate bonds. Valuation of plan assets is measured at fair value or using
discounted cash flows if market prices are unavailable. Expected return on plan assets is determined based on
market expectations at the beginning of the period for returns over the entire life of the obligation. At a
minimum, an actuarial gain/loss arising from experience adjustments, changes in actuarial assumptions and
amendments to pension plans in excess of 10% of the greater of the present value of the defined benefit
obligation or the fair value of plan assets at the beginning of the year is amortized over the expected average
remaining working lives of the related employees (the corridor method). An entity can adopt a policy of
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recognizing actuarial gains and losses in full in the period in which they occur in profit or loss. The expenses will
be made up of service costs, interest costs, expected return on assets, recognized actuarial gains/losses,
recognized past service costs and curtailment or settlement impacts. Disclosures of the amount and line items of
the income statement in which each component is recorded, are required. Positive and negative past-service costs
are recognized in the income statement over the remaining vesting period. Where benefits have already vested,
past-service costs are recognized immediately. Gains and losses on curtailments or settlement of a defined benefit
plan are recognized when the curtailment or settlement occurs. There is no requirement to recognize a minimum
of pension liability.
Under U.S. GAAP, ASC 715 Compensation-Retirement Benefits (formerly addressed under SFAS
No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement PlansAn Amendment
of FASB Statements No. 87, 88, 106, and 132(R)) requires that the funded status of a defined benefit plan (that
is, the present value of the defined benefit obligation less the fair value of plan assets) is recognized in the
balance sheet. All actuarial gains and losses and past service costs are recognized in the balance sheet, with a
corresponding entry to accumulated other comprehensive income (AOCI). Valuation of plan assets should
reflect an exit price, representing the price at which an asset could be sold to another party in a hypothetical
transaction. Expected return on plan assets is determined based on market conditions and nature of the assets.
The amounts of actuarial gains and losses recognized within AOCI (to reflect the funded status of the defined
benefit plan in the balance sheet) are amortized out of AOCI into the income statement on a basis that is similar
to Indonesian GAAP, except that gains and losses are amortized over the remaining life expectancy of the plan
participants if all or almost all plan participants are inactive. The expenses, including actuarial gains and losses
and unrecognized prior service costs, will be recognized as a single component of net periodic pension cost in
employee costs. Positive prior-service costs for current and former employees are recognized out of AOCI and
into income over the period during which the employer expects to receive an economic benefit from the
increased pension benefit, which is typically the remaining service period of active employees. Negative prior
service costs are used first to offset previous positive prior-service costs, with the excess recognized in income in
the same manner as positive prior-service cost. Curtailment losses are recognized when it is probable that a
curtailment will occur and the effect of the curtailment is reasonably estimable. Curtailment gains are deferred
until realized and are recognized in earnings, either when the related employees terminate, or the plan suspension
or amendment is adopted. Settlement gains or losses are recognized when the event of settlement occurs. Further,
U.S. GAAP requires immediate recognition of a liability (the minimum liability) when the accumulated benefit
obligation exceeds the fair value of the plan assets.
Deferred Taxes
Under Indonesian GAAP, deferred income tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying amount except for temporary
differences arising from goodwill or negative goodwill, or at the time of the initial recognition of assets or
liabilities from a transaction which is not a business combination transaction and at the time of transaction,
affects neither accounting profit nor taxable profit. Currently enacted rates or substantially enacted rates are used
in the determination of deferred income tax. A deferred tax asset is recognized if it is probable that sufficient
taxable profit will be available against which the temporary difference can be utilized. When an entity makes a
distinction between current and non-current assets and liabilities in its financial statements, it should not classify
deferred tax assets (liabilities) as current assets (liabilities). The uncertain tax position is measured using either
an expected value approach or a single best estimate of the most likely outcome. The cumulative probability
model is not permitted under Indonesian GAAP.
U.S. GAAP, ASC 740 Income Taxes (formerly addressed under SFAS No. 109 Accounting for Income
Taxes) and FASB Interpretation (FIN) No. 48, is similar to Indonesian GAAP except that no initial
recognition exemption and special requirements apply in computing deferred tax on leveraged leases. Use of
substantively enacted rates is not permitted as tax rate and tax laws used must have been enacted. A deferred tax
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asset is recognized in full but is then reduced by a valuation allowance if it is more likely than not that some or
all of the deferred tax asset will not be realized. Deferred tax assets and liabilities are either classified as current
or non-current, based on the classification of the related non-tax asset or liability for financial reporting. Tax
assets not associated with an underlying asset or liability are classified based on the expected reversal period. A
tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position
is sustainable based on its technical merits. The tax position is measured, using the cumulative probability model,
as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement.
Related Party Transactions
Under Indonesian GAAP, related party relationships are generally determined by reference to the control or
indirect control or exercise of significant influence of one party by another in making financial and operating
decisions. Disclosures typically include the related party relationship in respect of the related party transactions,
the nature of transactions with related parties, an indication of the volume of the transactions (both as an amount
and as an appropriate proportion) and amounts or appropriate proportions of outstanding items and pricing
policies. There is no requirement to disclose the expense recognized for the period in respect of bad debts due
from related parties, except for public companies. Public companies also need to disclose the total compensation
of key management personnel.
Under U.S. GAAP, for transactions with related parties, there is a requirement to disclose the nature and
extent of any transactions with all related parties, the nature of the relationship, the amounts involved in a
transaction, the amount, terms and nature of the outstanding balances and any doubtful amounts related to those
outstanding balances for each major category of related parties. U.S. GAAP is substantially similar to Indonesian
GAAP in this respect, except that for control relationships, disclosures are required regardless of whether
transactions occur. There is no specific requirement to disclose the name of the related party (other than the
immediate parent entity, the ultimate parent entity and the ultimate controlling party). The disclosure of
compensation of key management personnel is not required within the financial statements.
Intangible Assets
Under Indonesian GAAP, intangible assets are amortized on a systematic basis over the best estimate of its
useful life from the date when the asset is available for use. Intangible assets subject to amortization are carried at
cost less accumulated amortization/impairment, or at fair value less subsequent amortization/ impairment. There
is a rebuttable presumption that the useful life of an intangible asset does not exceed 20 years from the date on
which the asset is available for use. In very rare cases an entity may demonstrate that an intangible asset has a
finite useful life in excess of 20 years, but an indefinite useful life is not permitted.
Under U.S. GAAP, intangible assets with indefinite useful lives are not amortized, but are instead tested for
impairment at least annually by comparing the fair values of those assets with their recorded amounts (a two-step
process) in accordance with ASC 350 Intangibles-Goodwill and Other (formerly addressed under SFAS No.
142 Goodwill and Other Intangible Assets). Intangible assets with finite useful lives will continue to be
amortized over their useful lives and are required to be reviewed and assessed for impairment. In addition, EITF
No. 04-2 Whether mineral rights are tangible or intangible assets requires mining entities to account for
mineral rights as property, plant and equipment (tangible asset). Any effect on amortization or depreciation from
such reclassification is required to be accounted for prospectively.
Revenue Recognition
Under Indonesian GAAP, revenue is recognized for the sale of goods when the significant risks and rewards
of ownership of the goods have been transferred to the buyer, there is no continuing managerial involvement over
the goods to the degree usually associated with ownership and there is no effective control over the goods.
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Under U.S. GAAP, revenue is recognized when earned, which is generally when delivery has occurred or
services have been rendered, and the price is fixed and determinable and collection of the price is reasonably
assured. Delivery is not considered to have occurred unless legal title to the goods has transferred and the buyer
assumes the risks and rewards of ownership of the goods. Under U.S. GAAP, revenue is reduced for estimated
returns and allowances due to quality and customer rejections.
Loans to Related Parties and Shareholders
Under Indonesian GAAP, loans made to shareholders or ultimate parent companies are recognized as assets
of the lender. Interest on such loans is recognized as interest income as earned.
Under U.S. GAAP, loans made to shareholders or ultimate parent companies, including interest income
earned thereon, for which repayment is effected by the dividends declared by the lender to the same shareholders
or ultimate parent companies, are accounted for as a capital transaction of the lender. Accordingly, the reported
amount of loans to related parties and shareholders would reduce the amount reported for net shareholders
equity.
Disclosures and Presentation
In general, the disclosure requirements for Indonesian GAAP are not as extensive as those required by U.S.
GAAP. Areas where U.S. GAAP requires specific additional disclosures include, among others, concentrations
of credit risk, significant customers and suppliers, fair value of financial instruments, use of estimates, earnings
per share (for publicly traded companies), income taxes, guarantees, pensions and other post-retirement
employee benefits, business, segments disclosures and comprehensive income, among others. In addition, certain
line items included in the Indonesian GAAP balance sheet and profit and loss statement would be reclassified in
preparing and presenting a U.S. GAAP balance sheet and income statement.
Accounting for Contingencies
Under Indonesian GAAP, a provision is recorded when the following three conditions are met: (a) an entity
has a present obligation as a result of a past event; (b) it is probable that an outflow of resources embodying the
economic benefits will be required to settle the obligation; and (c) a reliable estimate can be made of the amount
of the obligation. The amount recognized as a provision is the best estimate of the expenditure required to settle
the present obligation at the balance sheet date. The anticipated cash flows are discounted using a pre-tax
discount rate (or rates) that reflect(s) current market assessments of the time value of money and the risks
specific to the liability (for which the cash flow estimates have not been adjusted) if the effect is material. If a
range of estimates is predicted and no amount in the range is more likely than any other amount in the range, the
mid-point of the range is used to measure the liability. A contingent asset is a possible asset that arises from
past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the entitys control. A contingent asset is recognized only when the
realization of the associated benefit, such as an insurance recovery, is virtually certain. A contingent liability is a
possible obligation whose outcome will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events outside the entitys control. It can also be a present obligation that is not recognized
because it is not probable that there will be an outflow of economic benefits, or the amount of the outflow cannot
be reliably measured. Contingent liabilities are disclosed unless the probability of outflows is remote. Probable is
defined as more likely than not.
Under U.S. GAAP, ASC 450 Contingencies (formerly addressed under SFAS No. 5, Accounting for
Contingencies) if a range of estimates is present and no amount in the range is more likely than any other
amount in the range, the minimum (rather than the mid-point) amount is used to measure the liability. A
provision is only discounted when the timing of the cash flows is fixed or reliably determinable. The threshold
for recognizing contingent assets like insurance recoveries is lower. The recovery is required to be probable (the
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future event or events are likely to occur rather than virtually certain as under Indonesian GAAP). An accrual for
a contingent loss is required if it is probable that there is a present obligation resulting from a past event and an
outflow of economic resources is reasonably estimable. Probable is defined as likely to occur rather than more
likely than not (as under Indonesian GAAP). Indonesian GAAP is substantially similar to U.S. GAAP in this
respect. However, given the nature of certain of our contingencies (i.e., VAT issues, the effect of illegal mining,
etc.), we believe that actual application of U.S. GAAP may yield a different accounting result from our recorded
Indonesian GAAP. An accrual for a loss contingent is required if it is probable that there is a present obligation
resulting from a past event and an outflow of economic resources is reasonably estimable. Probable is defined as
likely to occur rather than more likely than not as under Indonesian GAAP.
Components of Financial Statements, Presentation and Disclosures
Under Indonesian GAAP, two years balance sheets, income statements, cash flow statements, changes in
equity, accounting policies and notes are required. There is no definition of foreign private issuers.
U.S. GAAP is similar to Indonesian GAAP, except three years are required for U.S. SEC registrants for all
statements except balance sheets.
In general, the disclosure requirements for Indonesian GAAP are not as extensive as those required by U.S.
GAAP. Areas where U.S. GAAP requires specific additional disclosures include, among others, concentrations
of credit risk, significant customers and suppliers, fair value of financial instruments, use of estimates, earnings
per share (for public traded companies), income taxes, guarantees, pensions and other post-retirement employee
benefits, business, segment disclosures and comprehensive income. In addition, certain line items included in
Indonesian GAAP balance sheets and income statements would be reclassified in preparing and presenting a U.S.
GAAP balance sheet and income statement.
Consolidation
Under Indonesian GAAP, the definition of subsidiary is based on voting control or power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. Dissimilar activities are
not a justification for non-consolidation of subsidiaries. There is no explicit requirement to consider currently
exercisable potential voting rights. Entities are not consolidated if control is temporary (short term) or if there are
long-term restrictions to transfer funds to the parent for non-consolidation of subsidiaries. Our consolidated
financial statements include all subsidiaries that are controlled by Berau Coal Energy. Control is presumed to
exist when a company owns, directly or indirectly (through subsidiaries), more than 50% of the voting rights of
the subsidiaries. Even when a company owns 50% or less of the voting rights, control exists when one of the
following conditions is met: (i) having more than 50% of the voting rights by virtue of agreement with other
investors; (ii) having the right to govern the financial and operating policies of the subsidiaries under the articles
of association or an agreement; (iii) ability to appoint or remove the majority of the members of the subsidiaries
management; (iv) ability to control the majority of votes at meetings of management.
Further, under Indonesian GAAP, consolidated financial statements shall be prepared using uniform
accounting policies for like transactions and other events in similar circumstances. If a member of the group uses
accounting policies other than those adopted in the consolidated financial statements for like transactions and
events in similar circumstances, appropriate adjustments are made to its consolidated financial statements in
preparing the consolidated financial statements. However, if it is not practicable for such adjustments to be
calculated, that fact is disclosed in the notes to the consolidated financial statements, together with the proportion
of the items in the consolidated financial statements to which the different accounting policies have been applied.
The consolidation of subsidiary accounts can be drawn up at a different reporting date provided the difference
between the reporting dates is no more than three months. Adjustments are made for significant transactions that
occur in the gap period. Minority interests should be presented separately in the consolidated balance sheet
between liabilities and the parent equity. Berau Coal Energys minority shareholders proportionate share in the
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equity of the consolidated subsidiaries is presented under Minority Interests in Net Assets of Consolidated
Subsidiaries in the consolidated balance sheets, while the minority shareholders proportionate share in the net
income or loss of consolidated subsidiaries is presented under Minority Interests in Net Income or Loss of
Consolidated Subsidiaries in the consolidated statements of income.
Under U.S. GAAP, an entity should first consider the guidance under ASC 810 Consolidation (formerly
addressed under FASB Interpretation No. 46 (revised in December 2003), Consolidation of Variable Interest
Entities (FIN 46(R))) which requires an entity to be consolidated by its primary beneficiary if the entity is a
variable interest entity. Variable interest entities include many entities such as special purpose entities and other
entities not previously regarded as special purpose entities under U.S. GAAP. Variable interest entities are
evaluated for consolidation based on all contractual, ownership, or other interests that expose their holders to the
risks and rewards of the entity, where such interests are termed variable interests. The holder of a variable
interest that receives the majority of the potential variability in expected losses or expected residual returns of the
variable interest entity is the variable interest entitys primary beneficiary, and is required to consolidate the
variable interest entity.
If it has been determined that an entity is a variable interest entity, ASC 810 generally requires consolidation
when one of the companies in a group directly or indirectly has a controlling financial interest in the other
companies. The usual condition for controlling financial interest is ownership of a majority of the voting interest
and, therefore, as a general rule, ownership by one company, directly or indirectly, of over 50% of the
outstanding voting shares of another company is a condition pointing towards consolidation. Consolidation of
majority-owned subsidiaries is required in the preparation of consolidated financial statements, unless control is
temporary and does not rest with the majority owner.
Consolidated financial statements under U.S. GAAP are prepared using uniform accounting policies for all
of the entities in a group except when a subsidiary has specialized industry accounting principles. Retention of
the specialized accounting policy in consolidation is permitted in such cases. Similar to Indonesian GAAP, the
consolidation of subsidiary accounts can be drawn up at a different reporting date similar to Indonesian GAAP
but adjustments are generally not made for transactions that occur in the gap period. Minority interests are
presented within equity.
Capitalization of Interest Cost
Under Indonesian GAAP, interest on borrowings directly attributable to the acquisition, construction or
production of qualifying assets is capitalized during the period of time that is required to complete and prepare
each asset for its intended use. Qualifying assets are assets that necessarily take a substantial period of time to get
ready for their intended use or sale.
U.S. GAAP ASC 835 Interest (formerly addressed under SFAS No. 34 Capitalization of Interest Cost)
requires capitalization of borrowing costs on qualifying assets. To qualify, assets must require a period of time to
get them ready for their intended use. Examples are assets that an enterprise constructs for its own use (such as
facilities) and assets intended for sale or lease that are constructed as discrete projects (such as ships or real estate
projects). However, interest cannot be capitalized for inventories that are routinely manufactured or otherwise
produced in large quantities on a repetitive basis. Investments accounted for using the equity method meet the
criteria for a qualifying asset while the investee has activities in progress necessary to commence its planned
principal operations, provided that the investees activities include the use of funds to acquire qualifying assets
for its operations.
The interest cost eligible for capitalization shall be the interest cost recognized on borrowings and other
obligations. The amount capitalized is to be an allocation of the interest cost incurred during the period required
to complete the asset. The interest rate for capitalization purposes is to be based on the rates on the enterprises
outstanding borrowings. If the enterprise associates a specific new borrowing with the asset, it may apply the rate
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on that borrowing to the appropriate portion of the expenditures for the asset. A weighted average of the rates on
other borrowings is to be applied to expenditures not covered by specific new borrowings. Judgment is required
in identifying the borrowings on which the average rate is based.
Accounting for Start-up (Pre-operating) Costs
Under Indonesian GAAP, start-up costs are deferred as part of exploration costs. Under U.S. GAAP, start-up
costs are expensed as incurred.
Accounting for Guarantees
Under Indonesian GAAP, recognizing a guarantee as a liability is prohibited unless the companys
economic outflow related to the guarantee is probable. In addition, the guarantor is only required to disclose the
nature and amount of guarantees.
Under U.S. GAAP, ASC 460 Guarantees (formerly addressed under FIN 45 Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of the Indebtedness of Others) requires
the recognition of a liability or asset at fair value determined based on the probability weighted cash flows for
certain types of third party guarantees. In addition, the guarantor is required to disclose (i) the nature of the
guarantee including the approximate term of the guarantee, how the guarantee arose and the events or
circumstances that would require the guarantor to perform under the guarantee; (ii) the maximum potential
amount of future payments under the guarantee; (iii) the carrying amount of the liability, if any, for the
guarantors obligation under the guarantee; and (iv) the nature and extent of any recourse provision or available
collateral that would enable the guarantor to recover the amounts paid under the guarantee and any assets held
either as collateral or by third parties that, upon the occurrence of any triggering event or condition under the
guarantee, the guarantor can obtain and liquidate to recover all or a portion of the amounts paid under the
guarantee.
Acquisition of Minority Interests
An entity may effectively increase its ownership interest in a subsidiary by (a) buying shares directly from
minority interests, (b) buying a disproportionately large percentage of newly issued shares, or (c) causing a
subsidiary that it controls to purchase its (the subsidiarys) shares from minority interests. There is no specific
guidance under Indonesian GAAP for transactions with minority interests resulting in changes in stake where an
investee is a subsidiary both before and after the transaction. Thus, an entity should make an accounting policy
choice whether (i) to treat the acquisition of minority interests as giving rise to an additional economic interest
held by the group, or by the parent companys equity shareholders, in which such purchase will generally result
in additional goodwill, or (ii) to treat the purchase of a minority interest as a transaction with a shareholder and as
such, any excess over the groups share of net assets is recorded in equity. Such accounting policy should be
applied consistently.
Under US GAAP, the economic substance of the alternatives of transactions with minority interests is
identical from an investor point of view, i.e. a purchase of additional shares at a cost more or less than an
investees book value, and thus the transactions should be accounted for consistently. Purchases (including
incremental purchases) are recorded at cost and the difference between investor cost and underlying equity in net
assets of the investee at the date of investment must be analyzed and assigned first to identifiable tangible and
intangible assets, such as marketable securities, natural resources, land and patents, and to liabilities based on
their fair values and the investors percentage ownership at the date of investment; any unassigned difference
should be designated goodwill.
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Business Combinations
Under Indonesian GAAP, a business combination which is an acquisition should be accounted for using the
purchase method of accounting, or, when meeting certain criteria, a business combination which is a uniting of
interests should be accounted for by use of the pooling of interests method. Acquisitions are accounted for using
the purchase method in accordance with the requirements of PSAK No. 22, Business Combinations. On
acquisition, the assets and liabilities of a subsidiary are measured at their fair value at the date of acquisition. Any
excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recognized as
goodwill and amortized using the straight-line basis over twenty (20) years. Acquisitions of subsidiaries that
represent a restructuring transaction of entities under common control are accounted for in accordance with
PSAK No. 38 (Revised 2004), Accounting for Restructuring Transactions of Entities Under Common Control.
Based on this standard, acquisition of a subsidiary is accounted for based on the pooling of interest, wherein
assets and liabilities of a subsidiary are recorded at their book values. The difference between the transfer price
and the companys interest in the subsidiarys book values, if any, is recorded as Difference in Value from
Restructuring Transactions of Entities under Common Control and presented as a separate component in the
companys shareholders equity.
Under U.S. GAAP, ASC 805 Business Combinations and Reorganizations (formerly addressed under
SFAS No. 141(R) Business Combinations) all business combinations where the acquired entity meets the
definition of a business are accounted for using the purchase method. The use of pooling (uniting) of interest
method is prohibited if the transaction meets the definition of a business combination and the combination is
within the scope of the relevant standards. Specific rules exist for accounting for combinations of entities under
common control. Such transactions are generally recorded at predecessor value, reflecting the transferors
carrying amount of the assets and liabilities transferred. The use of predecessor value or fair value depends on a
number of individual criteria.
Deferred Stripping Costs
Under Indonesian GAAP, the initial stripping costs incurred before the production period are capitalized as
part of deferred development expenditure. Ongoing stripping costs incurred during the production period are
normally expensed as production costs based on an average strip ratio. The average strip ratio is the ratio of the
estimated rock or land cover layer to the estimated amount of mineral content stated in unit quantity. In situations
where the actual strip ratio (which is the ratio between the quantity of land or rock which has been stripped for a
certain period and the quantity of reserves produced for the same period) is not significantly different from the
average ratio, the whole stripping costs incurred during the period can be expensed as production costs. When the
actual ratio is higher than the average ratio, the excess stripping costs are deferred and recorded as deferred
stripping costs. The deferred costs are expensed as production costs in periods where the actual ratio is
significantly lower than the average ratio. If there is a change in the average strip ratio, this change is considered
as a change in estimate. Berau Coals stripping cost on top soil is divided into (i) initial stripping of the top soil to
open up the mining area before production commences and (ii) additional stripping that is performed during the
production activity. The initial stripping costs are part of deferred development costs, while the additional
stripping costs are charged to production costs as long as the stripping ratio is close to or less than the average
estimated stripping ratio. However, when the actual ratio is significantly higher than the estimated average ratio,
the excess stripping costs are to be deferred and recorded as deferred stripping costs. These deferred stripping
costs are expensed as production costs in periods where the actual ratio is significantly lower than the estimated
average ratio.
Under U.S. GAAP, stripping costs incurred during the production phase of a mine are variable production
costs and should be included in the costs of the inventory produced (that is, extracted) during the period that the
stripping costs are incurred. During the development of a mine (before production begins), it is generally
accepted in practice that stripping costs are capitalized as part of the depreciable cost of building, developing,
and constructing the mine. Those capitalized costs are typically amortized over the productive life of the mine
using the units of production method.
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Recent U.S. GAAP Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007) Business Combinations (SFAS
141R), as codified in the ASC Topic 805 Business Combinations (ASC 805). The objective of ASC 805 is
to improve the relevance, representational faithfulness and comparability of the information that a reporting
entity provides in its financial reports about a business combination and its effects. To accomplish this, ASC 805
establishes principles and requirements for how the acquirer (a) recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the
acquiree, (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain
price, and (c) determines what information to disclose to enable users of the financial statements to evaluate the
nature and financial effects of the business combination. SFAS 141R, now codified in ASC 805, is effective for
fiscal years beginning on or after December 15, 2008.
In December 2007, the FASB issued SFAS No. 160 Noncontrolling Interests in Consolidated Financial
Statements an amendment of ARB No. 51 (SFAS 160), as codified in FASB ASC Subtopic 810-10,
Consolidation (ASC 810-10). ASC 810-10 requires that non-controlling (or minority) interests in
subsidiaries be reported in the equity section of the companys balance sheet, rather than in a mezzanine section
of the balance sheet between liabilities and equity. Additionally, ASC 810- 10 revises the manner in which the
net income of the subsidiary is reported and disclosed in the controlling companys income statement and also
establishes guidelines for accounting or changes in ownership percentages and for deconsolidation. ASC 810- 10
is effective for financial statements for fiscal years beginning on or after December 15, 2008 and interim periods
within those years.
In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of
Financial Instruments Which is codified as FASB ASC Topic 825, Financial Instruments (ASC 825). The
ASC 825 amends SFAS No. 107, Disclosures About Fair Value of Financial Instruments, now codified in
ASC 825, to require disclosures about fair value of financial instruments for interim reporting periods of publicly
traded companies as well as in annual financial statements. This issuance also amends APB Opinion No. 28,
Interim Financial Reporting now codified in FASB Topic 270 Interim Reporting (ASC 270), to require
those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB
28-1, now codified in ASC 825 were effective for interim reporting periods ending after June 15, 2009, with
early adoption permitted for periods ending after March 15, 2009. The issuance does not require disclosures for
earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, it requires
comparative disclosures only for periods ending after initial adoption.
In April 2009, the FASB issued FSP FAS No. 115-2 and FAS No. 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments (FSP FAS No. 115-2 and FAS 124-2), which are codified in ASC 320
FSP FAS No. 115-2 provides additional guidance designed to create greater clarity and consistency in accounting
for and presenting impairment losses on securities. This FSP is effective for interim periods ending after June 15,
2009, but early adoption is permitted for interim periods ending after March 15, 2009.
In April 2009, the FASB released FSP FAS No. 157-4, Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are
Not Orderly (FSP FAS No. 157-4), now codified in ASC 820. This issuance provides additional guidance for
estimating fair value in accordance with ASC 820, when the volume and level of activity for the asset or liability
have significantly decreased with providing guidance on identifying circumstances that indicate a transaction is
not orderly. FSP FAS No. 157-4, now codified in ASC 820 was effective for interim periods ending after
June 15, 2009.
In May 2009, the FASB issued SFAS No. 165, Subsequent Events (SFAS 165), as codified in FASB
ASC 855, Subsequent Events (ASC 855). ASC 855 established standards of accounting for and disclosures
of subsequent events which occur after the balance sheet date but before the financial statements are issued or are
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available to be issued. ASC 855 requires the disclosure of the date through which the subsequent events have
been evaluated as well as whether that date is the date the financial statements were issued or the date the
financial statements were available to be issued.
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS
167) as codified in FASB ASC 810 Consolidation (ASC 810), which amends the consolidation guidance
applicable to variable interest entities. The amendments will significantly affect the overall consolidation
analysis under FASB Interpretation No. 46(R). This statement is effective as of the beginning of the first fiscal
year that begins after November 15, 2009.
In June 2009, the FASB issued SFAS No. 168, The Hierarchy of Generally Accepted Accounting
Principles (SFAS 168), as codified in FASB ASC 105, Generally Accepted Accounting Principles (ASC
105). ASC 105 established the FASB Accounting Standards Codification (the Codification) as the source for
authoritative U.S. GAAP. The Codification will supersede all existing non-SEC accounting and reporting
standards under U.S. GAAP for nongovernmental entities. ASC 105 was effective for interim and annual periods
ending after September 15, 2009. The Codification is not intended to nor does it change existing U.S. GAAP.
In January 2010, the ASC guidance for fair value measurements and disclosure was updated to require
additional disclosures. The updated guidance requires additional disclosures around level 1 and 2 fair value
measurements, disaggregation of fair value assets and liabilities, clarifying guidance regarding input and
valuation techniques, and enhanced detail in the level 3 roll-forward disclosure.
Recent Indonesian GAAP Accounting Pronouncements
See Managements Discussion and Analysis of Financial Condition and Results of OperationsNew
Accounting Pronouncements for a summary of revisions to several accounting standards that may affect our
consolidated financial statements.
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GLOSSARY
The following explanations are not intended as technical definitions, but have been provided to assist the
reader to understand certain terms as used in this offering circular. We have also included abbreviations and
acronyms of certain units of measurement used in this offering circular.
Technical Terms:
ash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impurities consisting of iron, alumina and other incombustible matter
that are contained in coal. Since ash increases the weight of coal, it
adds to the cost of handling and can affect the burning characteristics
of coal.
barge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A long and large, usually flat-bottomed, boat of between 180 to 300

feet that is towed by a tugboat.
beneficiation . . . . . . . . . . . . . . . . . . . . . . . . .
A variety of processes whereby extracted ore is reduced to particles

that can be separated into mineral and waste.
blasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The process of causing an explosion in the overburden and/or coal of

a mine in order to enable the heavy equipment to operate more
efficiently.
blending. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The process of coal mixing to obtain the desired coal quality.
calorific value. . . . . . . . . . . . . . . . . . . . . . . .
A coal samples energy content measured as the heat released on

complete combustion in air or oxygen, usually expressed as the
amount of heat (measured in kilo calories) per unit weight of coal
(measured in kilograms) or (kcal/kg).
capesize vessels . . . . . . . . . . . . . . . . . . . . . .
Cargo ships that are too large to traverse the Panama Canal (i.e.,
larger than both panamax and suezmax vessels). Capesize vessels are
typically above 150,000 dwt.
CIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost, insurance and freight. Transportation and insurance are paid for
by the seller and prices are quoted inclusive of such costs.
coal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A readily combustible black or brownish-black rock with a

composition, including inherent moisture, which consists of more
than 50.0% by weight and more than 70.0% by volume of
carbonaceous material. It is formed from plant remains that have been
compacted, hardened, chemically altered and metamorphosed by heat
and pressure over time.
coal contract of work . . . . . . . . . . . . . . . . .
Berau Coals coal contract of work No. J2/J1.DU/12/83.
coal seam or seam . . . . . . . . . . . . . . . . . . . .
Coal deposits occur in layers in a bed of coal lying between a roof

and floor with each layer called a coal seam or seam.
crushing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The process by which ore is broken into small pieces by stamps,

crushers or rolls to prepare it for further processing.
exploration . . . . . . . . . . . . . . . . . . . . . . . . . .
Prospecting, sampling, mapping, drilling and other work involved in

searching for ore.
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FOB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Free on Board, which means that the seller fulfils his obligation to
deliver when the goods have passed over the ships rail at the named
port of shipment. This means that the buyer has to bear all costs and
risks of loss or damage to the goods from that point.
indicated resources . . . . . . . . . . . . . . . . . . .
Refers to that part of the coal deposit for which quality and quantity
can be estimated with a reasonable level of confidence (as defined in
the 2004 JORC Code). Indicated resources have a lower level of
geological confidence than measured resources.
JORC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Joint Ore Reserves Committee.
2004 JORC Code. . . . . . . . . . . . . . . . . . . . .
The Australasian Code for Reporting of Exploration Results, Mineral

Resources and Ore Reserves (2004 edition) prepared by the JORC,
which sets out the minimum standards, recommendations and
guidelines for public reporting of exploration results, mineral
resources and ore reserves in Australasia.
marketable reserves. . . . . . . . . . . . . . . . . . .
An estimate of the quantity of coal that could be profitably sold under

expected market conditions.
measured resources . . . . . . . . . . . . . . . . . . .
Refers to that part of the coal deposit for which quality and quantity
can be estimated with a high level of confidence (as defined in the
2004 JORC Code).
open-cut mining . . . . . . . . . . . . . . . . . . . . . .
A form of mining designed to extract coal from seams that lie near the
surface. Overburden is removed to expose the coal seam for mining.
Rock covering the minerals is blasted and removed by large draglines,
bucket wheel excavators or excavators and trucks.
overburden . . . . . . . . . . . . . . . . . . . . . . . . . .
Any material, consolidated or unconsolidated, such as layers of earth

and rock, that overlies a coal seam or lies between a number of coal
seams (typically called interburden). In surface mining operations,
overburden is removed prior to coal extraction and replaced after coal
is taken from the seam.
probable reserves . . . . . . . . . . . . . . . . . . . . .
The economically mineable part of an indicated, and in some

circumstances, a measured resource. It includes diluting materials and
allowances for losses which may occur when the material is mined.
Appropriate assessments and studies have been carried out, and
include consideration of and modification by realistically assumed
mining, metallurgical, economic, marketing, legal, environmental,
social and governmental factors. These assessments demonstrate at
the time of reporting that extraction could reasonably be justified (as
defined in the 2004 JORC Code).
proved reserves . . . . . . . . . . . . . . . . . . . . . .
The economically mineable part of a measured resource. It includes

diluting materials and allowances for losses which may occur when
the material is mined. Appropriate assessments and studies have been
carried out, and include consideration of and modification by
realistically assumed mining, metallurgical, economic, marketing,
legal, environmental, social and governmental factors. These
assessments demonstrate at the time of reporting that extraction could
reasonably be justified (as defined in the 2004 JORC Code).
259
reclamation . . . . . . . . . . . . . . . . . . . . . . . . . .
The restoration of land and environmental values to a surface mine

site after the coal is extracted. Reclamation operations are usually
underway as soon as the coal has been removed from a mine site. The
process commonly includes recontouring or reshaping the land to
its approximate original appearance. Reclamation operations are
usually underway before the mining of a particular site is completed.
Reclamation is regulated by applicable local law.
rehabilitation. . . . . . . . . . . . . . . . . . . . . . . . .
The process of restoring topsoil and planting vegetation which

commonly includes planting native grass and ground covers.
reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal, about which size, form, distribution, quantity and quality are
known, and which is mineable considering the economic, technical,
legal and environmental aspects at the time of measurement.
run of mine . . . . . . . . . . . . . . . . . . . . . . . . . .
Usually the typical quality of coal that is extracted prior to any act of
beneficiation such as washing, crushing or screening. The term is
used loosely and can be applied on a pit-by-pit basis and is typically
also used to refer to the processing and raw stockpile areas.
strip ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The number of cubic meters of overburden needing removal to access

one ton of coal. A strip ratio of 4:1 means that four cubic meters of
overburden must be stripped to produce one ton of run of mine coal.
sulfur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One of the elements present, in varying quantities, in coal that

contributes to environmental degradation when coal is burned. Sulfur
dioxide is produced as a gaseous by-product of coal combustion.
sulfur content . . . . . . . . . . . . . . . . . . . . . . . .
Coal is commonly described by its sulfur content due to the

importance of sulfur to customers concerned about compliance with
environmental regulations. Low sulfur coal has a variety of
definitions, but typically is used to describe coal consisting of 1.0% or
less sulfur.
thermal coal . . . . . . . . . . . . . . . . . . . . . . . . .
Coal which is combusted to provide heat for steam generation in

thermal plants to generate power.
underground mine . . . . . . . . . . . . . . . . . . . . Also known as a deep mine. Usually located several hundred feet
below the earths surface, an underground mines coal is removed
mechanically and transferred by shuttle car or conveyor to the
surface.
volatile matter . . . . . . . . . . . . . . . . . . . . . . .
The gaseous part, mostly hydrocarbons, of coal.
washing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The removal or reduction of impurities from coal.
Units of Measurement:
Dwt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dead weight ton.
GW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gigawatt, a rate of energy conversion. One gigawatt is equal to one

billion watts.
260
Hectare . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A metric unit of square measurement of surface or land equal to

10,000 square meters, or approximately 2,471 acres.
kcal/kg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kilocalorie per kilogram, a measurement of energy per unit mass.
Ton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A metric ton or ton which is equivalent to 1,000 kilograms, or 2,204.6

pounds. The metric ton, and not the net ton or British ton, is the unit
of weight measure referred to in this offering circular.
261
INDEX TO FINANCIAL STATEMENTS

Page

Independent Accountants Report for the three months ended March 31, 2010 and 2009 . . . . . . . . . . . . . . .
Unaudited consolidated balance sheets as of March 31, 2010 and 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unaudited consolidated statements of income for the three months ended March 31, 2010 and 2009 . . . . .
Unaudited consolidated statements of changes in equity for the three months ended March 31, 2010 and
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unaudited consolidated statements of cash flows for the three months ended March 31, 2010 and
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to the unaudited consolidated financial statements for the three months ended March 31, 2010 and
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Auditors Report for the years ended December 31, 2009, 2008 and 2007. . . . . . . . . . . . . . . . .
Consolidated balance sheets as of December 31, 2009, 2008 and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated statements of income for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . . . . .
Consolidated statements of changes in equity for the years ended December 31, 2009, 2008 and 2007 . . .
Consolidated statements of cash flows for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . .
Notes to the consolidated financial statements for the years ended December 31, 2009, 2008 and 2007. . .
PT Berau Coal
Independent Accountants Report for the three months ended March 31, 2010 and 2009 . . . . . . . . . . . . . . .
Unaudited consolidated balance sheets as of March 31, 2010 and 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unaudited consolidated statements of income for the three months ended March 31, 2010 and 2009 . . . . .
Unaudited consolidated statements of changes in equity for the three months ended March 31, 2010 and
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unaudited consolidated statements of cash flows for the three months ended March 31, 2010 and
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to the unaudited consolidated financial statements for the three months ended March 31, 2010 and
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Auditors Report for the years ended December 31, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . .
Independent Auditors Report for the year ended December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated balance sheets as of December 31, 2009, 2008 and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated statements of income for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . . . . .
Consolidated statements of changes in equity for the years ended December 31, 2009, 2008 and 2007 . . .
Consolidated statements of cash flows for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . .
Notes to the consolidated financial statements for the years ended December 31, 2009, 2008 and 2007. . .
F-1
F-2
F-3
F-5
F-6
F-7
F-8
F-70
F-71
F-73
F-74
F-75
F-76
F-134
F-135
F-137
F-138
F-139
F-140
F-185
F-187
F-189
F-191
F-192
F-193
F-194
INDEPENDENT ACCOUNTANTS REPORT

Report No. P020/2010
The Shareholders, Boards of Commissioners and Directors
PT Berau Coal Energy
(Formerly PT Risco)
We have reviewed the accompanying consolidated balance sheets of PT Berau Coal Energy, formerly PT
Risco, (the Company) and Subsidiaries as of March 31, 2010 and 2009, and the related consolidated statements
of income, changes in equity and cash flows for the three-month periods then ended. These consolidated financial
statements are the responsibility of the Companys management.
We conducted our reviews in accordance with the standards established by the Indonesian Institute of
Certified Public Accountants. A review of financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the
consolidated financial statements for the three-month periods ended March 31, 2010 and 2009 referred to above
in order for them to be in conformity with generally accepted accounting principles in Indonesia.
Previously, we have issued independent accountants report No. P015/2010 dated May 14, 2010, upon the
consolidated financial statements of PT Berau Coal Energy and Subsidiary as of March 31, 2010 and for the
three-month period then ended. As disclosed in Note 43 to the consolidated financial statements, the Company
reissued the consolidated financial statements in connection with the plan of issuance of Guaranteed Senior
Secured Notes and to meet the requirements of issuance of said Notes.
June 22, 2010
Tjiendradjaja Yamin
Public Accountant License No. 09.1.1026
NOTICE TO READERS
The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash
flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Indonesia. The
standards procedures and practices utilized to review such consolidated Financial statements may differ from those generally accepted in
countries and jurisdictions other than Indonesia. Accordingly, the accompanying consolidated financial statements and the accountants report
thereon are not intended for use by those who are not informed about Indonesian accounting principles and auditing standards and their
application in practice.
F-2
PT BERAU COAL ENERGY (Formerly PT Risco) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2010 AND 2009 (UNAUDITED)
(Expressed in Millions of Rupiah, unless otherwise stated)
Notes
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivablesthird parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables
Related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third partiesnet of allowance for doubtful accounts of Rp1,258 in
2010 and Rp2,377 in 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2d,4
2e,5
2f,6
2g,7
2g,2h,8,34
2g,8
2i,9
10
2j,11
2010
2009
1,960,821 1,452,914
683,669
230,377
683,625
3,913
740,381 1,057,997
23,490
102,127
342,365
129,971
91,608
93,436
342,814
30,807
100,929
4,734,567
3,336,677
17,062
3,302,554
38,600
2c,2o,13
2p,14
6,903,273
158,856
334,170
363,415
2l,2n,15
365,238
368,713
2c,16
17
163,926
9,858
63,808
13,142
Total Non-Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,618,213
4,484,402
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,352,780
7,821,079
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NON-CURRENT ASSETS
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in associated company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred exploration and development costsnet of accumulated
amortization of Rp348,574 in 2010 and Rp285,923 in 2009 . . . . . . . . . . .
Deferred stripping costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assetsnet of accumulated depreciation of Rp546,794 in 2010 and
Rp644,625 in 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwillnet of accumulated amortization of Rp579,010 in 2010 and
Rp182,821 in 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2h,34b
2k,12
See the independent accountants report and accompanying notes to consolidated financial statements.
F-3

MARCH 31, 2010 AND 2009 (UNAUDITED)(Continued)
Notes
LIABILITIES AND EQUITY

CURRENT LIABILITIES
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables
Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current maturities of long-term debts:
Senior Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . .
2009
2q,18
2,661,555
2h,19,34
19
20
2t,24a
1,950
982,977
550,754
1,368,963
111,900
732,435
738,513
963,718
24,369
264,178
167
29,536
5,590,568
2,840,447
2q,21
2n,22
2r,23
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NON-CURRENT LIABILITIES
Due to related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilitiesnet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debtsnet of current maturities Senior Notes . . . . . . . . . . . . . . . . .
2010
2h,34a
2t,24d
2u,33
2q,21
2,734,500
103,503
119,137
25,525
19,737
3,067,736
Total Non-Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,863,528
3,206,610
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,454,096
6,047,057
344,217
1,241,601
3,150,000
1,250
MINORITY INTEREST IN NET ASSETS OF CONSOLIDATED

SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EQUITY
Capital stockRp100 (full amount) par value per share in 2010 and
Rp1,000,000 (full amount) par value per share in 2009 Authorized
90,000,000,000 shares in 2010 and 5,000 shares in 2009 Issued and fully
paid31,500,000,000 shares in 2010 and 1,250 shares in 2009 . . . . . . . . .
Difference in value from restructuring transactions of entities under
common control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences due to financial statements translations . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2b,25
26
2c
2v
26
(56,495)
460,962
7,996
217,176
305,999
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,554,467
532,421
TOTAL LIABILITIES AND EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,352,780
7,821,079
F-4

CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)
Notes
SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF GOODS SOLD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2h,2s,28,34c
2s,29
GROSS PROFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
2,041,827 1,721,093
1,473,166 1,036,921
568,661
684,172
125,359
29,040
39,467
22,182
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
154,399
61,649
OPERATING INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
414,262
622,523
236,141
5,122
(100,928)
(34,152)
(30,736)
(160)
(78,582)
71,789
(81,636)
(6,330)
(12,332)
383
75,287
(106,708)
489,549
(239,878)
515,815
(261,610)
249,671
254,205
(30,068)
(159,403)
219,603
94,802
6.97
3.02
OPERATING EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER INCOME (CHARGES)

Foreign exchange gain (loss)net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing charges. . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Othersnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2s,30
2v
2h,34b
2h,31,34a
2q
2c,16
Other Income (Charges)Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INCOME BEFORE
INCOME TAX EXPENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME TAX EXPENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME BEFORE MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED
SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2t,24b
2b,25
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BASIC EARNINGS PER SHARE (FULL AMOUNT) . . . . . . . . . . . . . .
2w,32
F-5
F-6
3,150,000
2,367,087
(2,367,087)
Additional
Paid-In
Capital
7,996
7,996
(56,495)
114,262
(170,757)
217,176
157,112
60,064
Translation
Adjustments
Balance as of March 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,500
3,142,500
26
2v
Balance as of December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capitalization of retained earnings and additional paid-in capital. . .
Exchange differences due to financial statements translations . . . . .
Net income for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,250
1,250
2v
Balance as of March 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exchange differences due to financial statements translations . . . . .
Net income for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes
Capital
Stock
Difference in
Value from
Restructuring
Transactions of
Entities under
Common
Control
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

532,421
377,555
60,064
94,802
Total Equity
460,962
3,554,467
1,016,772 3,505,621
(775,413)
(170,757)
219,603
219,603
305,999
211,197
94,802
Retained
Earnings

CONSOLIDATED STATEMENTS OF CASH FLOWS
2010
CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment to suppliers and operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment to Government for coal sharing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for employee salaries, wages and allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
2,173,640 1,597,250
(1,214,379) (961,495)
(224,351) (124,334)
(83,001)
(46,577)
(2,781)
(3,662)
Cash receipts from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous collectionsnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
649,128
(100,402)
(51,925)
5,122
461,182
(20,332)
(15,449)
4,688
Net Cash Flows Provided by Operating Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
501,923
430,089
CASH FLOWS FROM INVESTING ACTIVITIES

Withdrawals of restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductions (additions) in other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exploration and development costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
373,705
377
(683,625)
(17,720)
(15,682)
102,546
(468)
(128)
(13,673)
(9,435)
Net Cash Flows Provided by (Used in) Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . .
(342,945)
78,842
CASH FLOWS FROM FINANCING ACTIVITIES

Additions of due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of long-term debts:
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Flows Used in Financing Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,065)
(7,260)
(74,938)
(248)
(2,065)
(82,446)
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . .

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD. . . . . . . .
156,913
1,803,908
426,485
1,026,429
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD . . . . . . . . . . . . . . . .
1,960,821
1,452,914
Supplementary Cash Flows Information:

Activity not affecting cash flows
Capitalization of retained earnings and additional paid-in capital to capital stock . . . . . .
Capitalization of unpaid interest to due from related parties . . . . . . . . . . . . . . . . . . . . . . . . .
3,142,500
66,973
F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
a. Establishment and General Information
PT Berau Coal Energy (the Company), formerly PT Risco, was established in the Republic of Indonesia
based on Notarial Deed No. 2 of Rony Saputra S, S.H., dated September 7, 2005. The Deed of Establishment was
approved by the Ministry of Law and Human Rights in its decision letter No. C-31138.HT.01.01.TH.2005 dated
November 23, 2005 and published in the State Gazette of the Republic of Indonesia No. 2 dated September 7, 2005.
The Companys articles of association have been amended several times, the most recent being based on Notarial
Deed No. 247 dated March 20, 2010, of Sutjipto, S.H., regarding the change of the Companys name from PT Risco
to PT Berau Coal Energy, increase in authorized capital stock, issuance of new shares and changes in directors and
commissioners of the Company. These amendments were approved by the Ministry of Law and Human Rights of
the Republic of Indonesia on April 28, 2010 under Decree No. AHU-AH.01.10-10172.
In accordance with Article 3 of the Companys articles of association, the scope of activities of the
Company comprises of trading, mining, plantation, construction, real estate, agriculture, printing, industry,
transportation and services. Currently, the Company is engaged as a holding company of its Subsidiaries.
The Companys office is located at Wisma GKBI, 38th Floor, Jl. Jend. Sudirman Kav. 28, Jakarta 10210,
Indonesia.
b. Boards of Commissioners and Directors and Employees
The composition of the Companys Boards of Commissioners and Directors as of March 31, 2010 and 2009
were as follows:
2010
Commissioner
Commissioner
Commissioner
Commissioner
Commissioner
Sofyan Abdul Djalil

Rosan Perkasa
Thomas Warren Shreve
Sandiaga Salahuddin Uno
Erry Firmansyah
Andi Achmad Dara
Board of Directors
President Director
Director
Director
Raden Curt Eko Santoso Budianto

John Joseph Ramos
Ferial Martifauzi
2009
Commissioner
Director
Rizal Risjad
Handy Purnomo Soetedjo
The Company did not provide remuneration to its commissioners and directors for the three-month periods
ended March 31, 2010 and 2009.
As of March 31, 2010 and 2009, the Company and Subsidiaries had 661 and 589 employees, respectively
(unaudited).
F-8

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)(Continued)
c. The Structure of the Company and Subsidiaries
As of March 31, 2010 and 2009, the Company had direct and indirect ownership in Subsidiaries as follows:
Subsidiaries
Direct ownership:
(Armadian) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domicile
Principal
Activity
2010
Percentage of
Ownership
(%)
Start of
Commercial
Operations
Total Assets
Before
Elimination
Indonesia
Special purpose
company
99.99
1999
9,192,214
Republic of
Seychelles
Special purpose
company
100.00
2009
3,550,067
Indirect ownership:
Through Armadian and Rognar
PT Berau Coal (Berau) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia
Coal mining
90.00
1995
9,153,602
Through Berau
Empire Capital Resources
Pte. Ltd. (EC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore
Special purpose
company
90.00
2006
2,736,350
Through Winchester
(Aries) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malta
Special purpose
company
100.00
2006
1,315,961
Through Aries and Armadian

Rognar Holdings B.V.
(Rognar) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netherlands
Special purpose
company
100.00
2004
1,342,450
Percentage of
Ownership
(%)
Start of
Commercial
Operations
Total Assets
Before
Elimination
Winchester Investment Holdings

PLC. (Winchester) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
Subsidiaries
Domicile
Principal
Activity
Direct ownership:
(Armadian) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia
Special purpose
company
99.99
1999
8,633,434
Indirect ownership:
PT Berau Coal (Berau) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia
Coal mining
56.00
1995
8,580,830
Through Berau
Pte. Ltd. (EC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore
Special purpose
company
56.00
2006
3,475,425
PT Berau Coal
Berau is involved in coal mining and has been operational since 1995.
The Company had 90% indirect ownership in PT Berau Coal (Berau), a Subsidiary, which was established
under the framework of the Foreign Capital Investment Law No. 1 of 1967, as amended by Law No. 11, Year
1972. The scope of activities of Berau comprises of exploration, development, mining, marketing, trading, and
transporting of coal in Kalimantan.
F-9

Beraus activities are governed by the provisions of the Coal Contract of Work (CCoW) entered into by
Berau and Perusahaan Negara Tambang Batubara on April 26, 1983, which was subsequently transferred to PT
Tambang Batubara Bukit Asam (PTBA) in 1991. Based on Presidential Decree No. 75/1996 dated
September 25, 1996 and the amendment to the CCoW No. 02/1-DD/50/96 between PTBA and Berau dated
June 28, 1997, all rights and obligations of PTBA under the CCoW were transferred to the Government of the
Republic of Indonesia, represented by the Minister of Mines and Energy, effective July 1, 1997.
Under the terms of the CCoW, Berau acts as the contractor of the Government and is responsible for coal
mining operations in areas totaling approximately 487,217 hectares located in East Kalimantan. Since April 7,
2005, the concession area has been 118,400 hectares.
Berau started commercial operations on April 27, 1995 and its concession right is valid for 30 years.
The Company had 90% indirect ownership in Empire Capital Resources Pte. Ltd. (EC), a Subsidiary, which
was established by Berau on November 2, 2006, with the main purpose of issuing the Senior Notes (Note 21) and
on-lending the gross proceeds of the Senior Notes to Berau pursuant to an Inter-company Loan Agreement. EC
was incorporated as a limited liability company under the laws of Singapore. On December 28, 2009, EC
obtained a new loan from Credit Suisse AG, the proceeds of which were used for the payment of the Senior
Notes.
d. Exploration and Exploitation / Development Areas
Berau has exploration and exploitation/development areas as follows:
Exploration Areas
Location
Lati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Date of
Concession
End Date
April 30, 1983 April 26, 2025

April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
F-10
Percentage
of
Ownership
100%
100%
100%
100%
100%
100%
100%
Total Exploration
Costs
Recognized as of
Balance Sheet
Date
323,684
95,763
52,322
36,667
25,368
4,095
1,287

Exploitation / Development Areas
Location
Lati . . . . . . . . . . . .
Binungan . . . . . . .
Sambarata . . . . . .
Concession
Date of
End Date
April 30, 1983

April 30, 1983
April 30, 1983
April 26, 2025

April 26, 2025
April 26, 2025
Percentage
of
Ownership
Proven
Reserve (P1)*
(in million
tonnes)
100%
100%
100%
97.2
63.9
26.0
Total Production
(in million tonnes)
Accumulated
Current
Total
Year
Production
2.2
1.0
0.5
59.8
38.6
9.1
Balance of
Proven
Reserve (in
million
tonnes)
37.4
25.3
16.9
*) Total Proven Reserves (P1) are based on the survey result of by Minarco-MineConsult as of December 31,
2008.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in accordance with generally
accepted accounting principles in Indonesia (Indonesian GAAP) established by the Indonesian Institute of
Accountants and Financial Statements Presentation Guidelines issued by Bapepam-LK No. VIII. G.7 of Financial
Statements Presentation Guidelines and Circular Letter No. SE-02/BL/2008 Bapepam and LK dated January 31,
2008 of Presentation and Disclosure Guidelines for Financial Statements Issuer or Public Company General
Mining Industry. Significant accounting policies that have been consistently applied by the Company and
Subsidiaries are as follows:
a. Basis of Preparation of Consolidated Financial Statements
The consolidated financial statements, except for the consolidated statements of cash flows, are prepared
under the accrual basis of accounting, with the measurement basis being historical cost, except for certain
accounts that are measured on the basis described in the related accounting policies.
The reporting currency used in the preparation of the consolidated financial statements is Indonesian Rupiah
(Rp), which is the functional currency of the Company.
The consolidated statements of cash flows are prepared using the direct method, cash flows being classified
into operating, investing and financing activities.
b. Principles of Consolidation
The consolidated financial statements include all Subsidiaries that are controlled by the Company. Control
is presumed to exist when the Company owns, directly or indirectly (through Subsidiaries), more than 50% of the
voting rights of the Subsidiaries. Even when the Company owns 50% or less of the voting rights, control exists
when one of the following conditions is met:
a) having more than 50% of the voting rights by virtue of agreement with other investors;
b) having the right to govern the financial and operating policies of the Subsidiaries under the articles of
association or an agreement;
F-11

c) ability to appoint or remove the majority of the members of the Subsidiaries management;
d) ability to control the majority of votes at meetings of managements.
The minority shareholders proportionate share in the equity of the consolidated Subsidiaries is presented
under Minority Interest in Net Assets of Consolidated Subsidiaries in the consolidated balance sheets, while
the minority shareholders proportionate share in the net income or loss of consolidated Subsidiaries is presented
under Minority Interest in Net Income or Loss of Consolidated Subsidiaries in the consolidated statements of
income.
All significant inter-company transactions and balances have been eliminated.
c. Business Acquisition
Acquisitions are accounted for using the purchase method in accordance with the requirements of
Statements of Financial Accounting Standards (PSAK) No. 22, Business Combination. On acquisition, the
assets and liabilities of a Subsidiary are measured at their fair values at the date of acquisition. Any excess of the
cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill and
amortized using the straight-line basis over five (5) years.
Acquisitions of Subsidiaries that represent a restructuring transaction of entities under common control are
accounted for in accordance with PSAK No. 38 (Revised 2004), Accounting for Restructuring Transactions of
Entities Under Common Control. Based on this standard, acquisition of a Subsidiary is accounted based on the
pooling of interest method, wherein assets and liabilities of a Subsidiary are recorded at their book values. The
difference between the transfer price and the Companys interest in the Subsidiarys book values, if any, is
recorded as Difference in Value from Restructuring Transactions of Entities Under Common Control and
presented as a separate component in the Companys equity. The balance of Difference in Value from
Restructuring Transactions of Entities Under Common Control can be realized as gain or loss from the time the
common control no longer exists between the entities that entered into the transaction.
Coal resources represent the fair value adjustment of coal resources acquired at the date of acquisition of
Winchester and Aries and are stated at cost and presented as part of Deferred Exploration and Development
Costs on the consolidated balance sheets. Coal resources are amortized using the unit-of-production method
from the date of acquisition based on total estimated proven reserves. Changes in estimated proven reserves are
accounted for on a prospective basis, from the beginning of the period in which the change occurs.
d. Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and in banks and time deposits with maturities within
three months or less and not pledged as collateral nor restricted in use.
e. Restricted Cash
Cash in banks and time deposits that are restricted in use are presented as Restricted Cash. Restricted cash
to be used to pay currently maturing obligations that are due within one (1) year is presented under current assets.
F-12

f. Financial Instruments
Effective January 1, 2010, the Company and Subsidiaries have applied PSAK 50 (Revised 2006), Financial
Instruments: Presentation and Disclosures and PSAK 55 (Revised 2006), Financial Instruments: Recognition
and Measurement, which supersede PSAK 50, Accounting for Certain Investments in Securities and PSAK 55
(Revised 1999), Accounting for Derivative Instruments and Hedging Activities, respectively.
1. Financial Assets
Initial Recognition
Financial assets are recognized initially at fair value, plus transaction costs, except for those financial assets
classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are
classified as financial assets at fair value through profit or loss (FVTPL), held-to-maturity investments (HTM),
loans and receivables or available-for-sale financial assets (AFS). The Company and Subsidiaries determine the
classification of their financial assets at initial recognition and, where allowed and appropriate, re-evaluate the
designation of such assets at each balance sheet date.
Subsequent Measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial Assets at Fair Value Through Profit or Loss (FVTPL)
Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is
designated as at FVTPL at initial recognition. Financial assets are classified as held for trading if they are
acquired for the purpose of selling or repurchasing in the near term. Derivative assets are also classified
as held for trading, unless they are designated as effective hedging instruments. Financial assets at
FVTPL are carried in the consolidated balance sheets at fair value, with gains or losses recognized in the
consolidated statements of income. The net gain or loss recognized in the consolidated statements of
income includes any dividend or interest earned on the financial asset.
Held-to-Maturity (HTM) Investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Company and Subsidiaries have the positive intent and ability to hold to maturity are classified as HTM.
After initial measurement, HTM investments are measured at amortized cost using the effective interest
method, less any impairment. Gains and losses are recognized on the consolidated statements of income
when the investments are derecognized or impaired, as well as through the amortization process.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such financial assets are carried at amortized cost using the effective interest
rate method, less any impairment. Gains and losses are recognized in the consolidated statements of
income when the loans and receivables are derecognized or impaired, as well as through the amortization
process.
Available-for-Sale (AFS) Financial Assets
AFS financial assets are non-derivative financial assets that are designated as available-for-sale or are not
classified in any of the three preceding categories. After initial recognition, AFS financial assets are
measured at fair value with unrealized gains and losses being recognized as a separate component of
F-13

equity until the investment is derecognized or until the investment is determined to be impaired, at which
time the cumulative gain or loss previously reported in equity is included in the statement of income.
These financial assets are classified as non-current assets, unless the intention is to dispose such assets
within twelve months from the balance sheet date.
Derecognition of Financial Assets
The Company and Subsidiaries derecognize a financial asset only when the contractual rights to the cash
flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity. When the Company and Subsidiaries have transferred their rights to
receive cash flows from an asset and have neither transferred nor retained substantially all the risks and rewards
of the asset nor transferred control of the asset, the asset is recognized to the extent of the Company and
Subsidiaries continuing involvement in the asset.
2. Financial Liabilities and Equity Instruments
Initial Recognition
The Company and Subsidiaries determine the classification of their financial liabilities at initial recognition.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
Financial liabilities are classified as financial liabilities at fair value through profit or loss, loans and
borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Financial
liabilities are recognized initially at fair value and, in the case of loans and borrowings, inclusive of directly
attributable transaction costs.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Company and Subsidiaries are recorded at the
proceeds received, net of direct issue costs.
For compound instruments issued by the Company and Subsidiaries, the component parts are classified
separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At
the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for
a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis using the
effective interest method until extinguished upon conversion or at the instruments maturity date. The equity
component is determined by deducting the amount of the liability component from the fair value of the
compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not
subsequently re-measured.
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial Liabilities at Fair Value Through Profit or Loss (FVTPL)
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities
designated upon initial recognition as FVTPL. Financial liabilities are classified as held for trading if they
are acquired for the purpose of selling or repurchasing in the near term. Derivative liabilities are also
F-14

classified as held for trading unless they are designated as effective hedging instruments. Financial
liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognized in the consolidated
statements of income. The net gain or loss recognized in the consolidated statements of income
incorporates any interest paid on the financial liability.
Loans and Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost using the effective interest rate method. Gains and losses are recognized on the consolidated
statements of income when the liabilities are derecognized as well as through the amortization process.
Derecognition of Financial Liabilities
The Company and Subsidiaries derecognize financial liabilities when, and only when, the Company and
Subsidiaries obligations are discharged, cancelled or expired.
3. Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance
sheets if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
4. Amortized Cost of Financial Instruments
Amortized cost is computed using the effective interest method less any allowance for impairment and
principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and
includes transaction costs and fees that are an integral part of the effective interest rate.
g. Receivables
Receivables, which are non-interest bearing and generally have less than a year term, are recognized and
carried at amount billed less an allowance for any uncollectible amounts. Provision is made when there is
objective evidence that the Company and Subsidiaries will not be able to collect the debts.
h. Transactions with Related Parties
The Company and Subsidiaries have transactions with certain parties, which have a related party
relationship, as defined in PSAK No. 7, Related Party Disclosures.
All significant transactions with related parties, whether or not conducted under the same terms and
conditions as those with third parties, are disclosed in the notes to consolidated financial statements.
i. Inventories
Berau applied PSAK No.14 (Revised 2008), Inventories (Revised PSAK 14). Inventories are valued at
the lower of cost or net realizable value. Cost is determined using the average method. Allowance for inventory
obsolescence is provided based on a review of the condition of inventories at the end of the period.
F-15

j. Prepaid Expenses
Prepaid expenses are amortized over the periods benefited using the straight-line method.
k. Investment in Associated Companies
Investments in associated companies with an ownership interest of at least 20% but not exceeding 50% and
with no ability to control, or when the Company or Subsidiaries have significant influence over the associated
companies, are accounted for under the equity method whereby the costs of the investments are increased or
decreased by the Company or Subsidiaries equity in the net income or loss of the associated companies since the
date of acquisition and decreased by cash dividend received. Investment with ownership interest of less than 20%
is carried at cost.
l. Fixed Assets
The Company and Subsidiaries applied PSAK No. 16 (Revised 2007), Fixed Assets (Revised PSAK
16). Based on Revised PSAK 16, an entity shall choose between the cost model and revaluation model as the
accounting policy for its fixed assets measurement. The Company and Subsidiaries have chosen the cost model
as the accounting policy for their fixed assets measurement.
Fixed assets are stated at cost less accumulated depreciation and any impairment in value. Depreciation is
computed using the straight-line method at a rate of 12.5% per year except for buildings and several land
improvements, which are depreciated at a rate of 5% per year.
Land improvement represents cost incurred (i.e. land clearing cost, road development, etc.) in preparing the
land area for mining operations.
The assets useful lives and method of depreciation are reviewed and adjusted if appropriate, at the end of
the period.
Construction-in-progress is stated at cost and presented as part of Fixed Assets on the consolidated
balance sheets. The accumulated costs will be reclassified to the appropriate fixed assets account when
construction is completed and the assets are ready for their intended use.
The cost of repairs and maintenance is charged to the consolidated statements of income as incurred;
replacement or major inspection costs are capitalized when incurred and if it is probable that future economic
benefits associated with the item will flow to the Company and Subsidiaries, and the cost of the item can be
measured reliably. An item of fixed assets is derecognized upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the
consolidated statements of income in the period the asset is derecognized.
m. Impairment of Asset Values
Asset values are reviewed for any impairment and possible write-down to fair value whenever events or
changes in circumstances indicate that the carrying value may not be recoverable. Whenever the carrying amount
of an asset exceeds its recoverable amount, an impairment loss is recognized in the current period consolidated
statements of income. Recoverable amount is the higher of an assets net selling price and its value in use.
F-16

n. Leases
The Company and Subsidiaries applied PSAK No. 30 (Revised 2007), Leases (Revised PSAK 30).
Under Revised PSAK 30, leases that transfer substantially all the risks and benefits incidental to ownership of the
leased item to the lessee are classified as finance leases. Finance leases are capitalized at the inception of the
lease at the fair value of the leased assets or at the present value of the minimum lease payments if the present
value is lower than the fair value. Lease payments are apportioned between finance charges and reduction of the
lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are recorded in the consolidated statements of income. Leased assets held by the lessee under finance leases are
included in fixed assets and depreciated over the estimated useful life of the assets or the lease term, whichever is
shorter, if there is no reasonable certainty that lessee will obtain ownership by the end of the lease term.
Leases that do not transfer substantially all the risks and benefits incidental to ownership of the leased item
are classified as operating leases.
o. Deferred Exploration and Development Costs
Deferred exploration and development expenditures incorporate costs related to general surveys,
exploration, borrowing cost, refinancing, feasibility studies and development of the mine incurred prior to the
commencement of operations. Deferred exploration and development costs are amortized using the
unit-of-production method.
p. Deferred Stripping Costs
Stripping cost on top soil is divided into:
(i) initial stripping of the top soil to open up the mining area before production commences; and
(ii) additional stripping that is performed during the production activity.
The initial stripping costs are part of deferred development costs, while the additional stripping costs are
charged to production cost as long as the stripping ratio is close to or less than the average estimated stripping
ratio. However, when the actual ratio is higher than the estimated average ratio, the excess stripping costs are to
be deferred and recorded as deferred stripping costs. These deferred stripping costs are expensed as production
costs in periods where the actual ratio is lower than the estimated average ratio.
F-17

q. Deferred Financing Costs
Fees incurred to obtain financing are deferred and amortized over the terms of the related financing
agreements and presented net of the related liabilities.
r. Estimated Environmental Restoration Obligation
Beraus policy is to meet or surpass the requirements of the CCoW and all applicable environmental
regulations issued by the Government of Indonesia (GOI), by application of technically proven and economically
feasible measures. Environmental management at Berau includes, but is not limited to, top soil replacement,
dredging of sediment ponds and dams, water quality control and waste handling, planting and seeding.
Estimated liability for restoration costs are based principally on legal and regulatory requirements. Such
estimated costs as a result of production activities are charged as production cost. Estimates are reassessed
regularly and the effects of changes are recognized prospectively.
Recognition of current portion of obligation is based on the estimates of the management.
s. Revenue and Expense Recognition
Revenue from coal sales is recognized when the significant risks and rewards of ownership of the goods
have passed to the buyer and:
Expenses are recognized as incurred on an accrual basis.
t. Income Taxes
Current tax expense is provided based on the estimated taxable income for the period. Tax rates specified in
the CCoW are used to determine income tax of Berau. Under the CCoW, the annual tax rate is 35% during the
first full ten years from the commencement of the operating period (through 2001), and 45% during the
remainder of the operating period. Current tax expense of Subsidiaries that are domiciled and registered as tax
subjects outside of Indonesia are determined based on the estimated taxable income for the period computed
using prevailing tax rates in the relevant country.
Deferred tax assets and liabilities are recognized for temporary differences between the financial and the tax
bases of assets and liabilities at each reporting date. Deferred tax asset are recognized for all deductible
temporary differences to the extent it is probable that future taxable profit will be available against which the
deductible temporary difference can be utilized. Deferred tax liabilities are recognized for all taxable temporary
differences. Future tax benefits, such as the carry-forward of unused tax losses, are also recognized to the extent
that realization of such benefits is probable.
F-18

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realized or the liability settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Amendments to tax obligations are recorded when an assessment is received and/or, if objected to and/or
appealed against by the Company and Subsidiaries, when the result of the objection and/or appeal is determined.
u. Employee Benefits
The Company and Subsidiaries adopted PSAK No. 24 (Revised 2004), Employee Benefits (Revised
PSAK 24) to determine their employee benefits obligation under the Labor Law No. 13/2003 dated March 25,
2003 (the Law). Under Revised PSAK 24, the cost of employee benefits based on the Law is determined using
the Projected Unit Credit actuarial valuation method. Actuarial gains or losses are recognized as income or
expense when the net cumulative unrecognized actuarial gains and losses at the end of the previous reporting
year exceed the higher of the 10% of the defined benefit obligation and 10% of the fair value of plan assets at
that date. These gains or losses are recognized on a straight-line basis over the expected average remaining
working lives of the employees. Past-service costs arising from the introduction of a defined benefit plan or
changes in the benefits obligation of an existing plan are required to be amortized over the period until the
benefits concerned become vested.
Berau has a defined contribution retirement plan covering all of its qualified permanent employees,
contributions being computed at the rate of 1% to 2% of the employees monthly salaries and funded equally by
Berau and its employees. The plan is managed by PT Bank Negara Indonesia (Persero) Tbk. Beraus
contributions to such plan are recognized and directly charged to operations when incurred.
v. Foreign Currency Transactions and Balances
The books of accounts of the Company are maintained in Indonesian Rupiah. Transactions during the period
involving foreign currencies are recorded at the rates of exchange prevailing at the time the transactions are
made. At balance sheet date, monetary assets and liabilities denominated in foreign currencies are adjusted to
reflect the exchange rates prevailing at that date. The resulting gains or losses are credited or charged to the
current consolidated statement of income.
The book of accounts of certain Subsidiaries are maintained in currencies other than Rupiah. For
consolidation purposes, assets and liabilities of the Subsidiaries at balance sheet date are translated into Rupiah
using the exchange rates at balance sheet date, while revenues and expenses are translated at the average rates of
exchange for the period. Resulting translation adjustments are shown as part of equity as Exchange Differences
Due to Financial Statements Translation.
As of March 31, 2010 and 2009, the rates of exchange used were middle rates published by Bank Indonesia
as follows:
US Dollar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singaporean Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australian Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-19
2010
(Full Amount)
2009
(Full Amount)
9,115
98
6,505
8,344
12,216
11,575
118
7,617
7,949
15,327

w. Earnings per Share
In accordance with PSAK No. 56, Earnings per Share, basic earnings per share are computed by dividing
net income by the weighted average number of shares outstanding during the period.
x. Segment Information
Segment information is presented based on PSAK No. 5, Segment Reporting. The Company and
Subsidiaries primary reporting segment information is based on business segment, while its secondary reporting
segment information is based on geographical segment.
y. Dividend
Final dividend distributions are recognized as a liability when the dividends are approved by the Companys
General Meeting of the Shareholders. Interim dividend distributions are recognized as a liability when approved
by the Board of Directors resolution in accordance with the Companys articles of association.
z. Contingencies
Contingent liabilities are recognized in the consolidated financial statements, unless the possibility of an
outflow of resources is remote. Contingent assets are not recognized in the consolidated financial statements but
are disclosed in the notes to consolidated financial statements when an inflow of economic benefits is probable.
aa. Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting
principles in Indonesia requires management to make estimations and assumptions that affect amounts reported
therein. Due to the inherent uncertainty in making estimates, actual results reported in future periods may be
based on amounts that differ from those estimates.
3. ACQUISITION OF SUBSIDIARIES
The Company has acquired the following Subsidiaries:
a. PT Armadian Tritunggal
Pursuant to the Share Sale and Purchase Agreement dated July 28, 2006, the Company agreed to purchase
20,833 shares or 83.33% of Armadian from PT Mentari Bukit Makmur (8,333 shares), Henry Ngadimin (8,333
shares) and David Jahja (4,167 shares). The sale and purchase price amounting to USD18,000,000 minus the
aggregate amounts owed to Prime Quest Holding Inc. and PT Mentari Bukit Makmur, as well as the settlement to
Asiawerks Global Investment Group Pte. Ltd. on the completion date. The difference between the purchase price
and the net assets value of Armadian was recorded as goodwill (Note 16).
On April 2, 2007, the Company, Armadian and Berau entered into a Novation Agreement whereby all the
receivables from Armadian to Berau were transferred to the Company. Such receivables were subject to interest
of 3-month LIBOR plus 4.75% per year. On the same date, the Company and Armadian entered into a Debt to
Equity Conversion Agreement in which the Company converted all its receivables from Armadian into 392,998
new ordinary shares in the equity capital of Armadian.
F-20

Based on the Minutes of Extraordinary Shareholders Meeting, which were notarized under the Notarial
Deed No. 38 by PPAT Go Public Imas Fatimah, S.H., dated June 8, 2007, the shareholders of Armadian agreed
to the transfer of 4,166 shares or 16.67% of Armadian shares held by a common stockholder to the Company.
The transfer of shares represented a transaction of entities under common control in accordance with PSAK
No. 38, Accounting for Restructuring of Entities Under Common Control. The Subsidiarys equity at the
beginning on which control is acquired is presented in equity as Difference in Value from Restructuring
Transactions of Entities Under Common Control. In December 2009, the Company realized the gain from
restructuring transactions amounting to Rp7,996 since the control by the common stockholder no longer existed.
b. Winchester Investment Holdings PLC
On December 29, 2009, the Company acquired 45.50% ownership (36,400,000 shares) in Winchester, a
company incorporated in the Republic of Seychelles, from PT Bukit Mutiara in accordance with Notarial Deed
No. 256 of Aulia Taufani, S.H., of the same date. In consideration, the Company issued 6,250 new shares to PT
Bukit Mutiara, representing 83.33% ownership in the Company. The acquisition was recorded using the purchase
method.
According to valuation reports issued by Martokoesoemo, Prasetyo & Rekan, independent appraisers, dated
December 29, 2009, the fair value of 45.50% of the shares of Winchester amounted to USD251,599,428
(equivalent to Rp2,373,337).
The difference between par value of the 6,250 shares amounting to Rp6,250,000 and fair value of 45.50%
shares based on an independent appraisal report recognized on the acquisition date amounting to Rp2,367,087
was recorded as additional paid-in capital (Note 27).
Pursuant to the Share Purchase Agreement (SPA) dated November 25, 2009 and effective December 29,
2009, the Company agreed to purchase 43,600,001 shares of Winchester and one (1) ordinary share B of Aries
from Eureka Company Limited (Eureka), and one (1) share of Winchester from Shelburne Company Limited
Company (Shelburne). The 43,600,001 shares purchased represent 54.50% of total outstanding shares of
Winchester. The consideration for the sale and purchase of the shares was the payment by the Company on
completion of the SPA of USD300 million but subject to adjustment based on the difference between the Actual
Completion Adjustment Statement and Estimated Completion Adjustment Statement. The Company used the
proceeds from the Intercompany Loan from PT Bukit Mutiara to pay the purchase price (Note 34).
The Company recognized the identifiable assets arising from the acquisition of Winchester which were
allocated to the coal resources of Berau and recorded as part of Deferred Exploration and Development Costs
(Note 13).
c. Aries Investment Ltd.
On December 16, 2009, Winchester, a Subsidiary, entered into an Assignment, Assumption and Release
Agreement with Danehill, a third party, in which Danehill agreed to transfer its 99.99% (80,001,599 shares)
ownership in Aries in exchange for the assumption of the loan payable to Berau amounting to USD296,050,419
(principal plus interest) and payment of USD80,000,000. Danehill has 34% indirect ownership in Berau through
Rognar. The agreement became effective on December 29, 2009. The fair value of identifiable assets was
allocated to the coal resources of Berau and recorded as part of Deferred Exploration and Development Costs
(Note 13).
F-21

4. CASH AND CASH EQUIVALENTS
This account consists of:
2010
2009
Cash on hand
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
(USD282,076 in 2010 and USD1,035,974 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
854
649
2,571
97
11,992
86
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,522
12,727
1,708,460
71,483
983,129
41,091
10,516
2,388
14
4,242
196
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,792,861
1,028,658
Rupiah
Hongkong and Shanghai Banking Corporation Limited . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Negara Indonesia (Persero) Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Mega Tbk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Internasional Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,195
27,056
12,850
11,347
2,882
508
224,712
3,654
159,170
2,109
61
1,088
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98,838
390,794
Total cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,891,699
1,419,452
Cash in banks
US Dollar
Hongkong and Shanghai Banking Corporation Limited (USD187,433,903 in 2010
and USD84,935,533 in 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank (USD7,842,394 in 2010 and USD3,549,922 in 2009) . . . . . . . .
PT Bank Internasional Indonesia Tbk (USD1,153,724 in 2010 and USD366,475 in
2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk (USD261,992 in 2010 and USD nil in 2009) . . . .
Others (each below Rp50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash equivalents
Time deposits
US Dollar
PT ANZ Panin Bank (USD nil in 2010 and USD779,500 in 2009). . . . . . . . . . . . . . . .
PT Bank Mega Tbk (USD nil in 2010 and USD960,000 in 2009). . . . . . . . . . . . . . . . .
9,023
11,112
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,135
Rupiah
PT ANZ Panin Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Negara Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,000
500
100
500
100
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,600
600
Total cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,600
20,735
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,960,821
1,452,914
All placements in cash and cash equivalents are third parties.

F-22

The annual interest rates of time deposits were as follows:
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
5.50% 7.00%
7.75% 11.50%
2.00% 3.50%
5. RESTRICTED CASH
Cash in banks
US Dollar
Hongkong and Shanghai Banking Corporation Limited (USD27,929,144 in 2010 and
USD13,549,107 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank (USD12,561,459 in 2010 and USD nil in 2009) . . . . . . . . . . . . . . . .
Rupiah
Hongkong and Shanghai Banking Corporation Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
254,574
114,498
156,831
86,410
42,269
455,482
199,100
Time Deposits
US Dollar
PT ANZ Panin Bank (USD10,465,600 in 2010 and USD1,807,794 in 2009) . . . . . . . . . .
Rupiah
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95,394
20,925
132,790
3
5,563
4,789
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
228,187
31,277
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
683,669
230,377
Bank accounts in Hongkong and Shanghai Banking Corporation Limited (HSBC) denominated in United
States Dollar and Indonesian Rupiah represent cash under the Cash and Accounts Management Agreement
pursuant to the conditions as set forth in the Senior Note Facility obtained by Berau (Note 21) in 2007 and 2008
and Credit Suisse loan facility in 2009 (Note 18). Restricted cash in banks and time deposits in HSBC are used
for payment of interest and currently maturing principal of Senior Notes and short-term loan.
Time deposits placed in PT ANZ Panin Bank as of March 31, 2010 and 2009, respectively, are used to
secure Beraus sales performance bonds required by several third party customers.
Time deposits placed in PT Bank Danamon Indonesia Tbk are pledged for bid bonds and performance bonds
required by several third party customers.
As of March 31, 2010 and 2009, restricted cash in HSBC is used as collateral for the short-term loan (Note
18) and Senior Notes (Note 21), respectively.
All restricted cash were placed with third parties.
F-23

Interest rates of time deposits ranged as follows:
Rupiah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
5.25% 5.75%
0.40% 0.70%
6.50% 9.75%
1.80% 3.75%
6. SHORT-TERM INVESTMENTS
2010
2009
Chateau Asean Fund 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PT Batavia Prosperindo Asset Manajemen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
683,625
3,913
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
683,625
3,913
a. Investment in PT Batavia Prosperindo Asset Manajemen, a third party, represents investment in mutual
funds. The initial investment in mutual funds was made on October 9, 2007, whereby the Company
appointed PT Batavia Prosperindo Asset Manajemen to manage the Companys funds in line with the
Companys investment policies and prevailing regulations. In 2008 and 2007, the Company made
additional investments and redemptions on the fund. As of March 31, 2009, the net asset value of the
short-term investment amounted to Rp3,913. The investment was fully redeemed in 2009.
b. On January 26, 2010, Berau entered into a investment agreement with Chateau Asean Fund 1, a third
party, (the Issuer). The Issuer issued premium convertible unsecured loan notes with a principal
amount of USD75 million (the Notes). The Notes shall be non-interest bearing but will receive a
return based on the performance of the underlying assets prior to conversion date.
The Issuer has the right to convert all or any part of the Notes into Redeemable Preference Shares at
anytime during the duration of the agreement. As of March 31, 2010, the fair value of investments
amounted to Rp683,625 (equivalent to USD75 million). These investments are intended as
available-for-sale investments. The investments are classified as current assets, as management plans to
liquidate them within a year
F-24

7. TRADE RECEIVABLESTHIRD PARTIES
2010
2009
Third parties
Rupiah
PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Indonesia Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT PLN Tanjung Jati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Sumber Segara Prima Daya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Karyatama Nagasari . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
146,786
130,790
50,042
46,821
227
73,701
332,273
54,639
89,066
1,179
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
374,666
550,858
US Dollar
CLP Guangxi Fangcheng Power Co. Ltd., China (USD7,016,929 in 2010 and
USD nil in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Southern Power Co., Ltd., South Korea (USD4,195,423 in 2010 and
USD nil in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Midland Power Co., Ltd., South Korea (USD3,786,691 in 2010 and
USD14,352,242 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guodian Fuel Co., Ltd., China (USD3,724,925 in 2010 and USD nil in 2009) . . . . . . .
Shanxi Coal Import & Export Group Co., Ltd., China (USD3,655,898 in 2010 and
USD nil in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rizhao Honglu Electricity and Energy Co. Ltd., China (USD3,633,336 in 2010 and
USD nil in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea South-East Power Co., Ltd., South Korea (USD3,486,291 in 2010 and USD nil
in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China National Minerals Co., Ltd., China (USD3,325,465 in 2010 and USD nil in
2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bhatia International Ltd., India (USD3,120,852 in 2010 and USD11,056,867 in
2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IEG Limited, Hong Kong (USD2,842,481 in 2010 and USD nil in 2009) . . . . . . . . . . .
Taiwan Power Company, Taiwan (USD1,334,023 in 2010 and USD12,105,680 in
2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Castle Peak Power, Hong Kong (USD nil in 2010 and USD3,902,259 in 2009) . . . . . .
Unique Mining Services Public Co., Ltd., Thailand (USD nil in 2010 and
USD2,396,235 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63,959
38,241
34,516
33,953
166,127
33,323
33,118
31,777
30,312
28,447
25,909
127,983
12,160
140,123
45,169
27,737
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
365,715
507,139
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
740,381
1,057,997
As of March 31, 2010 and 2009, the Company and Subsidiaries did not have trade receivables from related
parties.
F-25

The details of aging of trade receivables from third parties were as follows:
2010
2009
Up to 30 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 30 days - 60 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 60 days - 90 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
538,766
158,777
24,652
18,186
789,485
239,475
29,037
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
740,381
1,057,997
2010
2009
The details of trade receivables from third parties based on currencies were as follows:
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
374,666
365,715
550,858
507,139
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
740,381
1,057,997
As of March 31, 2010 and 2009, Berau did not provide any allowance for doubtful accounts since the
management believes that all receivables are collectible.
As of March 31, 2010 and 2009, trade receivables are used as collateral for the short-term loan (Note 18)
and Senior Notes (Note 21), respectively.
F-26

8. OTHER RECEIVABLES
This account pertains to dispatch receivables and consists of:
2010
2009
Related party (Note 34)

PT Saptaindra Sejati
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
(USD nil in 2010 and USD1,322,802 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,179
15,311
Sub-total related party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,490
Third parties
Rupiah
PT Bukit Makmur Mandiri Utama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jaya Samudra Karunia Shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andhika Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp1,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,521
1,300
1,267
15,446
27,580
7,969
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,534
35,549
38,415
36,069
3,677
3,015
2,849
2,127
1,769
5,969
2,224
2,639
5,824
1,183
2,246
10,068
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,821
60,253
Other currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
11
US Dollar
PT Bukit Makmur Mandiri Utama (USD4,214,434 in 2010 and USD3,116,115
2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Midland Power Co., Ltd., South Korea (USD403,434 in 2010 and USD192,163
in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT PLN Tanjung Jati (USD330,820 in 2010 and USD227,953 in 2009) . . . . . . . . . . . . . .
PT Jawa Power (USD312,521 in 2010 and USD503,176 in 2009) . . . . . . . . . . . . . . . . . . .
Bhatia International Ltd., India (USD233,374 in 2010 and USD102,186 in 2009). . . . . .
PT Arpeni Ocean Lines (USD194,048 in 2010 and 2009). . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less allowance for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103,385
(1,258)
95,813
(2,377)
Sub-totalthird parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102,127
93,436
Net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102,127
116,926
F-27

The details of other receivables based on original currencies were as follows:
2010
Rupiah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,534
57,821
30
2009
43,728
75,564
11
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less allowance for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103,385 119,303
(1,258) (2,377)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102,127
116,926
The management of Berau believes that the allowance for doubtful accounts is adequate to cover possible
losses from non-collectibility of other receivables.
9. INVENTORIES
2010
2009
Coal inventories:
Clean coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-pit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114,462 171,708
198,315 139,178
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stores and consumable supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
312,777
29,588
310,886
31,928
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
342,365
342,814
Based on the review of the condition of inventories at the end of the period, Beraus management believes
that no allowance is necessary to cover possible losses and obsolescence.
In accordance with the CCoW, stores and consumable supplies recorded in the consolidated financial
statements remain the property of the Government of Indonesia with an exclusive right of use granted to Berau
(Note 36A).
As of March 31, 2010 and 2009, inventories were not insured.
10. ADVANCES
2010
2009
Sub-contractor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuel purchase and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120,427
9,544
25,440
5,367
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129,971
30,807
F-28

11. OTHER CURRENT ASSETS
2010
2009
Guarantee deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90,000
1,608
95,137
5,792
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91,608
100,929
In September 2008, Berau paid Rp90 billion to the Government of Indonesia (GOI) as deposit for coal
sharing representing Beraus commitment to the GOI for the settlement and payment of the coal sharing
obligation.
12. INVESTMENT IN ASSOCIATED COMPANY
As of March 31, 2009, the Company, through Armadian, owned 12.82% of Rognar Holdings B.V.
amounting to Rp38,600. The investment was accounted for using cost method.
As of March 31, 2010, the Company effectively has 100% indirect ownership in Rognar through Armadian
and Winchester. On December 29, 2009, the Company acquired 100% of Winchester which indirectly owned
87.18% Rognar through Aries, a wholly-owned subsidiary of Winchester (Note 3). Thus, the books of Rognar
were consolidated to the Company and were no longer accounted for using cost method.
F-29

13. DEFERRED EXPLORATION AND DEVELOPMENT COSTS
2010
2009
Carrying value
Lati I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan 1-4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
205,253
118,431
52,322
45,976
44,507
36,667
25,368
5,280
4,095
1,287
260,648
118,077
66,450
58,385
56,519
17,363
29,436
6,614
4,967
1,634
Total Carrying Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
539,186
620,093
Accumulated amortization
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange difference due to financial statements translation . . . . . . . . . . . . . . . . . . . . . . . .
258,694
9,045
(7,985)
261,926
9,090
14,907
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
259,754
285,923
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
279,432
334,170
Coal Resources Carrying value

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,947,767
(235,106)
Ending balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,712,661
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88,820
Ending balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88,820
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,623,841
Deferred Exploration and Development CostsNet . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,903,273
F-30
334,170

Changes during the period of deferred exploration and development cost based on area of interest in 2010
and 2009 were as follows:
2010
Exchange
Differences
Due to
Financial
Statements
Translation
Area of Interest
Beginning
Balance
Lati I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
211,671
114,991
53,958
47,414
45,898
26,161
29,124
5,382
4,201
1,327
6,927
8,426
61
21
(6,418)
(3,487)
(1,636)
(1,438)
(1,391)
(793)
(883)
(163)
(127)
(40)
205,253
118,431
52,322
45,976
44,507
25,368
36,667
5,280
4,095
1,287
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
540,127
15,435
(16,376)
539,186
Additions
Deductions
Ending
Balance
Amortization expense charged to cost of goods sold amounted to Rp97,865 and Rp9,090 for the periods
ended March 31, 2010 and 2009, respectively (Note 29).
The unit-of-production amortization rate used for the amortization of deferred exploration and development
costs is based on managements best estimate of proven reserves in 2005. The Unit-of-production amortization
rate was further updated in 2006 and 2008 when Berau hired a third party consultant to reassess the Beraus
estimated coal reserves based on the Australian Joint Ore Reserves Committee Code.
As of March 31, 2010 and 2009, Berau did not recognize any asset impairment and believed that there were
no circumstances that would give rise to asset impairment.
14. DEFERRED STRIPPING COSTS
Deferred stripping costs as of March 31, 2010 and 2009 amounted to Rp158,856 and Rp363,415,
respectively. The deferred stripping costs will be expensed as production costs for areas where the actual ratio is
significantly lower than the planned stripping ratio.
2010
Actual
Planned
Stripping Stripping
Ratio
Ratio
Lati. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - H3N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - H4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata B1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-31
7.98
38.22
5.60
7.02
7.54
12.01
10.44
9.11
5.93
5.93
8.41
12.06
6.88
9.29
2009
Actual
Planned
Stripping Stripping
Ratio
Ratio
8.83
4.72
31.77
7.21
8.70
9.60
15.20
8.69
7.11
7.11
8.21
9.59
8.47
7.32

As of March 31, 2010 and 2009, Berau did not recognize any asset impairment and believed that there were
no circumstances that would give rise to asset impairment.
15. FIXED ASSETS
The details and changes of fixed assets were as follows:
2010
Exchange
Differences
Due to
Financial
Statements
Translation
Ending
Balance
Beginning
Balance
Additions
Carrying Value
Direct ownership
Land improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . . . . .
Transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
306,910
48,221
413,498
50,724
19,417
83,505
3,067
188
14,465
(9,305)
(1,462)
(12,537)
(1,538)
(589)
(2,532)
297,605
46,759
400,961
52,253
19,016
95,438
Total carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
922,275
17,720
(27,963)
912,032
Accumulated Depreciation
Direct ownership
Land improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . . . . .
Transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
179,526
23,389
310,073
28,957
10,741
4,857
596
4,128
969
490
(5,520)
(720)
(11,313)
(893)
1,514
178,863
23,265
302,888
29,033
12,745
Total Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . .
552,686
11,040
(16,932)
546,794
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
369,589
F-32
Disposals
365,238

2009
Exchange
Differences
Due to
Financial
Statements
Translation
Beginning
Balance
Additions
Carrying Value
Direct ownership
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . . .
Transportation equipment. . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . .
337,847
55,264
339,608
49,627
8,230
105,652
1,286
12,387
19,284
3,154
19,384
2,832
470
6,030
357,131
58,418
358,992
53,745
8,700
124,069
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
896,228
13,673
51,154
961,055
Indirect ownership
Leased assets
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,503
9,957
2,255
568
41,758
10,525
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49,460
2,823
52,283
Total carrying value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
945,688
13,673
53,977
1,013,338
Direct ownership
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . .
Transportation equipment. . . . . . . . . . . . . . . . . . . . . . . . . . .
186,459
24,457
309,361
29,969
4,971
6,012
736
3,637
870
132
10,616
1,394
17,642
1,708
286
203,087
26,587
330,640
32,547
5,389
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
555,217
11,387
31,646
598,250
Indirect ownership
Leased assets
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,623
5,703
1,311
331
2,084
323
40,018
6,357
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,326
1,642
2,407
46,375
Total Accumulated Depreciation. . . . . . . . . . . . . . . . . . . . .
597,543
13,029
34,053
644,625
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
348,145
F-33
Disposals
Ending
Balance
368,713

The details of depreciation expenses were as follows:
2010
2009
Cost of goods sold (Note 29) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General and administrative expenses (Note 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,396
644
12,372
657
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,040
13,029
The details of construction-in-progress accounts were as follows:
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . . . . . . . . . . . . . .
Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percentage of
Completion
2010
Accumulated
Cost
10% - 95%
10% - 96%
30% - 95%
20% - 80%
0%
68,917
18,233
1,788
5,615
885
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 - 2011
2010 - 2012
2010 - 2011
2010
95,438
Percentage of
Completion
Estimated
Completion Date
10% - 95%
10% - 96%
30% - 95%
20% - 80%
2009
Accumulated
Cost
23,192
98,430
1,334
1,113
Estimated
Completion Date
2010 - 2011
2010 - 2012
2010 - 2011
2010
124,069
In accordance with the CCoW, certain fixed assets recorded in these consolidated financial statements
remain the property of the Government of Indonesia. However, Berau has an exclusive right to use the fixed
assets over the contract period or the remaining period (Note 36A).
Berau entered into finance lease agreements for plant and equipment and motor vehicles that are used for
mining operations (Note 22).
Machinery and equipment as well as transportation equipment are covered by insurance against losses under
blanket policies amounting to Rp34,626 as of March 31, 2010. Management believes this is adequate to cover
possible losses from such risks.
As of March 31, 2010 and 2009, the Company and Subsidiaries management did not recognize any asset
impairment and believed that there were no circumstances that would give rise to asset impairment.
F-34

16. GOODWILL
This account represents the excess of acquisition cost over the net assets value of Subsidiaries.
Beginning
Balance
2010
Additions/
Reclassification Deductions
Ending
Balance
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246,629
209,130
157,163
30,736
403,792
239,866
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37,499
126,427
163,926
Beginning
Balance
2009
Additions/
Reclassification Deductions
Ending
Balance
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246,629
170,489
12,332
246,629
182,821
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76,140
12,332
63,808
17. OTHER NON-CURRENT ASSETS

2010
2009
Restricted guarantee deposits

PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refundable deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp1,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,292
400
1,868
298
9,260
508
2,373
1,001
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,858
13,142
Restricted guarantee deposits consisted of:

a. Time deposits placed with PT ANZ Panin Bank are pledged for long-term bid bonds and performance
bonds required by several third party customers.
b. Time deposits placed with PT Bank Danamon Indonesia Tbk are pledged for the employee housing
ownership program.
F-35

18. SHORT-TERM LOAN
2010
2009
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing charges
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange difference due to financial statements translations . . . . . . . . . . . . . . . . . . . . . .
2,734,500
100,489
(34,152)
6,608
Ending balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72,945
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,661,555
EC and Berau, who acted as the Borrower and Guarantor, respectively, entered into a Loan Agreement (the
Loan Agreement) with Credit Suisse AG, Singapore Branch (Credit Suisse), as the arranger, facility agent
and security agent, on December 23, 2009. Pursuant to the Loan Agreement, Berau shall make a single drawing
at the time and in the amount agreed upon by both parties amounting to three hundred million US Dollars
(USD300,000,000) (the Loan). The Loan bears interest at three-month London Interbank Offered Rate
(LIBOR) plus margin at 4.75% per annum for the first two quarters, margin of 6.25% per annum for the third
quarter and 7.75% per annum for the fourth quarter. The maturity date under the Loan Agreement shall be the
earlier of the date falling twelve (12) months after the date of the loan disbursement and the date on which the
Vendor Notes (each of the USD580,000,000 aggregate principal amount of 8% secured notes due December
2010 to be issued by PT Bukit Mutiara, an intermediate parent company) become due and payable in full
(whether on or before the stated maturity).
The Loan is secured by (1) pledges of all the shares in Berau and EC (except for the 10% of shares in Berau
held by Sojitz Corporation) and certain other group companies and intermediate holding companies in which the
beneficial owners of Berau and EC hold shares; (2) liens over certain offshore bank accounts and receivables of
Berau and EC; (3) various fiduciary security covering the Indonesian assets of Berau; (4) assignment of certain
principal operating agreements of Berau; and (5) pledges of certain inter-company loans or advances payable to
EC or to any other pledgor.
On December 28, 2009, the net proceeds of the Loan from Credit Suisse amounting to USD290,861,927
were directly transferred to HSBC Bank USA, National Association to fully repay the outstanding balance of the
Senior Notes. The remaining balance of the loan amounting to USD9,138,073 was withheld by Credit Suisse for
payment of fees, costs and expenses in connection with obtaining the Loan.
In accordance with the Loan Agreement, Berau is required to comply with certain financial ratio covenants,
such as debt service coverage ratio and total debt to EBITDA, commencing from March 31, 2010. As of
March 31, 2010, Berau was in compliance with the financial covenants required by the Loan Agreement.
As of March 31, 2010, the outstanding balance of the loan amounted to Rp2,734,500 (equivalent to
USD300,000,000).
F-36

19. TRADE PAYABLES
2010
Related parties (Note 34)

Rupiah
PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
Sojitz Corporation
(USD213,953 in 2010 and USD nil in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(USD nil in 2010 and USD5,997,696 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,950
2009
42,476
69,424
Sub-totalrelated parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,950
111,900
Third parties
Rupiah
PT Bukit Makmur Mandiri Utama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Andhika Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Wijaya Karya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Pembangunan Perumahan (Persero) Cabang VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Roda Teknik . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Wira Ariandi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CV Kasam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
275,096
54,573
9,088
5,485
2,071
1,495
1,122
57,078
242,254
12,107
1,770
1,508
18,321
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
406,008
275,960
431,664
414,435
US Dollar
PT Bukit Makmur Mandiri Utama
(USD47,357,535 in 2010 USD35,804,362 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(USD8,578,695 2010 and USD nil in 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Kartika Samudra Adijaya
(USD2,526,394 in 2010 USD1,218,940 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Trada Tug and Barge
(USD1,523,200 in 2010 and USD761,600 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demmurage
(USD925,482 in 2010, USD nil in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Mitra Bahtera Segar Sejati
PT Lintas Wahana Indonesia
(USD456,033 in 2010 USD nil in 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Runge Indonesia
(USD172,210 in 2010 and nil in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Mitra Swire CTM
(USD148,603 in 2010 USD252,388 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nuco Korea
F-37
78,195
23,028
14,109
13,884
8,816
8,436
5,395
4,157
1,570
1,355
2,921
1,040

2010
2009
PT Roda Teknik
(USD107,636 in 2010, USD315,711 in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
981
3,829
3,654
10,149
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
573,534
454,084
Other currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,435
2,391
Sub-totalthird parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
982,977
732,435
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
984,927
844,335
2010
2009
Up to 30 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31 days to 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61 days to 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
More than 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
661,813
16,625
1,486
305,003
814,583
1,143
28,609
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
984,927
844,335
2010
2009
The details of aging schedule for trade payables were as follows:
The details of trade payables based on original currencies were as follows:

Rupiah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
406,008 318,436
575,484 523,508
3,435
2,391
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
984,927
844,335
2010
2009
Mining and haulage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Coal sharing to Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for coal sharing to Government (Note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demurrage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trans-shipment facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Local transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sample analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp1,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
203,985
80,492
68,665
38,969
32,834
25,214
10,461
12,558
2,844
2,178
1,309
71,245
319,916
184,548
50,922
33,850
4,613
14,639
19,651
1,327
2,537
72,894
2,595
31,021
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
550,754
738,513
20. ACCRUED EXPENSES

F-38

21. SENIOR NOTES
2010
2009
Current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
289,375
(25,197)
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
264,178
Non-current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,110,781
(43,045)
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,067,736
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,803,558
On December 15, 2006, EC and Berau, who acted as the Issuer and Parent Guarantor, respectively, issued
Senior Notes totaling USD325 million. These Senior Notes comprised of Floating Rate Notes and Fixed Rate
Notes with principal amounting to USD100 million and USD225 million, respectively, each with a maturity date
of December 15, 2011. The aggregate principal amount of Floating Rate Notes will be amortized in 16 equal
installments, beginning March 15, 2008.
The Floating Rate Notes bear interest at three-month London Interbank Offered Rate (LIBOR) plus
3.75% per annum (which is adjusted quarterly), payable quarterly in arrears on March 15, June 15, September 15
and December 15 of each year, commencing on March 15, 2007. The Fixed Rate Notes bear interest at a rate of
9.375% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on
June 15, 2007.
The Senior Notes are secured by (1) pledges of all the shares in Berau and EC (other than the 10% of shares
in Berau held by Sojitz Corporation) and certain other group companies and intermediate holding companies in
which the beneficial owners of Berau and EC hold their shares; (2) liens over certain offshore bank accounts and
receivables of Berau and EC; (3) various fiduciary security covering the Indonesian assets of Berau;
(4) assignment of certain principal operating agreements of Berau; and (5) pledges of certain inter-company
loans or advances payable to EC or to any other pledgor.
Certain of Berau and ECs bank accounts are governed by the Cash and Accounts Management Agreement
(CAMA). The bank accounts are, in the case of United States Dollar accounts, maintained with a bank in Hong
Kong and, in the case of Indonesian Rupiah accounts, maintained with a bank in Jakarta (Note 5). The collection
and disbursement of all cash balances by Berau and EC are subject to the CAMA.
EC may redeem some or all of the Fixed Rate Notes at any time on or after December 15, 2009 at agreed
redemption prices. Before December 15, 2009, EC may redeem up to 35% of the Fixed Rate Notes at a
redemption price of 109.375% of the principal amount plus accrued and unpaid interest, if any, and up to 35% of
the Floating Rate Notes, at a redemption price of 100% of the principal amount thereof plus a premium equal to
the LIBOR then in effect plus 3.75% of the principal amount, plus accrued and unpaid interest, if any, with the
net cash proceeds from certain equity offerings. In addition, EC may redeem in whole or in part, at any time prior
to December 15, 2009 in the case of the Fixed Rate Notes, and at any time, in the case of the Floating Rate Notes,
at a price equal to 100% of the principal amount of the applicable Notes plus an agreed premium.
F-39

On December 18, 2006, one of the directors of Berau, who represented a shareholder holding a 10% interest
in Berau, submitted a letter to the Directorate General of Energy and Mineral Resources (DEMR) stating an
objection regarding the Senior Notes Facility and requesting the temporary discontinuation of such plan until
further clarification was obtained from the management of Berau. In connection with such objection letter, on
December 20, 2006, DEMR issued a letter ordering Berau not to pursue the Senior Notes Facility. Subsequent
discussions and clarifications between the directors and shareholders were held to resolve the issue regarding the
validity of the Senior Notes Facility and on April 19, 2007, the directors and shareholders jointly submitted a
letter to DEMR expressing their consent and support for the said Notes Facility Agreement.
On April 27, 2007, DEMR issued a letter allowing Berau to record the Senior Notes in its financial
statements subject to the following requirements:
1) The Senior Notes have to maintain separate records for the Senior Notes that have been used by the
shareholders and Berau.
2) The total used loan has to be equal to the actual realization of the investment and should be computed
by independent appraisal.
3) Interest of the loan has to be lower than the interest generally prevailing in the market.
4) Berau has to impose interest on the shareholders.
5) The Government of Indonesia will not guarantee and will not be held liable in the event of failure of
Berau and will not revoke any rights under the CCoW.
6) Copies of agreements and the related documentation have to be submitted to the Government.
7) The loan shall not saddle the operations of Berau in any way that will affect the entitlements of the
Government.
8) Regular reports should be submitted to the Government each time Berau receives a payment from the
shareholders.
Berau fully accomplished the requirements of DEMR in 2007.
As of March 31, 2009, the loan repayment schedule was as follows:
2009
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
217,031
289,375
2,893,750
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,400,156
289,375
Net of Current Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,110,781
On December 28, 2009, the outstanding principal of the Senior Notes, premium for early redemption and
accrued interest were fully paid through the proceeds of the Loan from Credit Suisse (Note 18). The outstanding
balance of deferred financing charges amounting to USD6,439,897 was expensed outright in 2009 upon payment
of the Senior Notes.
F-40

22. OBLIGATIONS UNDER FINANCE LEASES
This account consists of obligations to:
PT ORIX Indonesia Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Type of Asset
2009
Motor vehicles
167
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
167
(167)
Long-term Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minimum payments for lease agreements as of March 31, 2009 consist of:
2009
Minimum lease payments:

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
167
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less future finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
167
Lease payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
167
(167)
Long-term Portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In May 2009, finance lease obligations have been fully settled by Berau.
23. ESTIMATED ENVIRONMENTAL RESTORATION OBLIGATION
2010
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for restoration during the period (Note 29) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual restoration made during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange difference due to financial statements translations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Current Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,732
4,160
(2,781)
(742)
2009
27,216
4,432
(3,662)
1,550
24,369 29,536
(24,369) (29,536)
The environmental restoration obligation pertains to the accrued portion of costs to be incurred at the end of
the mine life. The mine sites of Berau are located in several areas in Kalimantan (Note 1d). Management believes
that the accrual is adequate to meet the obligations for environmental restoration.
F-41

24. TAXATION
a. Taxes Payable
2010
The Company
Income Taxes
Article 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,439
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,439
2009
Subsidiaries
Income Taxes
Article 15 and 4 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value-Added Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,518
2,337
2,565
928
84,992
44,507
10,263
10,496
1,262,930 905,446
256
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,362,524
963,714
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,368,963
963,718
2010
2009
b. Income Taxes
Income tax benefit (expense) of the Company and Subsidiaries was as follows:
Subsidiaries
Current. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(243,258) (266,094)
3,380
4,484
Income Tax ExpenseNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(239,878) (261,610)
The Company has no income tax expense current and deferred in 2010 and 2009.
F-42

c. Reconciliation
Reconciliation between income before income tax expense and tax losses was as follows:
2010
Consolidated income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deduct income before income tax expenseSubsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidation eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expensethe Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
489,549 515,815
(634,432) (580,654)
364,486 159,641
219,603
Temporary difference
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94,802
Permanent differences
Equity interest in net income of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(247,219) (159,642)
(3)
(88)
(128)
12
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(247,222) (159,846)
Tax losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax losses carry forwardbeginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(27,619) (65,041)
(163,610) (242,730)
Tax Losses Carry ForwardEnding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(191,229) (307,771)
d. Deferred Tax
The details of deferred tax were as follows:
Beginning
Balance
The Company
Fiscal loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,903
(40,903)
2010
Exchange
Differences
Income
Due to
Tax
Financial
Benefit
Statements
(Expense) Translations
6,904
(6,904)
Ending
Balance
47,807
(47,807)
Subsidiaries
Deferred exploration and development costs. . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(76,625)
(44,230)
10,685
1,872
365
1,143
2,294
1,334
(341)
(72,459)
(42,531)
11,487
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(110,170)
3,380
3,287
(103,503)
Deferred Tax LiabilitiesNet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(110,170)
3,380
3,287
(103,503)
F-43

Beginning
Balance
The Company
Fiscal loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
Exchange
Differences
Income
Due to
Tax
Financial
Benefit
Statements
(Expense) Translations
60,683 16,260
(60,683) (16,260)
Ending
Balance
76,943
(76,943)
Subsidiaries
Deferred exploration and development costs. . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(96,472)
(27,854)
(12,473)
12,247
7,626
1,394
2,032
(112)
346
824
(5,513)
(1,600)
(711)
698
431
(100,591)
(27,422)
(13,296)
13,291
8,881
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(116,926)
4,484
(6,695)
(119,137)
Deferred Tax LiabilitiesNet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(116,926)
4,484
(6,695)
(119,137)
The Company did not recognize deferred tax assets on fiscal loss carry-forward and other temporary
differences as of March 31, 2010 and 2009 as the management believes that deferred tax assets cannot be utilized
in future periods.
In 2010 and 2009, the Company and Subsidiaries did not receive tax assessment letters (SKP) from the Tax
Authorities.
e. Government Regulation
In September 2008, Law No. 7 Year 1983 regarding Income Tax was revised for the fourth time with Law
No. 36 Year 2008. The revised Law stipulates changes in corporate tax rate from a marginal tax rate to a single
rate of 28% for fiscal year 2009 and 25% for fiscal year 2010 onwards. The revised Law became effective
January 1, 2009.
f. Value-Added Tax
Government Regulation No. 144/2000 (GR 144/2000), which became effective on January 1, 2001,
stipulates that coal is no longer subject to Value-Added Tax (VAT) and as a result Berau is unable to seek
reimbursement for VAT Input paid starting from the said date. Under the CCoW, Berau is entitled to be held
harmless by the Government for additional taxes. Accordingly, in its consolidated financial statements, Berau has
offset VAT Inputs in 2010 and 2009 amounting to Rp1,610,571 (equivalent to USD176,694,607) and
Rp1,605,315 (equivalent to USD138,688,091), respectively, against its accrued coal sharing liability to the
Government. Based on the independent advice from its external legal counsel, Beraus management believes that
such offsetting of VAT Inputs against the coal sharing liability is the appropriate treatment for the additional tax
burden resulting from GR 144/2000.
F-44

Management believes that Berau has followed the appropriate treatment under the CCoW and Indonesia
Civil Code. On July 20, 2007, Berau received a letter from the State Claims Commission (Panitia Urusan Piutang
Negara (PUPN)) No. SKPBN-433/ PUPNC.11.05/2007 collecting unpaid coal sharing on coal for the years 2001
to 2005 amounting to Rp312.703 and USD26,198,343. Furthermore, the Directorate General of State Assets
(Direktorat Jenderal Kekayaan Negara) issued a Final Notice of Collection (Berita Acara Pemberitahuan Surat
Paksa) ordering Berau to pay the said coal sharing liabilities on or before September 11, 2007, otherwise, the
Government would restrain Beraus assets to the extent of such liabilities.
Berau, through its legal counsel Kusumanegara and Partners, filed a petition for Restraining Order to
restrain the PUPN from executing the Final Notice of Collection and impending appropriation of Beraus assets.
In its petition, Berau argued, among others, that:
The CCoW explicitly exempts Berau from the harm of present and future Indonesian taxes except those
set forth therein.
The Commission on State Claims and/or the Indonesian Courts do not have the jurisdiction to settle any
dispute arising from the provisions of CCoW.
On September 20, 2007, Jakarta Court of State Affairs (Pengadilan Tata Usaha Negara Jakarta) issued a
Restraining Order with reference case No. 127/G/2007/PTUN-JKT dated March 3, 2008 granting Beraus
petition and simultaneously ordering PUPN to temporarily cease and desist from pursing its collection effort and
appropriation of Companys assets while awaiting final decision. On March 18, 2008, Berau received the verdict
from the Jakarta Court of State Affairs upholding its petition and argument. Pursuant to the Decision of the
Jakarta Court of State Affairs, PUPN was thereby ordered to permanently withdraw its Final Notice of
Collection. The court however did not rule on the issue on whether the PUPN should not pursue the collection of
royalty duly offset by Berau against the VAT Inputs. Hence, PUPN still has the recourse to pursue the collection
through the international arbiter as stipulated in the CCoW.
On March 19, 2008, PUPN filed its appeal to the Jakarta High Court of State Affairs (Pengadilan Tinggi
Tata Usaha Negara Jakarta (PTTUN)). The verdict dated August 28, 2008, which was delivered formally to
Berau on January 17, 2009 stated that PTTUN does not have the capacity to issue a verdict concerning PUPNs
Decree. Therefore, PTTUN annulled the previous verdict made by Jakarta Court of State Affairs.
On January 28, 2009, Berau filed cassation to the Supreme Court and on March 17, 2009, the cassation was
officially registered with case No. 94 K/TUN/2009.
As of the completion date of the consolidated financial statements, Berau is waiting for the final decision
from the Supreme Court. However, Berau has made a provision for coal sharing to the Government, which, based
on managements assessment, is adequate to meet its obligations (Note 20).
F-45

25. MINORITY INTEREST
a. Minority interest in net assets of Subsidiaries
2010
2009
Sojitz Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rognar Holdings B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
344,217
253,388
988,213
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
344,217
1,241,601
b. Minority interest in net income of Subsidiaries

2010
2009
Sojitz Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rognar Holdings B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,068
32,531
126,872
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,068
159,403
26. CAPITAL STOCK

The shareholders and their respective shareholdings were as follows:
PT Bukit Mutiara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of Shares
2010
Percentage of
Ownership (%)
Total (Rp)
31,500,000,000
100
3,150,000
Number of Shares
2009
Percentage of
Ownership (%)
Total (Rp)
Rizal Risjad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Handy Purnomo Soetedjo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Garibaldi Thohir. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
813
250
187
65
20
15
813
250
187
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,250
100
1,250
a. In accordance with the Companys Extraordinary Shareholders General Meeting as recorded in Notarial
Deed No. 256 of Aulia Taufani, S.H., dated December 29, 2009, the following actions were approved:
To increase the authorized capital stock from 5,000 shares with par value of Rp1 per share to 30,000
shares with par value of Rp1 per share
To issue 6,250 new shares to PT Bukit Mutiara as consideration for the acquisition of Winchester
Investment Holdings PLC. (Note 3). This transaction resulted in the increase in issued and paid share
capital from Rp1,250 to Rp7,500 and made PT Bukit Mutiara the owner of the 83.33% of the Company.
F-46

b. Mr. Rizal Risjad, Mr. Handy Purnomo Soetedjo and Mr. Garibaldi Thohir (Shareholders) and PT Bukit
Mutiara entered into a Share Sale and Subscription Agreement on November 25, 2009 and Letter of
Agreement dated December 28, 2009 wherein the Shareholders agreed to sell, transfer and assign their
shares in the Company to PT Bukit Mutiara in exchange for the consideration stated in the agreement. The
transfer of the shares of Mr. Rizal Risjad (813 shares), Mr. Handy Purnomo Soetedjo (250 shares) and
Mr. Garibaldi Thohir (187 shares) was effected based on the Deeds of Transfer No. 281, 283 and 285,
respectively, dated December 30, 2009 and notarized by Aulia Taufani, S.H.
c. In accordance with the Companys Extraordinary Shareholders General Meeting as recorded in Notarial
Deed No. 247 of Sutjipto, S.H., dated March 20, 2010, the following actions were approved:
To approve the increase of authorized capital stock from 30,000 shares with par value of Rp1 per share to
90,000,000,000 shares with the nominal amount Rp100 (full amount) per share.
To approve the increase in issued and fully paid shares of the Company amounting to Rp3,142,500
divided into 31,425,000,000 shares with par value of Rp100 (full amount) per share of which carried out
through capitalization of retained earnings amounting to Rp775,413 and additional paid-in capital
amounting to Rp2,367,087 becoming share capital of the Company.
To approve the issuance of 31,425,000,000 new shares of the Company as the result of capitalization of
retained earnings and additional paid-in capital of the Company, that will be allocated and subscribed
entirely by the shareholder.
27. ADDITIONAL PAID-IN CAPITAL
This account represents the difference between the par value of the 6,250 newly issued shares, as stated in
the Companys articles of association, and fair value of the 45.50% shares of Winchester acquired by the
Company (Note 3).
The difference between par value of the 6,250 shares amounting to Rp6 and fair value of 45.50% shares
based on an independent appraisal report recognized on the acquisition date amounting to Rp2,367,087 is
recorded as additional paid-in capital.
28. SALES
2010
2009
Export. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,483,664
558,163
1,088,106
632,987
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,041,827
1,721,093
All sales represent coal mining sales of Berau.

In 2010 and 2009, total sales through related party amounted to Rp133,460 (equivalent to USD14,411,017)
or 6.54% and Rp129,856 (equivalent to USD11,164,629) or 7.54% of total sales, respectively.
F-47

The details of customers with sales of more than 10% of total sales were as follows:
Total
2010
Percentage (%)
Taiwan Power Company, Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PT Indonesia Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below 10%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
237,127
219,544
1,585,156
12
11
77
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,041,827
100
Total
2009
Percentage (%)
PT Indonesia Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Midland Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan Power Company, Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below 10%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
332,273
240,766
207,439
940,615
19
14
12
55
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,721,093
100
29. COST OF GOODS SOLD

2010
Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal sharing to Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight and handling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of coal resources (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal processing and other production cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in coal inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization (Notes 13 and 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restoration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
800,004
258,734
213,413
88,820
62,892
25,702
19,441
4,160
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,473,166
2009
660,199
202,007
179,430
56,990
(87,599)
21,462
4,432
1,036,921
Details of suppliers having transactions of more than 10% of total cost of goods sold were as follows:
2010
2009
PT Bukit Makmur Mandiri Utama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below 10%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
250,153
279,815
943,198
309,033
136,462
591,426
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,473,166
1,036,921
F-48

30. OPERATING EXPENSES
2010
2009
a. General and Administrative

Salaries, wages and provision for employee benefits (Note 33) . . . . . . . . . . . . . . . . . . . . . . .
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Community development and donation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repair and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Representation and entertainment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Training and education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Promotion and advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp1,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,031
63,262
6,785
3,373
1,500
1,412
1,211
977
670
644
589
369
225
2,311
16,710
2,678
7,564
2,675
1,920
1,232
1,480
759
675
657
680
112
508
1,817
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125,359
39,467
b. Selling and Marketing

Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp1,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,109
2,948
2,131
852
19,115
1,458
914
695
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29,040
22,182
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
154,399
61,649
2010
2009
31. INTEREST EXPENSES

The details of interest and finance expenses were as follows:
Loan from PT Bukit Mutiara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-49
61,676
39,252
81,636
100,928
81,636

32. EARNINGS PER SHARE
The computation of earnings per share was as follows:
2010
2009
Net income for the period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted average number of shares to compute basic earnings per share (full
amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
219,603
94,802
31,500,000,000
31,437,500,000
Basic Earnings per Share (Full Amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.97
3.02
The weighted average number of shares in 2009 has been adjusted due to capitalization of retained earnings
and additional paid-in capital to capital stock.
33. EMPLOYEE BENEFITS OBLIGATION
The employee benefits obligation of Berau for the three-month periods ended March 31, 2010 and 2009
were based on the estimation of Berau which were computed based on the actuarial reports prepared by PT Biro
Pusat Aktuaria, an independent actuarial firm, in its reports dated on February 23, 2010 and February 13, 2009,
respectively. The computations used the following assumptions:
Discount rate
Future salary increment rate
Mortality table
Disability rate
Retirement age
:
:
:
:
:
10.5% in 2010 and 12% in 2009

10% per annum
Table Mortality Indonesia 1999
10% Mortality Rate
55 years old
Employee benefit expenses were as follows:

2010
2009
Current service cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of past service costplan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of past service costnon vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,070
611
746
8
9
968
701
200
13
14
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,444
1,896
Employee benefits obligation was as follows:

2010
Present value of obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrecognized actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized past service costplan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized past service costnon vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-50
2009
41,625 25,046
(14,533) (3,646)
(744)
(790)
(823)
(873)
25,525
19,737

Movements in the employee benefits obligation were as follows:
2010
2009
Beginning balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for employee benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange difference due to financial statements translations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,745 16,946
2,444
1,896
(19)
(645)
895
Ending Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,525
19,737
The management believes that the employee benefits obligation is adequate to cover the requirements of
Labor Law No. 13/2003.
The employees are also covered by a compulsory social security plan called JAMSOSTEK set up by an
agency of the Indonesian Government.
34. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
In the normal course of business, the Company and Subsidiaries have entered into certain transactions with
related parties. The nature of the transactions and relationships with related parties were as follows:
a. Due to Related Party
The Company, who acted as the Borrower, entered into a Intercompany Loan Agreement (the
Intercompany Loan Agreement) with PT Bukit Mutiara (BUMU), as the Lender, on December 23, 2009.
Pursuant to the Intercompany Loan Agreement, the Company shall make a single drawing at the time and in the
amount agreed upon by both parties amounting to USD300,000,000. The proceeds were used for the acquisition
of 54.50% of Winchester as defined in the facility agreement between PT Bukit Mutiara and Credit Suisse AG,
Singapore Branch, as arranger and facility agent (Bidco Facility Agreement).
The Intercompany loan bears interest at three-month LIBOR plus margin at 8.25% per annum for the first
two quarters, margin of 9.75% per annum for the third quarter and 11.25% per annum for the fourth quarter
which is payable at the end of each quarter.
Until repayment in full of all amounts owing pursuant to or in connection with the Bidco Facility
Agreement, this agreement is subject to the terms of the Bidco Facility Agreement. If any provision of this
agreement is inconsistent with the Bidco Facility Agreement, the Bidco Facility Agreement will prevail.
The maturity date under the Loan Agreement is the date three (3) months after the date on which BUMU
gives the Company notice that it requires the repayment of the loan.
As of March 31, 2010, the outstanding balance of the Intercompany loan amounted to Rp2,734,500
(equivalent to USD300,000,000) or 32.34% of total liabilities. Interest expense amounted to Rp61,676 or 61.11%
of total interest expenses.
F-51

b. Due from Related Parties
2010
2009
Loan to employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Begarion Capital Limited (BCL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Highlander Investments Pte. Ltd. (Highlander) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,062
22,111
3,223,323
57,120
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,062
3,302,554
Percentage to total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.14%
42.23%
b.1 Due from BCL was funded from the proceeds of the Senior Notes (Note 21), which earned interest at a
rate of 10.375%. In January 2007, Berau amended the interest rate of the loan to BCL, which became
10.375%. Interest on loan to BCL is payable semi-annually, commencing June 15, 2007. Interest
income earned from due from BCL amounted to Rp66,973 or 3.89% of total sales in 2009. As of
March 31, 2009, due from BCL amounted to Rp3,223,323 (equivalent to USD278,472,787) or 41.21%
of total assets.
On December 16, 2009, BCL entered into an Assignment, Assumption and Release Agreement with
Danehill Capital Ltd. (DCL), which transferred the loan from Berau effective December 29, 2009. On
December 16, 2009, DCL entered into an Assignment, Assumption and Release Agreement with
Winchester Investment Holdings PLC., which transferred the loan obtained from Berau to Winchester
effective December 29, 2009.
b.2 Based on the inter-company loan agreement entered into by the Company and Highlander dated
December 15, 2006, the Company extended a loan to Highlander amounting to USD4,750,848 with
interest of 9.85% per annum. Subsequently on December 18, 2006, the principal and interest rate were
adjusted from USD4,750,848 to USD4,467,348 and 9.85% to 4.5% per annum, respectively. Interest
income earned from loan to Highlander amounted to Rp585 or 0.03% of total sales in 2009. As of
March 31, 2009, due from Highlander amounted to Rp57,120 or 0.73% of total assets. The loan was
fully paid by Highlander in 2009.
c. Sales
Berau entered into a marketing agency agreement dated October 1, 2001 with Sojitz which owns 10.0%
direct equity interest in Berau. The marketing agency agreement is renewable on a yearly basis as long as Berau
continues to supply coal to the Japanese market. Under this agreement, Sojitz is required to use its best efforts to
promote, market and seek orders for Beraus coal and maintain good relations with customers, as well as keep
Berau informed of any developments in the Japanese market. Sojitz receives a commission that ranges from 1.5%
to 2.0% of the sale proceeds of coal that is delivered to and accepted by customers and fully paid for at Berau
invoiced price. In 2010 and 2009, total sales through related party under the marketing agency agreement
amounted to Rp133,460 (equivalent to USD14,411,017) or 6.54% and Rp129,856 (equivalent to
USD11,164,629) or 7.54% of total sales, respectively (Note 28). There was no outstanding receivable balance as
of March 31, 2010 and 2009 from these transactions. Berau incurred commission expense to Sojitz amounting to
Rp8,747 (equivalent to USD944,535) or 5.66% of total operating expenses in 2010 and Rp2,886 (equivalent to
USD248,103) or 4.68% of total operating expenses in 2009. The outstanding payable arising from this
F-52

transaction amounted to Rp1,950 or 0.02% of total liabilities as of March 31, 2010 and presented as part of
Trade Payables in the 2010 consolidated balance sheet (Note 19).
d. Mining Services and Rental of Equipment
Berau, in the regular conduct of its business, has transactions with PT Saptaindra Sejati, a related party,
consisting of mining services and rental of equipment. The outstanding payable arising from these transactions
amounted to Rp111,900 or 1.85% of total liabilities as of March 31, 2009 and was presented as part of Trade
Payables in the 2009 consolidated balance sheet (Note 19). The outstanding receivable arising from these
transactions amounting to Rp23,490 or 0.30% of total assets as of March 31, 2009, pertains to the receivables
arising from the coal price and stripping ratio adjustments and was presented as part of Other Receivables in
the 2009 consolidated balance sheet (Note 8). In 2009, PT Saptaindra Sejati was no longer a related party.
e. Investment in Associated Company
2010
2009
Investment in associated company Rognar Holdings B.V.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38,600
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38,600
Percentage to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.49%
f. Nature of Relationship and Transactions

Related parties
Relationship
Nature of Transaction
PT Bukit Mutiara (2010)
Shareholder
Inter-company loan
PT Saptaindra Sejati (2009)
Common key management
Mining services and rental of

equipment
Begarion Capital Limited (2009)
Long-term receivable and related

interest income
Sojitz Corporation
(formerly Nissho Iwai
Corporation)
Shareholder of the Berau
Sales of goods and commission
Highlander Investments Pte. Ltd

(2009)

interest income

PLC. (2010)
Entity under common control

interest income
Maple Holdings Ltd. (2010)
Marketing services
Due to these relationships, it is possible that the terms and conditions of these transactions were not the
same as those that would result from transactions with third parties.
F-53

35. SEGMENT INFORMATION
Primary Segment
For management purposes, the Company and Subsidiaries are currently organized into two (2) business
divisions consisting of financing and mining. These divisions are the basis on which the Company and
Subsidiaries report their primary segment information.
Business segment information of the Company and Subsidiaries is as follows:
Financing
2010
Coal Mining Eliminations
Consolidated
REVENUES
External parties sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,254
2,041,827
(39,254)
2,041,827
COST OF GOODS SOLD

External parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,928
1,473,166
39,254
(39,254)
1,473,166
100,928
RESULT
Segment result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(61,674)
529,407
467,733
OPERATING EXPENSES UNALLOCATED. . . . . . . . . .
154,399
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on foreign exchangenet . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing charges . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Othersnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
313,334
5,122
236,141
(34,152)
(30,736)
(160)
INCOME BEFORE INCOME TAX EXPENSE . . . . . . . .

INCOME TAX EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . .
489,549
(239,878)
INCOME BEFORE MINORITY INTEREST IN NET

INCOME OF CONSOLIDATED SUBSIDIARIES . . .
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARIES . . . . . . . . . . . . . . . .
249,671
(30,068)
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER INFORMATION
Assets
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-54
219,603
10,779,279
9,153,602
(7,580,101) 12,352,780
6,339,366
30,736
5,711,435
33,155
108,905
(3,596,705)
8,454,096
33,155
108,905
30,736

Financing
REVENUES
External parties sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF GOODS SOLD
External parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESULT
Segment result. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
Coal Mining Eliminations
Consolidated
81,631
1,721,093
1,721,093
(81,631)
81,636
1,036,921
81,631
1,036,921
(81,631)
81,636
(5)
602,541
602,536
OPERATING EXPENSES UNALLOCATED. . . . . . . . . . .
61,649
OPERATING INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on foreign exchangenet . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing charges . . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Othersnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
540,887
71,789
(78,582)
(6,330)
(12,332)
383
INCOME BEFORE INCOME TAX EXPENSE . . . . . . . . .

INCOME TAX EXPENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
515,815
(261,610)

INCOME OF CONSOLIDATED SUBSIDIARIES . . . .
CONSOLIDATED SUBSIDIARIES . . . . . . . . . . . . . . . . .
(159,403)
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94,802
OTHER INFORMATION
Assets
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-55
254,205
1,531,503
8,580,830
(2,291,254) 7,821,079
946,559
12,332
6,046,951
23,062
22,119
(946,453) 6,047,057
23,062
22,119
12,332

Secondary Segment
Sales Based on Market
The following are sales based on geographical market regardless of the location of the production of coal:
2010
2009
Geographical market
Domestic
Indonesia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
558,163
632,987
International
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
426,753
360,933
237,127
202,253
161,768
69,687
25,143
379,979
204,594
223,896
45,387
129,856
104,394
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,483,664
1,088,106
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,041,827
1,721,093
36. SIGNIFICANT AGREEMENTS AND COMMITMENTS

A. Coal Contract of Work (CCoW)
Beraus activities are governed by the provisions of the CCoW, which was entered into by Berau and
Perusahaan Negara Tambang Batubara on April 26, 1983, and was subsequently transferred to PT Tambang
Batubara Bukit Asam (PTBA) in 1991.
Based on Presidential Decree No. 75/1996 dated September 25, 1996, and amendment to the CCoW
No. 02/I.DD/50/96 between PTBA and Berau dated June 28, 1997, all rights and obligations of PTBA under the
CCoW were transferred to the Government of the Republic of Indonesia, represented by the Minister of Mines
and Energy, with effect from July 1, 1997.
mining operations in an area located in East Kalimantan. The coordinates of which are detailed in Annexure A
and measuring approximately 487,217 hectares. Since April 7, 2005, the concession area has been reduced to
118,400 hectares.
Significant provisions of the CCoW include:
a. Entitlement Under the Agreement
Berau is entitled to take 86.5% of total coal produced from the final production processes established by
Berau and available for sale in each calendar year, while the Government reserves and retains the remaining
portion (i.e. 13.5%) as its share of total production.
F-56

b. Operating Period
The operating period of mine area is for 30 years subject to extension as may be approved by the
Government.
c. Dead Rent
Berau shall pay dead rent to the Government in half-yearly installments during the term of the CCoW,
which is recoverable by Berau as operating costs. Dead rent is calculated by reference to the number of hectares
included in the CCoW area in accordance with the rates stipulated in the CCoW for each period/stage of
operation.
d. Initial Cost
Berau paid to the Government the sum of USD500,000 within 30 days of signing the CCoW in 1983 as a
contribution to the Governments initial costs.
e. Equipment
Berau shall finance the cost of purchasing materials, supplies, plant, and equipment (the Equipment) and
such Equipment shall become the property of the Government when landed at the Indonesian port of import or
purchased locally. For the purpose of tax computation pursuant to Annexure D of the CCoW and all similar
government revenue charges and for the purpose of Annexure E thereof , Berau shall be in the same position as
if such Equipment was owned by Berau itself.
f. Corporation Taxes
Corporation taxes in respect of the annual profits of Berau shall be computed in accordance with the
prevailing laws and regulations in Indonesia, except that during the first full ten years from and after
commencement of the operating period the annual corporation tax rate shall only be 35% of the taxable income
and during the remainder of the operating period thereafter the corporation tax rate shall only be 45% of the
taxable income.
The computation of corporation tax should follow the rules of computation of corporation tax as provided
for in Annexure D of the CCoW.
Berau has the right to an investment allowance of 20% of the total investment (i.e. at a rate of 5% a year
from the taxable income provided for in article 4(b) of the Corporation Tax Law 1925 amended by Law No. 8 of
1970).
g. Divestment of Foreign Interest
Berau shall ensure that its shares owned by foreign investor(s) are offered either for sale or for issue to the
Government of Indonesia, Indonesian nationals, or Indonesian companies controlled by Indonesians in each year
following the end of the fourth full calendar year after commencement of the operating period as set out in the
Coal Agreement. By the end of the tenth full calendar year of the operating period, the cumulative amount to be
offered for sale reaches the maximum of 51%. As of March 31, 2010 and 2009, Indonesian shareholders owned
51% of the shares of Berau.
F-57

h. Accelerated Depreciation
Berau may apply accelerated depreciation at the rate of 10% per year for buildings and 25% per year for
other assets used in coal operations, for one year within any of the first four years for acquisition of such assets.
i. Other Financial Obligations and Taxes
The CCoW further provides that Berau, shall, subject to the terms of the coal CCoW, pay to the Government
the following taxes and levies:
i. Withholding taxes on:
Dividends paid to shareholders, interest and royalties on patents paid by Berau at a rate of 10%.
Remuneration of Beraus employees, expatriates who are employed or engaged by Berau or Beraus
contractors or affiliates and who remain in Indonesia for more than 90 days in aggregate in any one
calendar year shall be liable in Indonesia for personal income tax on remuneration paid to them for
services rendered in Indonesia.
Other payments made by Berau including but not limited to fees for technical services based on the
prevailing laws and regulations in Indonesia at a rate of 10%.
ii. Regional Development Tax (IPEDA) and other regional taxes, fees or impositions in the form of
annual lump sum payments, which amount shall only be USD100,000 or the Rupiah equivalent each
year commencing as from the commencement of the construction period and that shall be paid to the
applicable local government not later than 3 months following the commencement of the construction
period and annually thereafter. In the event payment is made in Rupiah, the exchange rate for Rupiah
shall be the mail transfer buying rate for Rupiah as quoted by Bank Indonesia two business days
preceding the date of payment. The figure of USD100,000 is based upon the 1982 US Dollar value and
will be adjusted every two years according to the report published by the International Bank for
Reconstruction and Development (IBRD). All the regional taxes were paid by Berau for the periods
ended March 31, 2010 and 2009.
iii. Sales taxes on services rendered to Berau in Indonesia in accordance with prevailing laws and
regulations in Indonesia, but at rates not exceeding 5% of the assessable basis. The assessable basis for
calculating the sales tax on the fee for services rendered in Indonesia shall be at a percentage of the
total contract sum as approved by the Ministry of Finance.
B. Operational Agreements
Berau has mining and coal hauling contracts with the following:
Mine Area
Ref
Lati
- Mining Operations and Coal Haulage
a1
Binungan
a2
2010 and 2009

- Coal Haulage from Binungan to Suaran port

Sambarata

a3
F-58

a1. Lati Mine Site
Mining Operations and Coal Haulage
PT Bukit Makmur Mandiri Utama (BUMA)
On December 1, 1998, Berau entered into an agreement with PT Mentari Bukit Makmur (MBM), for mining
operations and coal haulage at the Lati mine site. The term of the contract was until December 31, 2010. Starting
2007, the contract with MBM was assumed by BUMA, affiliated company of MBM. In 2008, the contract was
extended to December 31, 2018.
a2. Binungan Mine Site
PT Saptaindra Sejati (SIS)
On May 1, 2004, SIS took over the mining operation and coal haulage with an original contract term until
December 31, 2005, which was extended until December 31, 2008. In 2008, the contract was extended until
December 31, 2009. In 2009, the contract was extended to December 31, 2010.
On January 1, 2006, Berau entered into an agreement with SIS for mining operation and coal haulage of
Binungan Block 1-4 with an original contract term until December 31, 2010.
BUMA
On January 1, 2003, Berau entered into an agreement with BUMA for mining operations and coal haulage at
the Meraang mine site. The contract will expire on December 31, 2010. In 2008, the contract was extended to
December 31, 2018.
Coal HaulageBinungan Mine Site to Suaran Port
BUMA
Berau has an agreement with BUMA for coal haulage at the Binungan mine site to the Suaran Coal
Processing Plant. The contract will expire on December 31, 2010. In 2008, the contract was extended to
December 31, 2018.
a3. Sambarata Mine Site
Mining Operations
On May 1, 2005, Berau entered into an agreement with SIS for the operation of the coal mine and
processing plant in Sambarata A with a contract term until January 31, 2009. In 2008, the contract was extended
to December 31, 2011 for mining operations and coal haulage.
F-59

On July 15, 2007, Berau entered into another agreement with SIS for the operation of the coal mine and
processing plant in Sambarata Block B1 with a contract term until July 14, 2012.
a4. Other Operational Agreements
Coal Barging
On April 1, 1998, Berau entered into an agreement with PT Kartika Samudra Adijaya for coal barging at the
Lati Port and Suaran Port. The contract expired on December 31, 2007.
On January 1, 2005, Berau entered into an agreement with PT Kartika Samudra Adijaya for coal barging at
the Sambarata Port. The contract expired on December 31, 2007. On January 1, 2008 the contract was renewed
and expired on December 31, 2008.
On January 1, 2009, Berau entered into an agreement with PT Kartika Samudra Adijaya for coal barging at
the Lati, Suaran, and Sambarata Port. The contract will expire on December 31, 2013.
On January 1, 2009, Berau entered into an agreement with PT Trada Tug and Barge for coal barging at the
Lati and Suaran Port. The contract will expire on December 31, 2013.
On April 1, 2009, Berau entered into an agreement with PT Mitra Bahtera Segarasejati for coal barging at
the Lati, Suaran and Sambarata Port. The contract will expire on March 31, 2011.
On April 1, 2009, Berau entered into an agreement with PT Mitra Bahtera Segarasejati for Assist Tug at
Trans-shipment Point. The contract will expire on October 31, 2010.
On April 1, 2009, Berau entered into an agreement with PT Pelayaran Karya Samudera Mandiri for LCT at
Trans-shipment Facility. The contract will expire on April 26, 2011.
On April 1, 2009, Berau entered into an agreement with PT Pelayaran Karya Samudera Mandiri for Assist
Tug (TB. DL 05) at Trans-shipment Point. The contract will expire on April 30, 2010.
Coal Trans-shipments
On November 25, 1999, Berau entered into an agreement with Lati Trans-shippers Inc. for coal shipments
for a period of 11 years. The contract will expire in August 2010. The minimum loading rate governed by this
agreement is 20,000 metric tonnes per day, except for Taiwan Power Company where the loading rate is 24,000
metric tonnes per day. The agreement governs the contract rate and rate adjustment.
On January 1, 2009, Berau entered into an agreement with PT Mitra Swire CTM for coal shipments. The
agreement governs the contract rate and rate adjustment and will expire on December 31, 2011.
On September 20, 2007, Berau entered into an agreement with FOTP Transshipment INC for coal
shipments. The agreement governs the contract rate and rate adjustment and will expire in a period 10 years from
the actual operation date, July 30, 2009.
F-60

Gearless Vessel Stevedoring
On January 1, 2005, Berau entered into an agreement with PT Tirta Sarana Borneo for stevedoring of
gearless vessel. This agreement will expire on December 31, 2010.
Coal Analysis and Superintending
On September 1, 1998, Berau entered into an agreement with PT Sucofindo for coal analysis and
superintending for coal shipment. This agreement ended on December 31, 2007 and Berau has renewed the
agreement starting January 1, 2008 until December 31, 2010.
On July 1, 2005, Berau entered into an agreement with PT Geoservices for coal analysis and superintending
for coal shipment, which expired on September 30, 2008. Berau has renewed the agreement starting November 1,
2008 until October 31, 2011.
Heavy Equipment Hire
On April 1, 1999, Berau entered into an agreement with PT Roda Teknik for heavy equipment hire. This
agreement ended on December 31, 2007 and Berau has renewed the contract for a year starting January 1, 2008
until December 31, 2008. In 2008, the contract term was extended to December 31, 2012.
On June 1, 2005, Berau entered into an agreement with PT Surya Teknik Anugerah for heavy equipment
hire. This agreement will expire on May 31, 2010.
On January 1, 2008, Berau entered into an agreement with PT Bukit Makmur Mandiri Utama for heavy
equipment hire. This agreement will expire on December 31, 2010.
On January 1, 2005, Berau entered into an agreement with PT Sentra Baruna Hijau for heavy equipment
hire. This agreement will expire on December 31, 2010.
Drilling
On January 1, 2006, Berau entered into an agreement with PT Recsalog Geoprima for rental of logger and
logging services for a period of one year. The agreement was extended until December 31, 2008. In 2008, the
agreement was renewed and expired on December 31, 2009.
On February 1, 2009, Berau entered into an agreement with CV Kassam Drilling Group for drilling services.
The agreement will expire on January 31, 2010 and was subsequently renewed on February 1, 2010 and will
expire on December 31, 2011.
On June 21, 2009, Berau entered into an agreement with CV Sarana Seisindo Utama for drilling services.
This agreement expired on December 31, 2009 and was extended until December 31, 2010.
Marketing Agreements
On December 30, 2009, Berau entered into a marketing services agreement with Maple Holdings Limited
(Maple) under which Maple has agreed to act as the exclusive marketing agent of Berau for all coal sales except
those coal products which Sojitz Corporation is entitled to market and sell to customers in Japan under terms of
F-61

the Japan Marketing Agreement. The agreement shall become effective from December 30, 2009 to
December 30, 2019 and can be renewed for a further period of ten (10) years by mutual agreement. As
compensation, Berau is required to pay Maple a commission of 2% of the sales.
C. Commitments
Restoration
As stated in Note 23, Berau has obligations in respect of restoration, rehabilitation and environmental
expenditure.
Long-term Sales
Berau has long-term sales commitments as follows:
Taiwan Power Company
In July 2004, Berau entered into a 4-year sales contract from 2005 to 2008 with Taiwan-based company,
Taiwan Power Company. The quantity of coal to be delivered by Berau was 500,000 metric tonnes per each
contract year, subject to a tolerance of up to plus or minus 20% at the buyers option. Berau shall be liable to
buyer for any and all losses, damages and cost (including, without limitation, third party claims against buyer)
caused by or related to Beraus failure to perform in accordance with the representations and warranties. The
selling price is based on certain formulas as set forth in the contract.
In November 2008, Berau also agreed to 6 and 8 years long-term contracts up to 2014 and 2016,
respectively. The delivery period is from January through December. The quantity of coal to be delivered is
500,000 metric tonnes annually for each contract, meaning the total quantity is 1,000,000 metric tonnes annually
subject to a tolerance of up to plus or minus 20% at the buyers option. The term of contract is mainly similar to
the previous long-term contract and the selling price is also based on certain formula set out in the contract and
determined on a yearly basis.
PT Jawa Power
Berau entered into a coal supply agreement with PT Jawa Power (Buyer) dated December 18, 1995. The
initial term of this agreement shall be for a period commencing on the date of the agreement and ending, unless
extended or earlier terminated in accordance with terms of this agreement, on the date that falls ten (10) years
after the commercial operation date in November 2000. The quantity of coal to be delivered by Berau was
2,000,000 metric tonnes per year, subject to a tolerance of up to plus or minus 20% at the buyers option. In
January 2009, the term of agreement was extended by 5 years to November 2015. The buyer may extend the term
in the aforesaid manner on no more than four (4) occasions, such that the term shall not extend for a aggregate
period of more than thirty (30) years from the start of commercial operation. The selling price is determined on a
yearly basis.
PT Indonesia Power
On August 27, 2008, Berau entered into a 10-year sales contract from January 2008 up to December 2018
with Indonesia-based company, PT Indonesia Power. The quantity of coal to be delivered by Berau was
3,000,000 metric tonnes per year, subject to a tolerance of up to plus or minus 5% at the buyers option. The
selling price will be determined on a yearly basis.
F-62

Bank Guarantees
Berau had the following outstanding bank guarantee facility issued in relation to sales contracts and in
respect of contractor commitments.
Indonesian Rupiah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
400
7,292
508
9,260
37. MONETARY ASSETS AND LIABILITIES DENOMINATED IN CURRENCIES OTHER THAN

RUPIAH
2010
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign
Currencies
Amount
Equivalent
in Rupiah
USD
AUD
EUR
SGD
USD
USD
USD
USD
SGD
196,975,535
4,736
3,725
1,723
50,956,203
75,000,000
40,122,314
6,343,498
4,655
1,795,432
40
47
10
464,466
683,625
365,715
57,821
30
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,367,186
USD
AUD
SGD
EUR
USD
EUR
AUD
USD
USD
63,135,929
50,267
127,880
178,750
14,525,604
16,318
5,715
300,000,000
300,000,000
575,484
419
832
2,184
132,401
199
48
2,734,500
2,734,500
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,180,567
Net Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,813,381
F-63

2009
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign
Currencies
Amount
Equivalent in
Rupiah
USD
AUD
EUR
SGD
USD
USD
USD
SGD
USD
91,644,492
1,551
3,725
2,225
15,356,901
43,813,282
6,528,207
1,444
283,407,532
1,060,785
12
57
17
177,756
507,139
75,564
11
3,280,443
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,101,784
USD
AUD
SGD
EUR
USD
USD
45,227,473
58,596
38,577
106,413
16,495,943
293,750,000
523,508
466
294
1,631
190,941
3,400,156
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,116,996
Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
984,788
F-64

38. FINANCIAL INSTRUMENTS
The following table presented the Company and Subsidiaries financial assets and liabilities as of March 31,
2010:
2010
Financial Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available for sale
Short-term investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,960,821
683,669
740,381
102,127
17,062
Total Financial Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,187,685
Financial Liabilities
Liabilities at amortized cost
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to related party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Financial Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,661,555
984,927
550,754
24,369
2,734,500
6,956,105
683,625
The following table presented the carrying values and estimated fair values of the Company and
Subsidiaries financial instruments that are carried on the consolidated balance sheet as of March 31, 2010:
Financial Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available for sale
Short-term investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Financial Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to related party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Financial Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-65
Carrying Amount
Fair Value
1,960,821
683,669
740,381
102,127
17,062
1,960,821
683,669
740,381
102,127
17,062
683,625
4,187,685
683,625
4,187,685
2,661,555
984,927
550,754
24,369
2,734,500
6,956,105
2,661,555
984,927
550,754
24,369
2,734,500
6,956,105

The fair values of the financial assets and liabilities are included at the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.
The following methods and assumptions were used to estimate the fair value of each class of financial
instrument for which it is practicable to estimate such value:
Short-term financial assets and liabilities:
Short-term financial instruments with remaining maturities of one year or less (cash and cash equivalents,
restricted cash, trade and other receivables, other current financial assets, short-term loan, trade payables, accrued
expenses and other current financial liabilities).
These financial instruments approximate their carrying amounts largely due to their short-term maturities.
Long-term financial assets and liabilities (due from related parties and due to related party):
The carrying amounts of these financial instruments approximate their fair values as these are interestbearing.
39. FINANCIAL RISK MANAGEMENT
The Company and Subsidiary are affected by various financial risks, including credit risk, foreign currency
risk, interest rate risk and liquidity risk. The Company and Subsidiarys overall risk management objectives are
to effectively manage these risks and minimize potential adverse effects on their financial performance.
a. Credit risk
The financial assets that potentially subject the Company and Subsidiary to significant concentrations of
credit risk consist principally of cash and cash equivalents, trade and other receivables, and due from related
parties. The Company and Subsidiary have in place credit policies and procedures to ensure the ongoing credit
evaluation and active account monitoring.
The Company and Subsidiarys exposure to credit risk arises from the default of other parties, with
maximum exposure equal to the carrying amount of these instruments.
b. Foreign currency risk
The Company and Subsidiary use foreign currency-denominated assets as a natural hedge against its foreign
currency-denominated liabilities.
c. Interest rate risk
The Company and Subsidiary are financed through Senior Notes and other borrowings such as short-term
loans and du e to related parties. Therefore, the Company and Subsidiarys exposures to market risk for changes
in interest rates relates primarily to its borrowing obligations and interest-bearing assets and liabilities. The
Company and Subsidiarys policies are to obtain the most favorable interest rates available without increasing its
foreign currency exposure by managing its interest cost using a mixture of fixed and variable rate debts and longterm borrowings.
F-66

d. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents to support
business activities on a timely basis. The Company and Subsidiary maintain a balance between continuity of
accounts receivable and due from related parties collectibility and flexibility through the use of bank loans and
other borrowings.
40. CONTINGENCIES
Berau is contigently liable for various claims from third parties arising from the ordinary conduct of
business, which are either pending or are being processed by a decision of the court, the outcomes of which could
be substantial, but are not presently determinable. The following are the contingencies as of balance sheet date:
a. Claims by Lati Transshippers Inc. for Payment of VAT
On August 14, 2009, Lati Transshipers Inc. (LTI) registered charges against Berau by sending Notice of
Arbitration to the Singapore International Arbitration Center (SIAC) in relation to the demand of LTI to Berau
for the payment of VAT arising from the performance of the agreement between Berau and LTI during the years
2000 to 2003 amounting to Rp14,203 plus penalty as assessed by the Indonesian tax authorities.
On December 21, 2009, LTI had sent the Statement of Claim to Berau. On February 10, 2010, Berau
provided its response by sending a Statement of Defense to SIAC disputing the claim of LTI. Moreover, Berau
included counterclaim such as damages for breach of contract and cost of the arbitration, in case LTI should win
the case.
As of the completion date of the consolidated financial statements, Berau received the Response Letter to
the Statement of Defense from LTI and in process of preparation for the preliminary hearing scheduled on
April 30, 2010.
b. Case with a resident in Berau
During land clearing for haulage road construction to support Beraus mining activities, five residents
complained and demanded payment for damages of their property amounting to Rp800 per hectare. Berau
refused to pay because the restitution required by the five residents was significantly higher than the market
value of the land. Berau changed the plan for the haulage road so that it would not bypass the land of the five
residents. However, one of the five residents filed a complaint against Berau to the residential police dated
October 22, 2008 for using others land and/or damages to property.
As of the completion date of the consolidated financial statements, Berau is preparing for the defense of the
case.
F-67

41. NEW ACCOUNTING STANDARDS PRONOUNCEMENTS
The Indonesian Institute of Accountants (IAI) has released the following revisions to several accounting
standards that may have certain impacts on the consolidated financial statements.
The following revisions are effective for financial statements for the period commencing from on or after
January 1, 2011:
PSAK 1 (Revised 2009)Presentation of Financial Statements.
PSAK 2 (Revised 2009)Statement of Cash Flows.
PSAK 4 (Revised 2009)Consolidated and Separate Financial Statements.
PSAK 5 (Revised 2009)Operating Segments.
PSAK 12 (Revised 2009)Interest in Joint Ventures.
PSAK 15 (Revised 2009)Investments in Associates.
PSAK 25 (Revised 2009)Accounting Policies, Changes in Accounting Estimates and Errors.
PSAK 48 (Revised 2009)Impairment of Assets.
PSAK 57 (Revised 2009)Provisions, Contingent Liabilities and Contingent Assets.
PSAK 58 (Revised 2009)Non-Current Assets Held for Sale and Discontinued Operation.
ISAK 7 (Revised 2009)ConsolidationSpecial Purpose Entities.
ISAK 9Changes in Existing Decommissioning, Restoration and Similar Liabilities.
ISAK 11Distribution of Non-Cash Assets to Owners.
ISAK 12Jointly Controlled Entities: Non-Monetary Contributions by Venturers.
Moreover, IAI has revoked several accounting standards, the effective dates of which follow the effective
date of the provisions of the other related PSAKs, as follows:
PPSAK No. 2Revocation of PSAK 41 Accounting for Warrants and PSAK 43 Accounting for
Factoring.
PPSAK No. 3Revocation of PSAK 54 Accounting for the Restructuring of Troubled Debt.
PPSAK No. 4Revocation of PSAK 31 (Revised 2000): Accounting for Banking Industry, PSAK 42:
Accounting for Securities Companies and PSAK 49: Accounting for Mutual Funds.
PPSAK No. 5Revocation of ISAK 06: Interpretation of Paragraphs 12 and 16 of PSAK 55 (1999) on
Embedded Derivative Instruments in Foreign Currency Contract.
The Company and Subsidiaries are evaluating the potential impact on the consolidated financial statements
as a result of the adoption of the above new accounting standards.
42. SUBSEQUENT EVENTS
a. Acquisition of Seacoast Offshore Inc.
On April 15, 2010, the Company acquired 100% ownership (3 shares) in Seacoast Offshore Inc., a company
incorporated in British Virgin Islands. In consideration, the Company paid USD3 which is equivalent to the par
value of the shares acquired.
F-68

b. Acquisition of Keystone Business Resources Pte. Ltd.
On April 15, 2010, the Company acquired 100% ownership (2 shares) in Keystone Business Resources Pte.
Ltd., a limited private company incorporated in Singapore, from Andy Pe Yong Woon. In consideration, the
Company paid SGD2 which is equivalent to the par value of the shares acquired.
c. Amendment of Articles of Association based on Notarial Deed No. 207
In accordance with the Companys Extraordinary Shareholders General Meeting as recorded in Notarial
Deed No. 207 of Aulia Taufani, S.H., dated April 21, 2010, the following actions were approved:
To approve the issuance of 7,000,000,000 as Initial Public Offering Share to be offered to public and
recorded in Indonesia Stock Exchange.
To submit authorization to the Board that PT Bukit Mutiara is the only one shareholder of PT Berau Coal
Energy.
To give authorization to Director of the Company to perform all actions related with Initial Public
Offering Share including but not limited to:
a. Stating offering price
b. Stating total shares offered by approval from Board of Commissioners
c. Deposit the share in collective depository of PT Kustodian Sentral Efek Indonesia; and
d. Recording all shares of the Company issued and submitted in Indonesia Stock Exchange.
To approve the change of the Companys status from private to public company.
To approve the change of the Companys name from PT Berau Coal Energy to PT Berau Coal Energy
Tbk.
To approve the termination of Mr. Thomas Warren Shreve as commissioner and appoint him as director
of the Company.
43. REISSUANCE OF CONSOLIDATED FINANCIAL STATEMENTS
The Company has issued the consolidated financial statements for the three-month period ended March 31,
2010. The consolidated financial statements for the three-month period ended March 31, 2010 have been
reviewed by Tjiendradjaja & Handoko Tomo, Registered Public Accountants, with independent accountants
report No. P015/2010 dated May 14, 2010 with comparative figures of the consolidated financial statements for
the three-month period March 31, 2009. In connection with the plan of issuance of Guaranteed Senior Secured
Notes, the consolidated financial statements were reissued with the effect of the results of the review of the
consolidated financial statements for the three-month period ended March 31, 2009.
44. COMPLETION OF THE CONSOLIDATED FINANCIAL STATEMENTS
The management of the Company is responsible for the preparation of these consolidated financial
statements that were completed on June 22, 2010.
F-69
INDEPENDENT AUDITORS REPORT

Report No. 042/T/1/2010
PT Risco
We have audited the accompanying consolidated balance sheets of PT Risco (the Company) and
Subsidiaries as of December 31, 2009, 2008 and 2007, and the related consolidated statements of income,
changes in equity, and cash flows for the years then ended. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards established by the Indonesian Institute of
Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of PT Risco and Subsidiaries as of December 31, 2009, 2008 and 2007, and the results of
their operations and their cash flows for the years then ended in conformity with generally accepted accounting
principles in Indonesia.
March 17, 2010
Tjiendradjaja Yamin
NOTICE TO READERS
standards, procedures and practices utilized to audit such consolidated financial statements may differ from those generally accepted in
countries and jurisdictions other than Indonesia. Accordingly, the accompanying consolidated financial statements and the auditors report
thereon are not intended for use by those who are not informed about Indonesian accounting principles and auditing standards, and their
F-70
PT RISCO AND SUBSIDIARIES

DECEMBER 31, 2009, 2008 AND 2007
Notes
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivablesthird parties . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third partiesnet of allowance for doubtful accounts
of Rp1,033 in 2009, Rp2,249 in 2008 and Rp1,934
in 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments and other current assets . . . . . . . . . . . . . . . . . . . .
2d,4
2e,5
2f,6
2g,7
2g,8
2h,35d
2009
2007
1,026,429
332,923
3,785
934,154
533,305
353,314
4,344
474,772
20,917
10,496
84,729
451,432
178,571
98,264
283,579
120,779
7,533
56,518
22,629
4,448,208
2,820,830
1,462,911
2h,35b
2k,11
14,997
3,058,196
38,600
2,399,490
38,600
2l,2m,2n,14
369,589
348,145
248,305
2c,2m,2o,12
2m,2p,13
7,229,200
171,073
315,802
229,044
270,441
281,794
2c,15
37,499
76,140
125,466
2q,16
2e,17
100,489
10,235
70,517
12,674
81,161
14,373
Total Non-Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,933,082
4,149,118
3,459,630
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,381,290
6,969,948
4,922,541
2i,9
2j,10
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NON-CURRENT ASSETS
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in associated company. . . . . . . . . . . . . . . . . . . . . . .
Fixed assetsnet of accumulated depreciation of
Rp552,686 in 2009, Rp597,543 in 2008 and Rp476,393
in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred exploration and development costnet of
accumulated amortization of Rp258,694 in 2009,
Rp261,926 in 2008 and Rp194,560 in 2007 . . . . . . . . . . . .
Deferred stripping costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwillnet of accumulated amortization of Rp209,130
in 2009, Rp170,489 in 2008 and Rp121,163 in 2007. . . . .
Deferred financing chargesnet of accumulated
amortization of Rp561 in 2009, Rp48,667 in 2008 and
Rp21,358 in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,803,908
1,057,374
872,194
2008
The accompanying notes to consolidated financial statements are an integral part of

the consolidated financial statements.
F-71

DECEMBER 31, 2009, 2008 AND 2007
Notes

CURRENT LIABILITIES
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables
Related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other payables
Third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current maturities of long-term debts Senior Notes . . . . . . . . . .
Obligation under finance lease. . . . . . . . . . . . . . . . . . . . . . . .
Environmental restoration obligation . . . . . . . . . . . . . . . . . .
18
2h,19,35d
19
2009
2,820,000
2008
2007
837,117
145,951
504,849
92,470
290,763
1,837
734,686
1,179,921
9,066
957
814,798
654,867
273,750
392
8,956
128
457,756
269,472
235,475
6,403
13,479
5,582,627
2,404,520
1,365,946
2,820,000
110,170
23,745
14,666
116,926
16,946
3,011,250
18,260
4,166
109,273
12,884
2,825,700
1,278
11,513
Total Non-Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,968,581
3,163,382
2,964,814
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,551,208
5,567,902
4,330,760
2b,25
324,461
1,024,491
523,081
26
3b,27
7,500
2,367,087
1,250
1,250
7,996
7,996
114,262
1,016,772
157,112
211,197
18,354
41,100
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,505,621
377,555
68,700
TOTAL LIABILITIES AND EQUITY. . . . . . . . . . . . . . . . . . .
12,381,290
6,969,948
4,922,541
20
2t,24a
21
2n,22
2r,23
Total Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Due to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilitiesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debtsnet of current maturities Senior Notes. . . . .
Obligation under finance lease. . . . . . . . . . . . . . . . . . . . . . . .
Environmental restoration obligation . . . . . . . . . . . . . . . . . .
MINORITY INTEREST IN NET ASSETS OF

CONSOLIDATED SUBSIDIARIES . . . . . . . . . . . . . . . . . . .
EQUITY
Capital stockRp1 par value per share Authorized30,000
shares in 2009 and 5,000 shares in 2008 and 2007 Issued
and fully paid7,500 shares in 2009 and 1,250 shares in
2008 and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference in value from restructuring transactions of entities
under common control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences due to financial statements
translations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2h,35a
2t,24b
2u,34
21
2n,22
2r,23
2c
2v

F-72

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
Notes
SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF GOODS SOLD . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2h,2s,29,35c
2s,30
GROSS PROFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
2008
8,318,616 6,110,247
4,921,417 4,458,822
2007
(As restatedsee Note 41)
3,445,023
2,658,385
3,397,199
1,651,425
786,638
270,186
101,390
179,416
64,046
120,310
39,127
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
371,576
243,462
159,437
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,025,623
1,407,963
627,201
OPERATING EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gains (losses)net . . . . . . . . . . . . . . . . . . . .
Realization of difference in value from restructuring
transactions of entities under common control . . . . . . . . . .
Finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from early redemption of Senior Notes . . . . . . . . . . . . . .
Amortization of deferred financing charges. . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Othersnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2h,2s,35c
31a
31b
2h,35b
2v
259,674
175,876
243,263
(155,731)
225,411
(39,067)
2c,3a
32
21
2q,16
2c,15
7,996
(280,421)
(156,260)
(67,583)
(38,641)
4,918
(294,411)
(21,072)
(49,326)
4,915
(300,580)
(19,888)
(49,326)
4,825
(94,441)
(272,362)
(178,625)
Other ChargesNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME BEFORE
INCOME TAX EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expensenet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME OF CONSOLIDATED SUBSIDIARIES . . .
CONSOLIDATED SUBSIDIARIES. . . . . . . . . . . . . . . . .
2t,24b
2b,25
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BASIC EARNINGS PER SHARE . . . . . . . . . . . . . . . . . . . . .
2w,33
2,931,182
1,291,658
1,135,601
597,411
448,576
256,613
1,639,524
538,190
191,963
785,811
368,093
166,305
853,713
170,097
25,658
655.69
136.08
20.53

F-73
F-74
6,250
2v
3b,26,27
2y,28
7,500
1,250
2c,3a
2v
2v
1,250
2c,3a
2,367,087
2,367,087
(6,338)
6,338
Additional
Paid-in Capital
1,250
Capital Stock
(7,996)
7,996
7,996
7,996
Difference in
Value from
Restructuring
Transactions of
Entities under
Common Control
114,262
(42,850)
157,112
138,758
18,354
20,216
(1,862)
Exchange
Differences
Due to
Financial
Statements
Translations

Balance as of December 31, 2009 . . . . .
Balance as of December 31, 2008 . . . . . .

Realization of difference in value from
restructuring transactions of entities
under common control . . . . . . . . . . . . .
Exchange differences due to financial
statements translations . . . . . . . . . . . . .
Issuance of new shares . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income for the year . . . . . . . . . . . . . . .
Balance as of December 31, 2007 . . . . . .

Balance as of January 1, 2007 . . . . . . . . .

Elimination of proforma equity from
restructuring transactions of entities
under common control . . . . . . . . . . . . .
Difference in value from restructuring
transactions of entities under common
control . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes
Proforma
Equity from
Restructuring
Transaction of
Entities under
Common Control

(7,996)
377,555
138,758
170,097
68,700
20,216
25,658
7,996
(6,338)
21,168
Total Equity
1,016,772
3,505,621
(42,850)
2,373,337
(48,138)
(48,138)
853,713
853,713
211,197
170,097
41,100
25,658
15,442
Retained
Earnings

2009

Receipts from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment to suppliers and operating expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Payment to Government for coal sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for employee salaries, wages and allowances . . . . . . . . . . . . . . . . .
Payment for environmental restoration obligation . . . . . . . . . . . . . . . . . . . . .
2008
2007
8,380,576 5,650,865 3,338,104

(3,701,695) (3,399,311) (2,086,211)
(1,018,339) (644,570) (351,165)
(186,459) (139,567)
(89,256)
(15,768)
(11,833)
(5,208)
Cash provided by operation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of interest and financing charges . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,458,315
(829,749)
(291,228)
21,945
1,455,584
(224,646)
(294,758)
24,366
806,264
(233,459)
(299,651)
9,846
Net Cash Flows Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . .
2,359,283
960,546
283,000

Deduction (additions) to short-term investment . . . . . . . . . . . . . . . . . . . . . . .
Deduction (additions) to other non-current assets. . . . . . . . . . . . . . . . . . . . . .
Acquisition of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net withdrawal (deposit) of restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exploration and development cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,785
2,439
(2,820,000)
(724,451)
(110,614)
(48,876)
559
1,699
20,391
(111,312)
(112,727)
(4,344)
(9,536)
(148,966)
(77,315)
(23,835)
Net Cash Flows Used in Investing Activities. . . . . . . . . . . . . . . . . . . . . . . . . .
(3,697,717)
(201,390)
(263,996)

Proceeds (payments) of due to related parties . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds of short-term loannet of financing fee . . . . . . . . . . . . . . . . . . . . .
Deductions (additions) to due from related parties . . . . . . . . . . . . . . . . . . . . .
Payment of long-term debts:
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for Senior Notes redemption penalties . . . . . . . . . . . . . . . . . . . . . . .
Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,820,000
2,734,102
51,601
(4,166)
(12,588)
(659)
(3,285,000)
(392)
(156,260)
(48,138)
(241,989)
(7,289)
(5,734)
Net Cash Flows Provided by (Used in) Financing Activities . . . . . . . . . . . .
2,115,913
(266,032)
(6,393)
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . .

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR. . .
777,479
1,026,429
493,124
533,305
12,611
520,694
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . .
1,803,908
1,026,429
533,305
Additional information for non-cash activities:

Acquisition of subsidiary through issuance of shares. . . . . . . . . . . . . . . . . . .
Capitalization of unpaid interest to due from related parties. . . . . . . . . . . . .
2,373,337
225,263
215,564

F-75

1. GENERAL
PT Risco (the Company) was established in the Republic of Indonesia based on Notarial Deed No. 2 of
Rony Saputra S, S.H., notary in Tangerang dated September 7, 2005. The Deed of Establishment was approved
by the Ministry of Law and Human Rights in its decision letter No. C-31138.HT.01.01.TH.2005 dated
November 23, 2005 and was published in the State Gazette of the Republic of Indonesia No. 55, Supplement
No. 17822 dated July 10, 2009. The Companys articles of association have been amended several times, the
most recent being based on the Notarial Deed No. 256 dated December 29, 2009, made by Aulia Taufani, S.H.,
notary in Jakarta for the increase in authorized capital stock, issuance of new shares and changes in directors and
commissioners of the Company. These amendments were approved by the Ministry of Law and Human Rights of
the Republic of Indonesia on December 30, 2009 under the decree No. AHU-0087047.AH.01.09.Year 2009.
In accordance with Article 3 of the Companys articles of association, the scope of activities of the
Company comprises of trading, mining, plantation, construction, real estate, agriculture, printing, industry,
transportation and services. Currently, the Company is engaged as a holding company of its Subsidiaries.
The Companys office is located at Menara Batavia, 30th Floor, Jl. K.H. Mas Mansyur, Kav. 126, Jakarta
10220, Indonesia.
The composition of the Companys Boards of Commissioners and Directors as of December 31, 2009, 2008
and 2007 was as follows:
Commissioners
Commissioner
Commissioner
Directors
President Director
Director
2009
2008
2007
Fatah Setiawan Topobroto
Rizal Risjad
Rizal Risjad
Amirsyah Risjad
Jimmy Budiarto
2009
2008
2007
Arnanto

Selviya Risyad
The Company did not provide remuneration to its commissioners and directors for the years ended
December 31, 2009, 2008 and 2007.
As of December 31, 2009, 2008 and 2007, the Company and Subsidiaries had 657, 566 and 510 employees,
respectively (unaudited).
F-76

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007(Continued)
c. The Structure of the Company and its Subsidiaries
As of December 31, 2009, 2008 and 2007, the Company had direct and indirect ownership in Subsidiaries as
follows:
2009
Principal
Activity
Percentage of
Ownership
Start of
Commercial
Operations
Total Assets
Before
Elimination
Indonesia
Special Purpose
Company
99.99
1999
1,693,364
Republic of
Seychelles
Special Purpose
Company
100.00
2009
3,537,514
Indirect ownership:
Through Armadian andRognar
PT Berau Coal (Berau). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia
Coal Mining
90.00
1995
8,973,932
Through Berau
Pte. Ltd. (EC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore
Special Purpose
Company
90.00
2006
2,696,466
Through Winchester
(Aries). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malta
Special Purpose
Company
100.00
2006
1,732,421
Through Aries and Armadian

Rognar Holdings B.V.
(Rognar) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netherlands
Special Purpose
Company
100.00
2004
1,507,629
Subsidiaries
Direct ownership:
(Armadian). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PLC. (Winchester) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domicile
2008
Subsidiaries
Domicile
Principal
Activity
Percentage of
Ownership
Start of
Commercial
Operations
Total Assets
Before
Elimination
Direct ownership:
(Armadian). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia
Special Purpose
Company
99.99
1999
1,125,120
Indirect ownership:
Indonesia
Coal Mining
51.00*
1995
7,658,624
Through Berau
Pte. Ltd. (EC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore
Special Purpose
Company
51.00
2006
3,298,833
Total Assets
Before
Elimination
2007
Subsidiaries
Domicile
Principal
Activity
Percentage of
Ownership
Start of
Commercial
Operations
Direct ownership:
(Armadian). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia
Special Purpose
Company
99.99
1999
631,083
Indirect ownership:
Indonesia
Coal Mining
51.00*
1995
5,392,057
Through Berau
Pte. Ltd. (EC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore
Special Purpose
Company
51.00
2006
3,074,735
F-77

PT Berau Coal
Berau is involved in coal mining and has been operational since 1995.
As of December 31, 2009, the Company held 90% direct and indirect ownership in PT Berau Coal
(Berau). The scope of activities of Berau comprises of exploration, development, mining, marketing and
trading, and transporting of coal deposits in Kalimantan.
Beraus activities are governed by the provisions of the Coal Contract of Work (CCoW) entered into by
Berau and Perusahaan Negara Tambang Batubara on April 26, 1983, which was subsequently transferred to PT
Tambang Batubara Bukit Asam (PTBA) in 1991. Based on Presidential Decree No. 75/1996 dated
September 25, 1996 and the amendment to the CCoW No. 02/1-DD/50/96 between PTBA and Berau dated
June 28, 1997, all rights and obligations of PTBA under the CCoW were transferred to the Government of the
Republic of Indonesia, represented by the Ministry of Mines and Energy, which became effective on July 1,
1997.
mining operations in areas totaling approximately 487,217 hectares located in East Kalimantan. Since April 7,
2005, the concession area has been 118,400 hectares.
Berau started commercial operations on April 27, 1995 and its concession right is valid for 30 years.
In 2009, the Company held 90% direct and indirect ownership in Empire Capital Resources Pte. Ltd. (EC), a
subsidiary, that was established by Berau on November 2, 2006, with the main purpose of issuing the Senior
Notes (Note 21) and on-lending the gross proceeds of the Senior Notes to Berau pursuant to an Inter-company
Loan Agreement. EC was incorporated as a limited liability company under the laws of Singapore. On
December 28, 2009, EC obtained a new loan from Credit Suisse AG (Note 18), which was used for the payment
of the Senior Notes on December 28, 2009.
d. Exploration and Exploitation Area/Development
Exploration Area
Location
Lati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Date of
Concession
End Date
April 30, 1983 April 26, 2025

April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
April 30, 1983 April 26, 2025
F-78
Percentage
of
Ownership
100%
100%
100%
100%
100%
100%
100%
Total Exploration
Cost that has been
Recognized as of
Balance Sheet Date
326,662
98,694
53,958
29,124
26,161
4,201
1,327

Exploitation Area
Location
Lati . . . . . . . . . . . .
Binungan . . . . . . .
Sambarata . . . . . .
Concession
Date of
End Date
April 30, 1983

April 30, 1983
April 30, 1983
April 26, 2025

April 26, 2025
April 26, 2025
Percentage
of
Ownership
Proven
Reserve (P1)*
(in million
tonnes)
100%
100%
100%
97.2
63.9
26.0
Total Production
(in million tonnes)
Accumulated
Current
Total
Year
Production
8.1
4.3
1.9
57.6
37.6
8.6
Balance
of Proven
Reserve (in
million
tonnes)
39.6
26.3
17.4
*) Total Proven Reserve (P1) are based on the survey result of by Minarco-MineConsult as of December 31,
2008.
The consolidated financial statements have been prepared in accordance with the generally accepted
accounting principles and practices in Indonesia, which are covered by Statement of Financial Accounting
Standards (PSAK). The accounting principles applied consistently in the preparation of the consolidated financial
statements were as follows:
a. Basis of Preparation of Consolidated Financial Statements
The consolidated financial statements, except for the consolidated statements of cash flows, are prepared
under the accrual basis of accounting, with the measurement basis being historical cost, except for certain
accounts that are measured on the basis described in the related accounting policies.
The reporting currency used in the preparation of the consolidated financial statements is Indonesian Rupiah
(Rp), which is the functional currency of the Company.
The consolidated financial statements include all Subsidiaries that are controlled by the Company. Control
is presumed to exist when the Company owns, directly or indirectly (through Subsidiaries), more than 50% of the
b) having the right to govern the financial and operating policies of the Subsidiaries under the articles of
c) ability to appoint or remove the majority of the members of the Subsidiaries management;
d) ability to control the majority of votes at meetings of management;
The minority shareholders proportionate share in the equity of the consolidated Subsidiaries is presented
under Minority Interests in Net Assets of Consolidated Subsidiaries in the consolidated balance sheets, while
F-79

the minority shareholders proportionate share in the net income or loss of consolidated subsidiaries is presented
under Minority Interests in Net Income or Loss of Consolidated Subsidiaries in the consolidated statements of
income.
c. Business Acquisition
Acquisitions are accounted for using the purchase method in accordance with the requirements of PSAK
No. 22, Business Combination. On acquisition, the assets and liabilities of a Subsidiary are measured at their
fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable
net assets acquired is recognized as goodwill and amortized using the straight-line basis over five (5) years.
When the cost of acquisition is less than the fair values of the identifiable assets and liabilities acquired as at
the date of acquisition (i.e. discount on acquisition), fair values of the acquired non-monetary assets are reduced
proportionately until all the excess is eliminated. The remaining excess after reducing the fair values of
non-monetary assets acquired is recognized as negative goodwill, treated as deferred revenue and recognized as
revenue on a straight-line basis over five (5) years.
Acquisitions of Subsidiaries that represent a restructuring transaction of entities under common control are
accounted for in accordance with PSAK No. 38 (Revised 2004), Accounting for Restructuring Transaction of
Entities Under Common Control. Based on this standard, acquisition of a Subsidiary is accounted based on the
pooling of interest, wherein assets and liabilities of a subsidiary are recorded at their book values. The difference
between the transfer price and the Companys interest in the Subsidiarys book values, if any, is recorded as
Difference in Value from Restructuring Transactions of Entities Under Common Control and presented as a
separate component in the Companys equity. The balance of Difference in Value from Restructuring
Transactions of Entities Under Common Control can be realized as gain or loss from the time the common
control no longer exists between the entities that entered into the transaction.
Coal resources represent the fair value adjustment of coal resources acquired at the date of acquisition of
Subsidiary and are stated at cost and presented as part of Deferred Exploration and Development Cost in the
consolidated balance sheets. Coal resources are amortized using the units of production method from the date of
acquisition based on estimated proved reserves. Changes in estimated proven reserves are accounted for on a
prospective basis, from the beginning of the period in which the change occurs.
d. Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and in banks, and time deposits with maturities within
three months or less and not pledged as collateral or restricted in use.
e. Restricted Cash
Cash in banks and time deposits, which are restricted for short-term loan principal repayments and interest
payments and/or placed as security for any short-term bank facilities, are presented under current assets. Other
time deposits which are restricted in use are presented under non-current assets.
F-80

f. Short-term Investment
Investment in mutual funds is stated at net asset value of the funds. Increase (decrease) in net asset value of
the fund is reflected in the consolidated statements of income for the year.
g. Receivables
Receivables are recognized and carried at original amount less any allowance for doubtful accounts.
Allowance for doubtful accounts is maintained at a level considered to be adequate to provide for potential losses
on receivables. The level of this allowance is based on managements evaluation of collection experience and
other factors that may affect collectibility.
h. Transactions with Related Parties
The Company and Subsidiaries have transactions with certain parties, which have a related party
relationship, as defined in PSAK No. 7, Related Party Disclosures.
All significant transactions with related parties whether or not conducted under the same terms and
i. Inventories
Effective January 1, 2009, Berau applied PSAK No.14 (Revised 2008), Inventories (Revised PSAK 14),
which supersedes PSAK No. 14 (1994) Inventories. The adoption of Revised PSAK 14 had no significant
impact on the consolidated financial statements.
Coal inventories comprise of materials, labor and directly and attributable fixed and variable overheads
related to coal mining activities. Inventories are valued at the lower of cost or net realizable value (NRV). Cost is
determined using the average method. Allowance for inventories obsolescence is provided based on a review of
the condition of inventories at the end of the year.
j. Prepaid Expenses
Prepaid expenses are amortized over the periods benefited.
k. Investment in Associated Companies
Investment in associated companies with an ownership interest of at least 20% but not exceeding 50% and
with no ability to control, or when the Company or Subsidiaries have significant influence over the associated
companies, are accounted for under the equity method whereby the costs of the investments are increased or
decreased by the Company or Subsidiaries equity in the net income or loss of the associated companies since the
date of acquisition and decreased by cash dividend received. Investment with ownership interest of less than 20%
is carried at cost.
F-81

l. Fixed Assets
The Company and Subsidiaries applied PSAK No. 16 (Revised 2007), Fixed Assets (Revised PSAK
16). Based on Revised PSAK 16, an entity shall choose between the cost model and revaluation model as the
accounting policy for its fixed assets measurement. The Company and Subsidiaries have chosen the cost model
as the accounting policy for their fixed assets measurement.
computed on the straight-line method at a rate of 12.5% per year except for buildings and several land
In accordance with PSAK No. 47, Accounting for Land, land acquisitions are stated at acquisition cost
and not amortized. The acquisition cost includes permit, license cost and purchase cost of land.
Land improvement represents cost incurred (i.e. land clearing cost, road development, etc.) in preparing the
land area for mining operations.
The assets useful lives and method of depreciation are reviewed, and adjusted if appropriate, at the end of
the year.
Construction-in-progress is stated at cost and presented as part of Fixed Assets in the consolidated balance
sheets. The accumulated costs will be reclassified to the appropriate fixed assets account when construction is
completed and the assets are ready for their intended use.
The cost of repairs and maintenance is charged to consolidated statements of income as incurred;
benefits associated with the item will flow to the Company and Subsidiaries, and the cost of the item can be
are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in
consolidated statements of income in the year the asset is derecognized.
m. Impairment of Asset Values
of an asset exceeds its recoverable amount, an impairment loss is recognized in the current year consolidated
n. Leases
The Company and Subsidiaries applied PSAK No. 30 (Revised 2007), Leases (Revised PSAK 30).
Under Revised PSAK 30, leases that transfer substantially all the risks and benefits incidental to ownership of the
leased item to the lessee are classified as finance leases. Finance leases are capitalized at the inception of the
lease at the fair value of the leased assets or at the present value of the minimum lease payments if the present
value is lower than the fair value. Lease payments are apportioned between finance charges and reduction of the
lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are recorded in the consolidated statements of income. Leased assets held by the lessee under finance leases are
included in fixed assets and depreciated over the estimated useful life of the assets or the lease term, whichever is
shorter, if there is no reasonable certainty that lessee will obtain ownership by the end of the lease term.
F-82

o. Deferred Exploration and Development Cost
assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in or in relation to the area are continuing.
p. Deferred Stripping Costs
(i) initial stripping of the top soil to open up the mining area before production commences and
q. Deferred Financing Charges
Fees incurred to obtain financing are deferred and amortized on a straight-line basis over the terms of the
related financing agreements. Outstanding balance of the deferred financing charges is expensed outright upon
settlement of the liabilities.
r. Environmental Restoration Obligation
Beraus policy is to meet or surpass the requirements of the CCOW and all applicable environmental
regulations issued by the Government of Indonesia (GOI), by application of technically proven and economically
feasible measures. Environmental management at Berau includes, but is not limited to, top soil replacement,
dredging of sediment ponds and dams, water quality control and waste handling, planting and seeding.
F-83

Recognition of current portion is based on the estimates of the management.
s. Revenue and Expense Recognition
t. Income Taxes
Current tax expense is provided based on the estimated taxable income for the year. Tax rates specified in
the CCoW are used to determine income tax of Berau. Under the CCoW, the annual tax rate is 35% during the
first full ten years from the commencement of the operating period (through 2001), and 45% during the
remainder of the operating period. Temporary differences from accelerated depreciation and amortization have
been measured at the tax rates in effect when such temporary differences will be settled. Current tax expenses of
Subsidiaries that is domiciled and registered as a tax subject outside of Indonesia are determined based on the
taxable income for the year computed using prevailing tax rates in the relevant country.
bases of assets and liabilities at each reporting date. Deferred tax assets are recognized for all deductible
temporary differences to the extent that it is probable that future taxable profit will be available against which the
the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at balance sheet date.
Deferred tax assets and liabilities are offset in the consolidated balance sheets, except if these are for
different legal entities, in the same manner as the current tax assets and liabilities are presented.
appealed against by the Company and Subsidiaries, when the result of the objection and/or appeal is determined.
F-84

u. Employee Benefits
The Company and Subsidiaries adopted PSAK No. 24 (Revised 2004) on Employee Benefits (Revised
PSAK 24) to determine their employee benefits obligation under the Labor Law No. 13/2003 dated March 25,
2003 (the Law). Under Revised PSAK 24, the cost of employee benefits based on the Law is determined using
the Projected Unit Credit actuarial valuation method. Actuarial gains or losses are recognized as income or
year exceed the higher of the 10% of the defined benefit obligation and the 10% of the fair value of plan assets at
that date. These gains or losses are recognized on a straight-line basis method over the expected average
remaining working lives of the employees. Past-service cost arising from the introduction of a defined benefit
plan or changes in the benefits obligation of an existing plan are required to be amortized over the period until
the benefits concerned become vested.
Berau provides provisions for employee benefits for all of their eligible permanent employees based on
Labor Law No. 13/2003. Berau has a defined contribution retirement plan covering all of its qualified permanent
employees, contributions being computed at the rate of 1% to 2% of the employees monthly salaries and funded
equally by Berau and its employees. The plan is managed by PT Bank Negara Indonesia (Persero) Tbk. Beraus
v. Foreign Currency Transactions and Balances
The books of accounts of the Company and Subsidiaries are maintained in Indonesian Rupiah. Transactions
involving foreign currencies during the year are recorded at the rates of exchange prevailing at the time the
transactions are made. At balance sheet date, monetary assets and liabilities denominated in foreign currencies
are adjusted to reflect the exchange rates prevailing at that date. The resulting gains or losses are credited or
charged to current consolidated statements of income.
The books of accounts of certain Subsidiaries are maintained in currency other than Rupiah. For
consolidation purposes, assets and liabilities of the Subsidiaries at balance sheet date are translated into Rupiah
using the exchange rates at balance sheet date, while revenues and expenses are translated at the average rates of
exchange for the year. Resulting translation adjustments are shown as part of equity as Exchange Differences
Due to Financial Statements Translations.
The exchange rates used were middle rates published by Bank Indonesia as of December 31, 2009, 2008 and
2007 were as follows:
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singaporean Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australian Dollar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
(full amount)
2008
(full amount)
2007
(full amount)
9,400
102
6,699
8,432
13,510
10,950
121
7,607
7,556
15,432
9,419
83
6,502
8,229
13,760
w. Earnings per Share

In accordance with PSAK No. 56, Earnings per Share, basic earnings per share are computed by dividing
net income by the weighted average number of shares outstanding during the period. Diluted earnings per share
F-85

are computed by dividing net income by the weighted average number of shares outstanding as adjusted for the
effects of all potential dilution.
x. Segment Information
Segment information is presented based on PSAK No. 5 (Revised 2000) regarding Segment Accounting.
The Company and its Subsidiaries primary reporting segment information is based on geographical segment,
while its secondary reporting segment information is based on business segment.
y. Dividend
Final dividend distributions are recognized as a liability when the dividends are approved by the Companys
General Meeting of the Shareholders. Interim dividend distributions are recognized as a liability when approved
by the Board of Directors resolution in accordance with the Companys articles of association.
z. Contingencies
Contingent liabilities are recognized in the consolidated financial statements, unless the possibility of an
outflow of resources is remote. Contingent assets are not recognized in the consolidated financial statements but
are disclosed when an inflow of economic benefits is probable.
aa. Use of Estimates
3. ACQUISITION OF SUBSIDIARIES
The Company has acquired the following Subsidiaries:
a. PT Armadian Tritunggal
Pursuant to the Share Sale and Purchase Agreement (SPA) dated July 28, 2006, the Company agreed to
purchase 20,833 shares or 83.33% of Armadian from PT Mentari Bukit Makmur (8,333 shares), Henry Ngadimin
(8,333 shares) and David Jahja (4,167 shares). The consideration for the sale and purchase of the shares was the
payment by the Company on completion to each of the sellers of their respective proportions of the amount
USD18,000,000 minus the aggregate amounts owed to Prime Quest Holding Inc. and PT Mentari Bukit Makmur
as well as the settlement to Asiawerks Global Investment Group Pte. Ltd. on the completion date. The difference
between the purchase price and the net assets value of Armadian was recorded as goodwill (Note 15).
On April 2, 2007, the Company, Armadian and Berau entered into a Novation Agreement whereby all the
receivables from Armadian to Berau were transferred to the Company. Such receivables were subject to interest
of 3-month LIBOR plus 4.75% per year. On the same date, the Company and Armadian entered into a Debt to
Equity Conversion Agreement in which the Company converted all its receivables from Armadian into 392,998
new ordinary shares in the equity capital of Armadian.
F-86

Based on Minutes of Extraordinary Shareholders Meeting, which were notarized under the Notarial Deed
No. 38 by Imas Fatimah, S.H., notary in Jakarta, dated June 8, 2007, the shareholders of Armadian agreed to the
transfer of 4,166 shares or 16.67% of Armadian shares held by a common shareholder to the Company. The
transfer of shares represented a transaction of entities under common control in accordance with PSAK No. 38,
Accounting for Restructuring of Entities Under Common Control. The Subsidiarys equity at the beginning on
which control is acquired is presented in equity as Difference in Value from Restructuring Transactions of
Entities Under Common Control. As of December 31, 2009, the Company realized the gain from restructuring
transactions amounting to Rp7,996 since the control by the common stockholder no longer existed. The gain was
presented as part of the Other Income (Charges) in the consolidated statements of income.
b. Winchester Investment Holdings PLC
On December 29, 2009, the Company acquired 45.50% ownership (36,400,000 shares) in Winchester, a
company incorporated in Republic of Seychelles, from PT Bukit Mutiara, a third party, in accordance with the
Notarial Deed No. 256 of Aulia Taufani, S.H., on the same date. Winchester has 34% indirect ownership in
Berau through Rognar. As consideration, the Company issued 6,250 new shares to PT Bukit Mutiara which
represents 83.33% ownership in the Company. The acquisition is recorded based on the purchase method.
According to valuation reports issued by Martokoesoemo, Prasetyo & Rekan, an independent appraisers,
dated December 29, 2009, the fair value of 45.50% shares of Winchester amounted to USD251,599,428
(equivalent to Rp2,373,337).
The difference between par value of the 6,250 shares amounting to Rp6,250 and fair value of 45.50% shares
based on an independent appraisal report recognized on the acquisition date amounting to Rp2,367,087 is
recorded as additional paid-in capital (Note 27).
Pursuant to the Share Purchase Agreement (SPA) dated November 25, 2009 with effectivity date of
December 29, 2009, the Company agreed to purchase 43,600,001 shares of Winchester and one (1) ordinary share B
of Aries from Eureka Company Limited (Eureka), and one (1) share of Winchester from Shelburne Company
Limited Company (Shelburne). The 43,600,002 shares purchased represent 54.50% of total outstanding shares of
Winchester. The consideration for the sale and purchase of the shares was the payment by the Company on
completion of the SPA of USD300,000,001 but subject to adjustment based on the difference between the Actual
Completion Adjustment Statement and Estimated Completion Adjustment Statement. The Company used the
proceeds from the Intercompany Loan from PT Bukit Mutiara to pay the purchase price (Note 35a).
The Company recognized the difference between the cost and fair value of identifiable assets and liabilities
arising from the acquisition of Winchester were allocated to the coal resources of Berau and recorded as part of
Deferred Exploration and Development Cost (Note 12).
c. Aries Investment Ltd.
On December 16, 2009, Winchester, a Subsidiary, entered into an Assignment, Assumption and Release
Agreement with Danehill, a third party, in which Danehill agreed to transfer its 99.99% (80,001,599 shares)
ownership in Aries in exchange for the assumption of the loan from Berau amounting to USD296,050,419
(principal plus interest) and payment of USD80,000,000. Danehill has 34% indirect ownership in Berau through
Rognar. The agreement became effective on December 29, 2009. The difference between the cost and fair value
of identifiable assets and liabilities were allocated to the coal resources of Berau and recorded as part of
Deferred Exploration and Development Cost (Note 12).
F-87

2009
Cash on hand
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
(USD42,151 in 2009, USD48,056 in 2008 and USD1,158,360 in
2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp50 million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash in banks
Rupiah
Hongkong and Shanghai Banking Corporation Limited . . . . . . . . . . . . . . . .
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Negara Indonesia (Persero) Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Internasional Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp50 million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
Hongkong and Shanghai Banking Corporation Limited
(USD140,816,034 in 2009, USD65,373,464 in 2008 and
USD39,664,526 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank (USD22,178,857 in 2009, USD578,702 in 2008
and USD467,039 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Internasional Indonesia Tbk (USD1,331,092 in 2009,
USD507,462 in 2008 and USD357,182 in 2007). . . . . . . . . . . . . . . . . . . .
Others (each below Rp50 million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash equivalents
Time Deposits
Rupiah
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Negara Indonesia (Persero) Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Mega Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
PT ANZ Panin Bank (USD nil in 2009, USD4,779,500 in 2008
and USD nil in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Mega Tbk (USD nil in 2009, USD1,976,448 in 2008
and USD940,000 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-88
2008
2007
1,095
944
343
396
102
1,593
526
86
1,556
10,911
20
11,274
31,245
27,358
24,917
15,553
7,925
11
107,009
77,253
18,352
6,367
18,507
1,720
78
122,277
111,773
4,238
8,250
5,722
954
158
131,095
1,323,671
715,839
373,600
208,481
6,337
4,399
12,512
42
1,544,706
1,651,715
5,557
84
727,817
850,094
3,364
119
381,482
512,577
150,000
500
100
150,600
100,000
500
100
201
100,801
500
100
600
52,336
150,600
1,803,908
21,642
73,978
174,779
1,026,429
8,854
8,854
9,454
533,305

Rupiah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
2008
2007
5.50% 7.50%
6.15% 9.75%
2.13% 3.75%
3.00% 9.75%
4%
5. RESTRICTED CASH
2009
2008
2007
685,424
154,141
317,791
138,441
146,858
63
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
823,865
300,999
317,854
Time deposits
US Dollar
PT ANZ Panin Bank (USD10,625,600 in 2009, USD974,795 in 2008 and
USD2,870,555 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rupiah
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99,880
10,674
27,038
132,790
839
14,823
6,427
2,335
6,087
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
233,509
31,924
35,460
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,057,374
332,923
353,314
Cash in banks
US Dollar
Hongkong and Shanghai Banking Corporation Limited (USD72,917,429
in 2009, USD14,076,759 in 2008 and USD33,739,369 in 2007) . . . . . . . .
Rupiah
Hongkong and Shanghai Banking Corporation Limited . . . . . . . . . . . . . . . . .
Bank accounts in Hongkong and Shanghai Banking Corporation Limited (HSBC) denominated in US Dollar
and Rupiah represent cash under Cash and Accounts Management Agreement pursuant to the conditions as set
forth in the Senior Note Facility obtained by Berau (Note 21) in 2007 and 2008 and Credit Suisse loan facility in
2009 (Note 18). Restricted cash in banks and time deposits in HSBC are used for payment of interest and
currently maturing principal of Senior Notes and short-term loan.
Time deposits placed in PT ANZ Panin Bank, amounting to Rp232,670, Rp25,497 and Rp29,373 as of
December 31, 2009, 2008 and 2007, respectively, are used to secure Beraus sales performance bonds required
by several third party customers.
Time deposits placed in PT Bank Danamon Indonesia Tbk amounting to Rp839, Rp6,427 and Rp6,087 as of
December 31, 2009, 2008 and 2007, respectively, are pledged for bid bonds and performance bonds required by
several third party customers.
Interest rate of time deposits ranged as follows:
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-89
2009
2008
2007
5.25% 9.75%
0.50% 3.75%
7.75% 11.5%
2.25% 4.00%
6.15% 7.50%
4.75% 6.25%

6. SHORT-TERM INVESTMENT
Investment to PT Batavia Prosperindo Asset Manajemen represents investment in mutual funds. The
investment in mutual funds started on October 9, 2007, whereby the Company appointed PT Batavia Prosperindo
Asset Manajemen to manage the Companys funds in line with the Companys investment policy and prevailing
regulations. During 2008 and 2007, the Company made additional investments and redemptions on the funds. As
of December 31, 2008 and 2007, the net asset value of the short-term investment amounted to Rp3,785 and
Rp4,344, respectively. The investment was fully redeemed as of December 31, 2009.
7. TRADE RECEIVABLESTHIRD PARTIES
2009
Rupiah
PT Jawa Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Indonesia Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Sumber Segara Prima Daya. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT PLN Tanjung Jati. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Karyatama Nagasari . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Indocement Tunggal Prakarsa Tbk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
Taiwan Power Company, Taiwan (USD11,764,996 in 2009, USD7,171,844 in
2008 and USD12,297,022 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IEG, Limited, Hong Kong (USD8,725,410 in 2009, USD nil in 2008 and
USD4,351,581 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rizhao Honglu Electricity and Energy Co, Ltd., China (USD7,000,605 in 2009,
USD nil in 2008 and 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bhatia International Ltd., India (USD6,821,305 in 2009, USD5,471,695 in 2008
and USD3,993,241 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CLP Guangxi Fangcheng Power Co, Ltd., China (USD4,275,045 in 2009, USD
nil in 2008 and 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Midland Power Co., Ltd., South Korea (USD3,202,204 in 2009, USD nil
in 2008 and 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea East-West Power Co., Ltd., South Korea (USD2,896,529 in 2009, USD nil
in 2008 and 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Southern Power Co., Ltd., South Korea (USD2,891,609 in 2009, USD nil
in 2008 and 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China National Minerals Co., Ltd., China (USD2,636,710 in 2009, USD nil in
2008 and 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCT Co. Ltd., Thailand (USD nil in 2009, USD3,195,661 in 2008 and USD nil in
2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Castle PeakPower, Hong Kong (USD nil in 2009, USD2,745,347 in 2008 and
USD5,895,873 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unique Mining Service Co., Ltd., Thailand (USD nil in 2009 and 2008 and
USD1,496,453 in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-90
2008
2007
143,915 199,592
83,989
117,123 391,479
61,596
86,885
70,149
52,132
49,286
65,133
124
1,116
19,031
400,179 730,653 210,718
110,591
78,532
82,019
65,806
64,120
59,915
115,826
40,988
37,612
40,185
30,101
27,227
27,181
24,785
34,992
30,062
55,533
203,501
934,154
14,095
264,054
474,772
472,015
872,194

As of December 31, 2009, 2008 and 2007, the Company and Subsidiaries did not have trade receivable from
related parties.
The details of aging schedule of trade receivables from third parties were as follows:
2009
2008
2007
Up to 30 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 30 days - 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 60 days - 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 90 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
811,405 930,193 449,458

42,650
3,811
25,314
18,139
150
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
872,194
934,154
474,772
2008
2007
2009
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
400,179 730,653 210,718

472,015 203,501 264,054
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
872,194
934,154
474,772
The Company and Subsidiaries did not provide any allowance for doubtful accounts since the management
believes that all trade receivables from third parties are collectible as of December 31, 2009, 2008 and 2007.
F-91

This account pertains to dispatch receivables and consists of:
2009
Related party (Note 35d)

PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
2007
20,917
10,496
Third parties
PT Bukit Makmur Mandiri Utama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Arpeni Ocean Lines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Jaya Samudera Karunia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Agung Buana Rezeki. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Jaya Mandiri Rekabuana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67,308
1,824
1,300
710
700
164
73,592
2,125
710
710
Dispatch receivables from customer

PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Midland Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Indonesia Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bhatia International Ltd., India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT PLN Tanjung Jati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guangzhou Da You Coal Sell Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unique Mining Services Co, Ltd., Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan Power Company, Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea East-West Power Co., Ltd., South Korea. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Siam Cement Trading, Ltd., Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp500 million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,835
2,362
2,255
2,006
1,811
256
2,231
5,908
1,679
1,584
1,776
2,418
2,472
848
116
312
6,973
816
732
1,329
475
625
521
537
3,722
Total third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85,762 100,513
9,467
(1,033) (2,249) (1,934)
Third partiesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84,729
98,264
7,533
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84,729
119,181
18,029
The managements of the Company and Subsidiaries believe that the allowance for doubtful accounts is
adequate to cover possible losses from noncollectability of other receivables.
9. INVENTORIES
This account consists of cost of the following inventories:
2009
2008
2007
Coal inventories:
In-pit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clean coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
144,129 179,651 25,880

282,675
79,966 18,668
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stores and consumable supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
426,804 259,617 44,548

24,628
23,962 11,970
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
451,432
F-92
283,579
56,518

Based on the review of the condition of inventories at the end of the year, Beraus management believes that
no allowance is necessary to cover possible losses and obsolescence.
statements remain the property of the Government of Indonesia with an exclusive right of use granted to Berau
(Note 37A.e).
As of December 31, 2009, 2008 and 2007, inventories were not insured.
10. PREPAYMENTS AND OTHER CURRENT ASSETS
2009
2008
2007
Advances:
Sub-contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85,096
1,511
24,762 17,564
1,675
1,411
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,607
26,437
18,975
Guarantee deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90,000
1,964
90,000
4,342
3,654
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
178,571
120,779
22,629
In September 2008, Berau paid Rp90 billion to the Government of Indonesia (GOI) as deposit for royalty
representing Beraus commitment to the GOI for the settlement and payment of its obligation to Dana Hasil
Penjualan Batubara (DHPB) and VAT.
11. INVESTMENT IN ASSOCIATED COMPANY
2008
Percentage of
Ownership
Amount
(%)
(Rp)
Rognar Holding BV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.82
38,600
2007
Percentage of
Ownership
Amount
(%)
(Rp)
12.82
38,600
As of December 31, 2007 and 2008, the Company, through Armadian, owned 12.82% of Rognar. The
investment was accounted for using cost method.
As of December 31, 2009, the Company effectively has 100% indirect ownership in Rognar through
Armadian and Winchester. On December 29, 2009, the Company acquired 100% of Winchester which indirectly
owned 87.18% Rognar through Aries, a wholly owned subsidiary of Winchester (Note 3). Thus, the books of
Rognar were consolidated to the Company and was no longer treated under cost method.
F-93

12. DEFERRED EXPLORATION AND DEVELOPMENT COST
The cost and accumulated amortization of this account as of December 31, 2009, 2008 and 2007 were as
follows:
2009
Deferred exploration and development cost

Carrying value
Lati I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences due to financial statement translation. . . . . . . . . . . . . .
2008
2007
211,671 246,574 212,099

114,991 108,847
77,440
53,958
62,863
50,896
47,414
55,232
47,510
45,898
53,467
45,856
26,161
26,682
22,333
29,124
11,575
253
5,382
6,244
4,141
4,201
4,697
3,163
1,327
1,547
1,310
540,127
577,728
465,001
261,926 194,560 189,322

37,438
31,596
42,353
(40,670) 35,770 (37,115)
Ending balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
258,694
261,926
194,560
Net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
281,433
315,802
270,441
Coal resources
Carrying value
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,947,767
Ending balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,947,767
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,947,767
Deferred Exploration and Development CostNet
7,229,200
315,802
270,441
Coal resources represent the balance arising from the acquisition of ownership interest in Berau through
Winchester and Aries, as a result of the fair value of the assets acquired at the date of acquisition (Note 3).
F-94

Changes during the period of deferred exploration and development cost based on area of interest in 2009
was as follows:
Area of Interest
Beginning
Balance
Additions
Deductions
Exchange
Differences
Due to
Financial
Statements
Translation
Lati I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246,574
108,847
62,863
55,232
53,467
26,682
11,575
6,244
4,697
1,547
577,728
23,839
3,601
21,224
24
188
48,876
(7)
(7)
(34,903)
(17,695)
(8,898)
(7,818)
(7,569)
(4,122)
(3,675)
(886)
(684)
(220)
(86,470)
Ending
Balance
211,671
114,991
53,958
47,414
45,898
26,161
29,124
5,382
4,201
1,327
540,127
Amortization expense charged to cost of sales amounted to Rp37,438, Rp31,596 and Rp42,353 for the years
ended December 31, 2009, 2008 and 2007, respectively (Note 30).
The unit-of-production amortization rate used for the amortization of deferred exploration and development
costs is based on managements best estimate of proven reserves in 2005. The Unit-of-production amortization
rate was further updated in 2006 and 2008 when Berau hired a third party consultant to reassess the Beraus
estimated coal reserves based on the Australian Joint Ore Reserves Committee Code.
As of December 31, 2009, 2008 and 2007, Berau did not recognize any asset impairment and believed that
there were no circumstances that would give rise to asset impairment.
Deferred stripping costs as of December 31, 2009, 2008 and 2007 amounted to Rp171,073, Rp229,044 and
Rp281,794, respectively. The deferred stripping costs will be expensed as production costs for areas where the
actual ratio is significantly lower than the planned stripping ratio.
Areas of Interest
Lati. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - H3N . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - H4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata B1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
Actual
Planned
Stripping Stripping
Ratio
Ratio
8.55
5.36
12.36
8.08
8.21
9.23
10.45
F-95
8.69
7.11
7.11
8.21
9.59
8.47
12.19
7.32
2008
Actual
Planned
Stripping Stripping
Ratio
Ratio
8.31
6.77
11.18
6.48
8.38
8.83
7.55
8.46
8.46
7.59
9.10
9.56
9.56
15.47
2007
Actual
Planned
Stripping Stripping
Ratio
Ratio
7.51
6.6
10.18
7.23
10.99
9.45
303.9
6.99
8.56
8.56
6.79
9.36
8.54
8.54
13.02

As of December 31, 2009, 2008 and 2007, Berau did not recognize any asset impairment and believed that
14. FIXED ASSETS
The details and changes of fixed assets were as follows:
2009
Beginning
Balance
Additions
Carrying Value
Direct ownership
Land improvements . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment. . . . . . .
Transportation equipment . . . . . . . . . . . . . . . . . . .
Construction-in-progress . . . . . . . . . . . . . . . . . . . .
337,847
55,264
339,608
49,627
8,230
105,652
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
896,228
Indirect ownership
Leased assets
Plant and equipment. . . . . . . . . . . . . . . . . . . .
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . .
39,503
9,957
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49,460
Total carrying value . . . . . . . . . . . . . . . . . . . . . . . .
945,688
Exchange
Differences
Due to
Financial
Statements
Translation
Disposals
Reclassifications
4,155
778
88,051
8,121
3,970
5,539
(193)
12,731
(12,731)
110,614
(193)
(5,592)
(1,409)
33,911
8,548
(7,001)
42,459
110,614
(193)
(133,834) 922,275
186,459
24,457
309,361
29,969
4,971
21,527
2,648
11,716
3,571
608
(46)
(28,460) 179,526
(3,716) 23,389
(44,915) 276,162
(4,583) 28,957
(757)
4,776
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
555,217
40,070
(46)
(82,431) 512,810
Indirect ownership
Leased assets
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . .
36,623
5,703
2,724
1,177
(5,436)
(915)
33,911
5,965
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,326
3,901
(6,351)
39,876
Total Accumulated
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
597,543
43,971
(46)
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . .
348,145
F-96
Ending
Balance
(47,823) 306,910
(7,821) 48,221
(48,072) 379,587
(7,024) 50,724
(1,138) 10,869
(14,955) 83,505
(126,833) 879,816
(88,782) 552,686
369,589

2008
Beginning
Balance
Additions
Carrying Value
Direct ownership
Construction in-progress . . . . . . . . . . . . . . . . . . . .
263,245
51,478
289,647
30,200
5,087
42,496
10,598
3,490
1,866
14,531
2,348
78,479
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
682,153
111,312
Indirect ownership
Leased assets
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . .
33,980
8,565
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,545
724,698
Direct ownership
Disposals
Reclassifications
21,216
(6,941)
1,014
(12)
(22,230)
Exchange
Differences
Due to
Financial
Statements
Translation
Ending
Balance
42,788
7,237
47,081
4,908
795
6,907
337,847
55,264
339,608
49,627
8,230
105,652
(6,953)
109,716
896,228
5,523
1,392
39,503
9,957
6,915
49,460
111,312
(6,953)
116,631
945,688
143,621
19,828
253,946
23,894
4,014
17,233
2,488
12,498
1,942
273
(1,215)
(4)
25,605
3,356
42,917
4,137
684
186,459
24,457
309,361
29,969
4,971
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
445,303
34,434
(1,219)
76,699
555,217
Indirect ownership
Leased assets
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . .
28,907
2,183
2,668
2,799
5,048
721
36,623
5,703
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,090
5,467
5,769
42,326
Total Accumulated Depreciation . . . . . . . . . . . . .
476,393
39,901
(1,219)
82,468
597,543
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . .
248,305
F-97
348,145

2007
Ending
Balance
Beginning
Balance
Additions
Carrying Value
Direct ownership
Land improvements. . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements. . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . .
Construction-in-progress . . . . . . . . . . . . . . . . . . . .
206,741
47,631
275,101
27,445
4,687
17,893
47,359
2,035
2,377
1,540
193
23,811
9,145
1,812
12,169
1,215
207
792
263,245
51,478
289,647
30,200
5,087
42,496
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
579,498
77,315
25,340
682,153
Indirect ownership
Leased assets
Plant and equipment . . . . . . . . . . . . . . . . . . . .
Motor vehicles. . . . . . . . . . . . . . . . . . . . . . . . .
32,541
8,202
1,439
363
33,980
8,565
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,743
1,802
42,545
620,241
77,315
27,142
724,698
Direct ownership
Land improvements. . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements. . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . .
127,296
15,905
234,574
20,653
2,765
11,457
2,441
11,553
1,610
155
4,868
1,482
7,819
1,631
1,094
143,621
19,828
253,946
23,894
4,014
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
401,193
27,216
16,894
445,303
Indirect ownership
Leased assets
Plant and equipment . . . . . . . . . . . . . . . . . . . .
Motor vehicles. . . . . . . . . . . . . . . . . . . . . . . . .
22,150
961
4,980
178
1,777
1,044
28,907
2,183
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,111
5,158
2,821
31,090
Total Accumulated Depreciation . . . . . . . . . . . . .
424,304
32,374
19,715
476,393
Net Book Value. . . . . . . . . . . . . . . . . . . . . . . . . . . .
195,937
F-98
Disposals
Reclassifications
Exchange
Differences
Due to
Financial
Statements
Translation
248,305

The details of depreciation expenses were as follows:
2009
2008
2007
Cost of goods sold (Note 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General and administrative expenses (Note 31a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation of Armadian at the time of acquisition . . . . . . . . . . . . . . . . . .
41,478 38,001 29,361

2,493
1,900
1,559
1,454
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,971
39,901
32,374
The details of construction-in-progress accounts were as follows:
Percentage of
Completion
2009
Accumulated
Cost
10% - 95%
10% - 96%
30% - 95%
20% - 80%
38,986
9,456
30,370
4,693
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
Accumulated
Cost
10% - 40%
10% - 95%
30% - 95%
10% - 95%
19,546
79,848
4,282
1,976
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated
Completion Date
2009 - 2010
2009 - 2012
2009 - 2010
2009 - 2010
105,652
Percentage of
Completion
2010 - 2011
2010 - 2012
2010 - 2011
2010
83,505
Percentage of
Completion
Estimated
Completion Date
2007
Accumulated
Cost
10% - 80%
10% - 95%
10% - 95%
10% - 95%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,066
4,755
1,736
7,939
Estimated
Completion Date
2008 - 2009
2008 - 2009
2008 - 2009
2008 - 2009
42,496
Disposals of fixed assets are sale of assets with the following details:
Selling price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (Loss) on Sale of Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-99
2009
2008
146
147
6,372
5,733
639
(1)
2007

remain the property of the Government of Indonesia. However, Berau has an exclusive right to use the fixed
assets over the contract period or the remaining period (Note 37A.e).
Berau entered into finance lease agreements for plant and equipment and motor vehicles that are used for
mining operations (Note 22).
As of December 31, 2009, 2008 and 2007, fixed assets were not insured.
As of December 31, 2009, 2008 and 2007, the Company and Subsidiaries management did not recognize
any asset impairment and believed that there were no circumstances that would give rise to asset impairment.
15. GOODWILL
This account represents the excess of acquisition cost over the net assets value of Subsidiaries.
2009
Beginning
Balance
Additions
Ending
Balance
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246,629
170,489
38,641
246,629
209,130
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76,140
38,641
37,499
Deductions
2008
Beginning
Balance
Additions
Ending
Balance
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246,629
121,163
49,326
246,629
170,489
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125,466
49,326
76,140
Deductions
2007
Beginning
Balance
Additions
Ending
Balance
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246,629
71,837
49,326
246,629
121,163
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
174,792
49,326
125,466
Deductions
The balance of goodwill arises from the Companys acquisition of ownership in Armadian (Note 3a).
F-100

16. DEFERRED FINANCING CHARGES
2009
Beginning
Balance
Additions
Deductions
Exchange
Differences
Due to
Financial
Statements
Translation
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
119,184
48,667
101,050
67,583
(102,313)
(102,313)
(16,871)
(13,376)
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70,517
Ending
Balance
101,050
561
100,489
2008
Beginning
Balance
Additions
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102,519
21,358
21,072
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81,161
Deductions
Exchange
Differences
Due to
Financial
Statements
Translation
Ending
Balance
16,665
6,237
119,184
48,667
70,517
2008
Beginning
Balance
Additions
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98,177
818
19,888
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97,359
Deductions
Exchange
Differences
Due to
Financial
Statements
Translation
4,342
652
Ending
Balance
102,519
21,358
81,161
Deferred financing charges represent consultant expenses, bank charges, professional fees and other direct
costs that were incurred to obtain Senior Notes and short-term loan.
2009
2008
2007

PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refundable deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,520
400
2,008
307
8,760
400
3,120
394
9,234
1,850
2,981
308
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,235
12,674
14,373
F-101

ownership program.
18. SHORT-TERM LOAN
EC and Berau, who acted as the Borrower and Guarantor, respectively, entered into a Loan Agreement (the
Loan Agreement) with Credit Suisse AG, Singapore Branch (Credit Suisse), as the arranger, facility agent
and security agent, on December 23, 2009. Pursuant to the Loan Agreement, Berau shall make a single drawing
at the time and in the amount agreed upon by both parties amounting to three hundred million US Dollars
(USD300,000,000) (the Loan). The Loan bears interest at three-month London Interbank Offered Rate
(LIBOR) plus margin at 4.75% per annum for the first two quarters, margin 6.25% per annum for the third
quarter and 7.75% per annum for the fourth quarter. The maturity date under the Loan Agreement shall be the
earlier of the date falling twelve (12) months after the date of the loan disbursement and the date on which the
Vendor Notes (each of the USD580,000,000 aggregate principal amount of 8% secured notes due December
2010 to be issued by PT Bukit Mutiara, an intermediate parent company) become due and payable in full
(whether on or before the stated maturity).
The Loan is secured by (1) pledges of all the shares in Berau and EC (other than 10% of shares in Berau
held by Sojitz Corporation) and certain other group companies and intermediate holding companies in which the
beneficial owners of Berau and EC hold their shares; (2) liens over certain offshore bank accounts and
receivables of Berau and EC; (3) various fiduciary security covering the Indonesian assets of Berau;
(4) assignment of certain principal operating agreements of Berau; and (5) pledges of certain inter-company
loans or advances payable to EC or to any other pledgor.
were directly transferred to HSBC Bank USA, National Association to fully repay the outstanding balance of
Senior Notes. The remaining balance of the loan amounting to USD9,138,073 is withheld by Credit Suisse for
payment of fees, costs and expenses earned by it in connection with obtaining the Loan. All of these
administrative charges were presented as Deferred Financing Charges in the consolidated balance sheets.
In accordance with the Loan Agreement, Berau is required to comply with certain financial ratio covenants,
such as debt service coverage ratio and total debt to EBITDA, commencing from March 31, 2010.
As of December 31, 2009, the outstanding balance of the loan amounted to Rp2,820,000 (USD300,000,000).
F-102

19. TRADE PAYABLES
2009
2008
2007

Rupiah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
(USD6,856,954 in 2008 and USD5,951,659 in 2007) . . . . . . . . . . . . . . . . . . .
70,822
36,412
75,129
56,058
Sub-total-related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
145,951
92,470
241,771 145,630
41,353
29,861
455
6,072
1,460
136
1,297
2,043
1,259
599
1,746
540
1,842
25,722
2,520
4,981
4,403
2,357
1,686
10,184
7,616
94,636
1,205
5
651
824
57
98
2,294
223
9,326
Third parties
Rupiah
PT Bukit Makmur Mandiri Utama. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pertamina UPPDN VI Balikpapan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Likyndo Adi Wardana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Jaya Mandiri Rekabuana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Roda Teknik . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Karya Budi Mandiri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Patra Supplies & Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CV Kasam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Arpeni Pratama Ocean Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Kartika Samudra Adijaya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Pembanguna Perumahan (Persero) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Kaliraya Sari . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Swarna Baja Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Likyindo Adi Wardana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Sun Star Prima Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Geoservices (LTD). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp1,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar
(USD43,041,476 in 2009 USD22,429,881 in 2008 and USD17,464,194
in 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(USD6,545,623 in 2009, USD nil in 2008 and 2007) . . . . . . . . . . . . . . . . . . .
PT Mitra Swire CTM USD997,743 in 2009 USD nil in 2008 and 2007). . . . .
PT Lintas Wahana Indonesia
(USD853,329 in 2009, USD nil in 2008 and 2007) . . . . . . . . . . . . . . . . . . . . .
PT Trada tug and Bar ge
(USD767,438 in 2009, USD565,901 in 2008 and USD nil in 2007) . . . . . .
PT Mitra Bahtera Segar Sejati
(USD308,992 in 2009, USD nil in 2008 and 2007) . . . . . . . . . . . . . . . . . . . . .
F-103
334,396
201,137
109,319
404,590
245,607
164,495
61,529
9,379
8,021
7,214
6,197
2,905

PT Roda Teknik
(USD204,922 in 2009, USD282,123 in 2008 and USD149,910 in 2007) . .
PT Honson Corporation
(USD186,469 in 2009, USD nil in 2008 and USD203,312 in 2007) . . . . . .
Demmurage
(USD nil in 2009, USD1,916,421 in 2008 and USD nil 2007) . . . . . . . . . . .
PT Kartika Samudra Adijaya
(USD nil in 2009, USD1,563,033 in 2008 and USD53,424 in 2007) . . . . . .
NC Korea
(USD nil in 2009 and 2008 and USD34,292 in 2007) . . . . . . . . . . . . . . . . . . .
Others (below Rp1,000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
2008
2007
1,926
3,089
1,412
1,753
1,915
20,985
17,115
503
3,965
6,825
323
12,680
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
501,282
299,818
181,328
Other currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,439
3,894
116
Sub-total-third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
837,117
504,849
290,763
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
837,117
650,800
383,233
2009
2008
2007
The details of aging schedule for trade payables were as follows:
Up to 30 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 30 days - 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 60 days - 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 90 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
281,010 350,373 212,964

246,848 261,701 167,781
1,311
309,259
37,415
2,488
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
837,117
650,800
383,233
2009
2008
2007
The details of trade payables based on original currencies were as follows:
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
334,396 271,959 145,731

501,282 374,947 237,386
1,439
3,894
116
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
837,117
F-104
650,800
383,233

This account consists of accruals for the following:
2009
2008
2007
Mining and hauling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accrued sales tax to Government (Note 37A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Support cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal sharing to the Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demurrage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transhipment facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Donation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below Rp2,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
406,847 374,226 247,818

75,195
81,241
62,161
39,958
21,727
46,109 106,875
73,527
35,912
97,518
57,789
34,857
40,951
25,177
17,637
7,427
6,741
15,152
11,059
9,151
2,113
9,391
27,527
6,613
7,637
13,003
3,319
1,603
1,241
783 11,590
11,937
634
2,467
1,325
7,993
1,261
1,748
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
734,686
814,798
457,756
21. SENIOR NOTES

2009
2008
2007
Senior Notes
(USD300,000,000 in 2008 and USD325,000,000 2007) . . . . . . . . . . . . . . . . . . . . .
Less: current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,285,000 3,061,175
(273,750) (235,475)
Non-Current Portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,011,250
2,825,700
On December 15, 2006, the EC and Berau, who acted as the Issuer and Parent Guarantor, respectively,
obtained Senior Notes totaling USD325 million. These Senior Notes comprised of Floating Rate Notes and Fixed
Rate Notes with principal amounting to USD100 million and USD225 million, respectively, each with a maturity
date of December 15, 2011. The aggregate principal amount of Floating Rate Notes will be amortized in 16 equal
installments, beginning March 15, 2008.
June 15, 2007.
The Senior Notes are secured by (1) pledges of all the shares in Berau and EC (other than 10% of shares in
Berau held by Sojitz Corporation) and certain other group companies and intermediate holding companies in
F-105

which the beneficial owners of the Berau and EC hold their shares; (2) liens over certain offshore bank accounts
and receivables of the Company and its Subsidiary; (3) various fiduciary security covering the Indonesian assets
of Berau; (4) assignment of certain principal operating agreements of Berau; and (5) pledges of certain intercompany loans or advances payable to EC or to any other pledgor.
As of December 31, 2009, 2008 and 2007, the loan repayment schedule was as follows:
2009
2008
2009
2010
2011
2008
2007
235,475
235,475
235,475
2,354,750
....................................................................
....................................................................
....................................................................
....................................................................
273,750
273,750
2,737,500
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,285,000 3,061,175
(273,750) (235,475)
Net of Current Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,011,250
2,825,700
Certain of Berau and ECs bank accounts are governed by the Cash and Accounts Management Agreement
(CAMA). The bank accounts are, in the case of US Dollar accounts, maintained with a bank in Hong Kong and,
in the case of Indonesian Rupiah accounts, maintained with a bank in Jakarta (Note 5). The collection and
disbursement of all cash balances by Berau and EC are subject to the CAMA.
EC may redeem some or all of the Fixed Rate Notes at any time on or after December 15, 2009 at agreed
redemption prices. Before December 15, 2009, EC may redeem up to 35% of the Fixed Rate Notes at a
redemption price of 109.375% of the principal amount plus accrued and unpaid interest, if any, and up to 35% of
the Floating Rate Notes, at a redemption price of 100% of the principal amount thereof plus a premium equal to
the LIBOR then in effect plus 3.75% of the principal amount, plus accrued and unpaid interest, if any, with the
net cash proceeds from certain equity offerings. In addition, EC may redeem in whole or in part, at any time prior
to December 15, 2009 in the case of the Fixed Rate Notes, and at any time, in the case of the Floating Rate Notes,
at a price equal to 100% of the principal amount of the applicable Notes plus an agreed premium.
On December 18, 2006, one of the directors in Berau, who represents a shareholder holding a 10% interest
in Berau, issued a letter to Directorate General of Energy and Mineral Resources (DEMR) stating an objection
regarding the Senior Notes Facility and requesting the temporary discontinuation of such plan until further
clarification was obtained from the management of Berau. In connection with such objection letter, on
December 20, 2006, DEMR issued a letter ordering Berau not to pursue the Senior Notes Facility. Subsequent
discussions and clarifications between the directors and shareholders were held to resolve the issue regarding the
validity of the Senior Notes Facility and on April 19, 2007, the directors and shareholders jointly issued a letter
to DEMR expressing their consent and support for the said Notes Facility Agreement.
On April 27, 2007, DEMR issued a letter allowing Berau to record the Senior Notes in its financial
1) The Senior Notes have to maintain separate records for the Senior Notes that have been used by the
shareholders and Berau.
F-106

4) Berau has to impose interest on the shareholders.
5) The Government of Indonesia will not guarantee and will not be held liable in the failure of Berau and
will not revoke any rights under the CCoW.
7) The loan shall not saddle the operations of Berau in any way that will affect the entitlements of the
Government.
8) Regular reports should be submitted to the Government each time Berau receives a payment from the
shareholders.
Berau fully accomplished the requirements of DEMR in 2007.
accrued interest were fully paid through the proceeds of the Loan from Credit Suisse (Note 18).
Type of Asset
PT Dianlia Setyamukti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT ORIX Indonesia Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plant and
equipment
Motor vehicles
2009
2008
2007
392
6,579
1,102
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Current Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
392 7,681
(392) (6,403)
1,278
2009
2008
2007

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
462
6,556
1,278
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less future finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
462
(70)
7,834
(153)
Lease payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease PayablesNet of Current Maturities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minimum payments for lease agreements as of December 31, 2009, 2008 and 2007 consist of:
392 7,681
(392) (6,403)
1,278
Berau had a finance lease agreement with PT Sumber Mitra Jaya (SMJ) for the construction of plant in
Sambarata, which was terminated early by Berau in 2004. Due to the early termination, Berau agreed to a
termination payment amounting to USD3,693,423 to SMJ. This payment represents the current value, as agreed
to by Berau and SMJ, of the assets constructed by SMJ in respect of the Sambarata mine.
F-107

The aforesaid termination payment was financed by PT Dianlia Setyamukti (Dianlia), the succeeding
contractor for the Sambarata Mine. In relation to such payment, the legal title of the aforementioned assets was
transferred by SMJ to Dianlia. Based on the mining contract between Berau and Dianlia, the amount due to
Dianlia, arising from the aforesaid payment of the finance lease payable to SMJ will be settled by installments
through reductions in the future contractor charges to Dianlia. As of December 31, 2009, finance lease
obligations have been fully settled by Berau.
23. ENVIRONMENTAL RESTORATION OBLIGATION
2009
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for restoration during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual restoration made during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
27,216 24,992
17,850
8,836
(15,768) (11,833)
(5,566)
5,221
2007
21,464
7,553
(5,208)
1,183
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,732
(9,066)
27,216 24,992
(8,956) (13,479)
Non-Current Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,666
18,260
11,513
the mine life. Beraus management believes that the accrual is adequate to meet the obligations for restoration
and rehabilitation when coal reserves have been fully depleted.
24. TAXATION
a. Taxes Payable
2009
The Company
Income tax Article 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
2007
50
71
Subsidiaries
Income taxes
Article 15 and 4(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value-Added Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,152
10,345
79,038
14,408
1,074,976
2
4,218
10,704
15,989
623,903
3
2,553
8,976
15,670
242,201
1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,179,921
654,867
269,472
F-108

b. Income Taxes
Income tax benefit (expense) of the Company and Subsidiaries was as follows:
2009
2008
2007
Subsidiaries
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,280,822) (606,348) (274,339)

(10,836)
8,937
17,726
Income tax expensenet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,291,658) (597,411) (256,613)
The Company has no income tax expense current and deferred in 2009, 2008 and 2007.
Current Tax
Reconciliation between income before income tax expense, as recorded in the consolidated statements of
income and tax losses of the Company was as follows:
2009
Income before income tax expense per consolidated statements of

income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income of Subsidiaries before income tax expense . . . . . . . . . . . . . . . . . . . . . .
Elimination transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before tax expense attributable to the Company. . . . . . . . . . . . . . . . . .
2008
2007
2,931,182 1,135,601 448,576

(1,583,519) (1,322,716) (558,700)
(493,950)
357,213 135,782
853,713
170,098
25,658
12
Temporary difference
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12)
Permanent difference
Equity interest in net income of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on short-term investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(774,024)
(408)
(396)
247
(333,529) (101,346)
(35)
(470)
(441)
(94)
13
17
85
71
Sub total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(774,581)
(333,907) (101,822)
Taxable income (tax losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax losses carry forwardbeginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79,120
(242,730)
(163,797)
(78,933)
(76,163)
(2,770)
Tax Losses Carry ForwardEnding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(163,610)
(242,730)
(78,933)
F-109

Deferred Tax
The details of deferred tax of the Company and Subsidiaries as of December 31, 2009, 2008 and 2007 were
as follows:
2009
Beginning
Balance
The Company
Fiscal loss carry forward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,683
(60,683)
Income
Tax Benefit
(Expense)
Exchange
Differences
Due to
Financial
Statements
Translations
19,780
(19,780)
Ending
Balance
40,903
(40,903)
Subsidiaries
Deferred exploration and development cost . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental restoration obligation. . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(96,472)
(27,854)
(12,473)
12,247
7,626
6,848
(10,465)
(167)
(11,630)
4,578
12,999
4,948
1,781
(617)
(1,519)
(76,625)
(33,371)
(10,859)
10,685
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(116,926)
(10,836)
17,592
(110,170)
Deferred Tax LiabilitiesNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(116,926)
(10,836)
17,592
(110,170)
Exchange
Differences
Due to
Financial
Statements
Translations
Ending
Balance
2008
Beginning
Balance
The Company
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,680
(23,680)
Income
Tax Benefit
(Expense)
37,003
(37,003)
60,683
(60,683)
Subsidiaries
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(88,030)
(30,863)
(7,424)
11,246
5,798
5,187
7,095
(3,397)
(731)
783
(13,629)
(4,086)
(1,652)
1,732
1,045
(96,472)
(27,854)
(12,473)
12,247
7,626
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(109,273)
8,937
(16,590)
(116,926)
(109,273)
8,937
(16,590)
(116,926)
F-110

2007
Beginning
Balance
The Company
831
(831)
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income
Tax Benefit
(Expense)
22,849
(22,849)
Exchange
Differences
Due to
Financial
Statements
Translations
Ending
Balance
23,680
(23,680)
Subsidiaries
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(95,753)
(36,509)
(4,383)
9,659
4,519
11,425
6,936
(2,755)
1,078
1,042
(3,702)
(1,290)
(286)
509
237
(88,030)
(30,863)
(7,424)
11,246
5,798
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(122,467)
17,726
(4,532)
(109,273)
(122,467)
17,726
(4,532)
(109,273)
The Company did not recognize deferred tax assets on fiscal loss carry forward and other temporary
difference as of December 31, 2009, 2008 and 2007 as the management believes that it is improbable that future
taxable profit will be available against which the unrecognized deferred tax assets can be utilized.
In 2009, the Company and Subsidiaries did not received tax assessment letter (SKP) from Tax Authorities.
c. Government Regulation
In September 2008, Law No. 7 Year 1983 regarding Income Tax has been revised for the fourth time with
Law No. 36 Year 2008. The revised Law stipulates changes in corporate tax rate from a marginal tax rate to a
single rate of 28% for fiscal year 2009 and 25% for fiscal year 2010 onwards. The revised Law became effective
January 1, 2009.
As of December 31, 2009 and 2008, the deferred tax assets and liabilities have been calculated using these
enacted tax rates.
d. Value-Added Tax
stipulates that coal is no longer subject to Value-Added Tax (VAT) and as a result Berau is unable to seek
reimbursement for VAT Input paid starting from the said date. Under the CCoW, Berau is entitled to be held
harmless by the Government for additional taxes. Accordingly, in the consolidated financial statements, Berau
has offset its VAT Inputs in 2009, 2008 and 2007 amounting to USD171,270,677, USD130,044,206 and
USD96,155,447, respectively, against its accrued coal sharing liability to the Government. Based on the
independent advice from its external legal counsel, Beraus management believes that such offsetting of VAT
Inputs against the coal sharing liability is the appropriate treatment for the additional tax burden resulting from
GR 144/2000 (Note 38a).
F-111

25. MINORITY INTEREST
a. Minority interest in net assets of consolidated Subsidiaries
2009
2008
2007
Rognar Holdings BV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sojitz Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
324,461
815,411
209,080
416,330
106,751
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
324,461
1,024,491
523,081
b. Minority interest in net income of consolidated Subsidiaries

2009
2008
2007
Rognar Holdings BV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sojitz Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
625,441 292,972 132,365

160,370
75,121
33,940
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
785,811
368,093
166,305
26. CAPITAL STOCK

The shareholders and their respective shareholdings as of December 31, 2009, 2008 and 2007 were as
follows:
Number of
Shares
PT Bukit Mutiara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,500
Number of
Shares
2009
Percentage of
Ownership
100%
2008 and 2007
Percentage of
Ownership
Total
(Rp)
7,500
Total
(Rp)
Rizal Risjad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Handy Purnomo Soetedjo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Garibaldi Thohir. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
813
250
187
65%
20%
15%
813
250
187
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,250
100%
1,250
In accordance with the Companys Extraordinary Shareholders General Meeting as recorded in Notarial
Deed No. 256 of Aulia Taufani, S.H., dated December 29, 2009, the following actions were approved:
to increase the authorized capital stock from 5,000 shares with par value of Rp1 per share to 30,000 shares with
par value of Rp1 per share to issue 6,250 new shares to PT Bukit Mutiara as consideration for the acquisition of
Winchester Investment Holdings PLC. (Note 3). This transaction resulted in the increase in issued and paid share
capital from Rp1,250 to Rp7,500 and made PT Bukit Mutiara the owner of the 83.33% of the Company.
F-112

Mr. Rizal Risjad, Mr. Handy Purnomo Soetedjo and Mr. Garibaldi Thohir (Shareholders) and PT Bukit
Mutiara entered into a Share Sale and Subscription Agreement on November 25, 2009 and Letter of Agreement
dated December 28, 2009 wherein the Shareholders agreed to sell, transfer and assign their shares in the
Company to PT Bukit Mutiara in exchange of the consideration stated in the agreement. The transfer of the
shares of Mr. Rizal Risjad (813 shares), Mr. Handy Purnomo Soetedjo (250 shares) and Mr. Garibaldi Thohir
(187 shares) was effected based on the Deed of Transfer Nos. 281,283 and 285, respectively, dated December 30,
2009 and notarized by Aulia Taufani, S.H.
27. ADDITIONAL PAID-IN CAPITAL
This account represents the difference between the par value of the 6,250 newly issued shares, as stated in
the Companys articles of association, and fair value of the 45.50% shares of Winchester acquired by the
Company. The difference between par value of the 6,250 shares amounting to Rp6,250 and fair value of 45.50%
shares based on an independent appraisal report recognized on the acquisition date amounting to Rp2,367,087 is
recorded as additional paid-in capital (Note 3b).
28. DIVIDENDS
Based on the Companys Annual Shareholders General Meeting held on December 28, 2009, the
Companys shareholders approved the distribution of profit as cash dividends to shareholders (Rizal Risjad,
Handy Soetedjo, and Garibaldi Thohir) amounting to Rp48,138 (equivalent to USD4,571,438).
29. SALES
2009
2008
2007
Export . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,074,078
3,244,538
3,615,100
2,495,147
2,175,417
1,269,606
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,318,616
6,110,247
3,445,023
Sales represent coal sales of Berau.

In 2009, 2008 and 2007, total sales through related party amounted to Rp395,683 or 4.76% of total sales,
Rp434,860 or 7.12% of total sales, and Rp85,769 or 2.49% of total sales, respectively (Note 35c).
F-113

The details of customers with total sales of more than 10% of total sales were as follows:
Total
2009
Percentage
PT Indonesia Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan Power Company, Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,498,766
972,248
890,558
4,957,044
18.02%
11.69%
10.70%
59.59%
Jumlah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,318,616
100.00%
Total
2008
Percentage
PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,296,886
872,746
786,110
3,154,505
21.22%
14.28%
12.87%
51.63%
Jumlah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,110,247
100.00%
Total
2007
Percentage
PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
546,157
454,580
409,288
2,034,998
15.85%
13.20%
11.88%
59.07%
Jumlah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,445,023
100.00%

2009
2008
2007
Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight and handling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal sharing to government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal processing and other production cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization (Notes 12 and 14) . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in coal inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restoration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,876,691 2,550,480 1,460,593

817,408
973,448
553,563
957,573
677,918
376,867
256,475
230,049
163,632
78,916
69,597
71,714
(83,496)
(51,506)
24,609
17,850
8,836
7,407
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,921,417
F-114
4,458,822
2,658,385

2009
2008
2007
a. General and Administrative

Salaries, wages and provision for employee benefits (Note 34) . . . . . . . . . . . .
Community development and donation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuel and lubrications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repair and maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Representation and entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Promotion and advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Training and education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140,311
43,599
31,968
13,384
3,914
2,710
4,632
6,920
6,215
3,089
3,021
2,660
2,493
864
4,406
78,756
32,969
10,143
9,870
9,804
8,147
5,457
4,343
3,745
3,128
2,951
2,424
1,900
1,793
3,986
55,317
19,965
2,495
7,834
7,240
2,174
3,448
4,153
3,161
3,886
2,934
1,790
1,559
1,418
2,936
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
270,186
179,416
120,310
b. Selling and Marketing

Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78,184
9,926
6,415
6,865
48,653
8,146
4,671
2,576
28,724
4,656
3,295
2,452
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101,390
64,046
39,127
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
371,576
243,462
159,437
2009
2008
2007
32. INTEREST AND FINANCIAL EXPENSES

The details of interest and finance expenses were as follows:
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
279,554 294,349 300,432

867
62
148
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
280,421
294,411
300,580
33. EARNINGS PER SHARE

The computation of earnings per share was as follows:
2009
Net income for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted average number of ordinary shares (full amount) . . . . . . . . . . . . . . . . . . . . .
Basic Earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-115
2008
2007
853,713 170,097 25,658

1,302
1,250
1,250
655.69
136.08
20.53

Berau has a defined contribution retirement plan covering all of its qualified permanent employees,
Berau and its employees. The plan is managed by PT Bank Negara Indonesia (Persero) Tbk. Beraus
Berau recognized employee benefits as of December 31, 2009, 2008 and 2007 based on the actuarial
calculations prepared by PT Biro Pusat Aktuaria, an independent actuary, in its reports issued on February 23,
2010, February 13, 2009, and March 10, 2008, respectively, using the Projected Unit Credit Method, which
were based on the following assumptions:
Discount rate
Mortality table
Disability rate
Retirement age
:
:
:
:
:
10.5% in 2009, 12% in 2008 and 10.5% in 2007

10% per annum
10% Mortality Rate
55 years old
Net employee benefit expenses were as follows:

2009
2008
2007
Current-service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on obligation cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net actuarial losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of past-service costplan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of past-service costnon-vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,887
2,817
768
50
55
2,533
1,859
718
50
55
1,634
1,396
452
48
54
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,577
5,215
3,584
2009
2008
2007

Present value of defined benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized past-service costplan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized past-service costnon-vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,927 23,377 17,710

(9,597) (4,741) (3,031)
(753)
(803)
(852)
(832)
(887)
(943)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,745
16,946
12,884
Movements in the employee benefits obligation for the years ended December 31, 2009, 2008 and 2007
were as follows:
2009
2008
2007
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,946 12,884 10,042

7,577
5,215
3,584
(630) (1,304)
(853)
(148)
151
111
Ending Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,745
F-116
16,946
12,884

The managements of the Company and Subsidiaries believes that the employee benefits obligation as of
December 31, 2009, 2008 and 2007 is adequate to cover the requirements of Labor Law No. 13, 2003.
The employees of the Company and Subsidiaries are also covered by a compulsory social security plan
called JAMSOSTEK set up by an agency of the Indonesian Government.
35. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
The Company and Subsidiaries, in their regular conduct of business, have engaged in transactions with
related parties. Those transactions are as follows:
a. Due to Related Parties
a.1 The Company, who acted as the Borrower, entered into a Intercompany Loan Agreement (the
Intercompany Loan Agreement) with PT Bukit Mutiara (BUMU), as the Lender, on December 23,
2009. Pursuant to the Intercompany Loan Agreement, the Company shall make a single drawing at the
time and in the amount agreed upon by both parties amounting to three hundred million US Dollars
(USD300,000,000 or Rp2,829,900). On December 29, 2009, the Company obtained the proceeds of the
Intercompany Loan Agreement amounting to USD300,000,000 which was used for the acquisition of
the 54.5% of Winchester as defined in the facility agreement between PT Bukit Mutiara and Credit
Suisse AG, Singapore Branch, as arranger and facility agent (Bidco Facility Agreement).
The Intercompany Loan will bear interest at three-month London Interbank Offered Rate (LIBOR) plus
margin of 8.25% per annum for the first two quarters, margin of 9.75% per annum for the third quarter
and 11.25% per annum for the fourth quarter which is payable at the end of each quarter. Unpaid
interest on an overdue amount will be compounded daily with the overdue amount but will remain
immediately due and payable.
Until repayment in full of all amounts owing pursuant to or in connection with the Bidco Facility
Agreement, the Intercompany Loan Agreement is subject to the terms of the Bidco Facility Agreement.
If any provision of the Intercompany Loan Agreement is inconsistent with the Bidco Facility
Agreement, the Bidco Facility Agreement will prevail.
The maturity date under the Intercompany Loan Agreement is the date three (3) months after the date
on which BUMU gives the Company notice that it requires the repayment of the loan.
As of December 31, 2009, due to related party amounting to Rp2,820,000 (equivalent to
USD300,000,000) represents 32.98% of total liabilities.
a.2 Due to related party amounting to Rp4,166 as of December 31, 2007 pertains to the non-interest
bearing payable to Rizal Risjad in relation to the transfer of the 16.67% shares of Armadian to the
Company which was paid in 2008. This payable represents 0.10% of total liabilities.
F-117

b. Due from Related Parties
2009
2008
2007
Loan to employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Begarion Capital Limited (BCL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Highlander Investments Pte. Ltd. (Highlander) . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,997
18,486
2,986,225
53,485
5,898
2,349,510
44,082
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,997
3,058,196
2,399,490
Percentage to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.12%
43.88%
48.74%
b.1 Due from BCL was funded from the proceeds of Senior Notes (Note 21), which earned interest at a rate
of 10.375%. In January 2007, Berau amended the interest rate of the loan to BCL which became
10.375%. Interest on loan to BCL is payable semi-annually, commencing June 15, 2007. Interest
income earned from due from BCL amounted to Rp242,645 or 2.92% of total sales in 2009, Rp225,263
or 2.71% of total sales in 2008 and Rp215,564 or 3.53% of total sales in 2007. As of December 31,
2008 and 2007, due from BCL amounted to Rp2,986,225 (equivalent to USD272,714,641) and
Rp2,349,510 (equivalent to USD249,443,685), respectively.
Danehill Capital Ltd. (DCL), which transferred the loan from Berau effective December 29, 2009. On
December 16, 2009, DCL entered into an Assignment, Assumption and Release Agreement with
Winchester Investment Holdings PLC., which transferred the loan obtained from Berau to Winchester
effective December 29, 2009. As of December 31, 2009, due from Winchester amounted to
USD296,050,419.
b.2 Based on the inter-company loan agreement entered into by the Company and Highlander dated
December 15, 2006, the Company extended a loan to Highlander amounting to USD4,750,848 with
interest of 9.85% per annum. Subsequently on December 18, 2006, the principal and interest rate were
adjusted from USD4,750,848 to USD4,467,348 and 9.85% to 4.5% per annum, respectively, as stated
in the inter-company principal and interest adjustment notification. As of December 31, 2008 and 2007,
due from Highlander amounted to Rp53,485 (equivalent to USD4,884,487) and Rp44,082 (equivalent
to USD4,680,105). The loan has been fully paid by Highlander in 2009.
c. Sales to Related Parties
Berau entered into a marketing agency agreement dated October 1, 2001 with Sojitz which owns the 10.0%
direct equity interest in Berau. The marketing agency agreement is renewable on a yearly basis as long as Berau
continues to supply coal to the Japanese market. Under this agreement, Sojitz is required to use its best efforts to
promote, market and seek orders for Beraus coal and maintain good relations with customers as well as keep
Berau informed of any developments in the Japanese market. Sojitz receives a commission which ranges from
1.5% to 2.0% of the sale proceeds of coal that is delivered to and accepted by customers and fully paid for at
Berau invoiced price. In 2009, 2008 and 2007, total sales through related party under the marketing agency
agreement amounted to Rp395,683 or 4.76% of total sales, Rp434,860 or 7.12% of total sales, and Rp85,769 or
2.49% of total sales, respectively (Note 29). There was no outstanding receivable balance as of December 31,
2009, 2008 and 2007 from these transactions. Berau incurred commission expense to Sojitz amounting to
F-118

Rp14,735 (equivalent to USD1,417,103) or 3.97% of total operating expenses in 2009, Rp8,175 (equivalent to
USD844,570) or 3.36% of total operating expenses in 2008 and Rp1,295 (equivalent to USD141,694) or 0.81%
of total operating expenses in 2007.
d. Mining Services and Rental of Equipment
Berau, in the regular conduct of its business, has transactions with PT Saptaindra Sejati, a related party,
consisting of mining services and rental of equipment. The outstanding payables arising from these transactions
amounted to Rp145,951 (2.62% of total liabilities) and Rp92,470 (2.13% of total liabilities) as of December 31,
2008 and 2007, respectively, and are presented as part of Trade Payables in the consolidated balance sheets
(Note 19). The outstanding other receivables arising from these transactions amounted to Rp20,917 (0.3% of
total assets) and Rp10,496 (0.2% of total assets) as of December 31, 2008 and 2007, respectively, pertains to the
receivables arising from the coal price and stripping ratio adjustments and are presented as part of Other
Receivables in the consolidated balance sheets (Note 8). In 2009, PT Saptaindra Sejati was no longer a related
party.
Nature of relationship and transactions
Related parties
Relationship
PT Bukit Mutiara
Shareholder
Intercompany loan
(2007-2008)

Equipment
Begarion Capital Limited

(2007-2008)

interest income
Sojitz Corporation
Corporation)
Shareholder of the Berau
Highlander Investments Pte. Ltd

(2007-2009)

interest income
Due to these relationships, it is possible that the terms and conditions of these transactions are not the same
as those that would result from transactions between third parties.
36. SEGMENT INFORMATION
Primary Segment
For management purposes, the Company and Subsidiaries are currently organized into two (2) business
divisions consisting of financing and mining. These divisions are the basis on which the Company and its
Subsidiaries report their primary segment information.
F-119

Business segment information of the Company and Subsidiaries is as follows:
2009
Amount
Total Assets
Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Holding company . . . . . . . . . . . . . . . . . . .
Eliminations . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
Amount
2007
Amount
8,973,932
7,120,717
55.76
44.24
7,658,624
1,260,489
85.87
14.13
5,392,057
780,276
87.36
12.64
16,094,649
100.00
8,919,113
100.00
6,172,333
100.00
(3,713,359)
(1,949,165)
(1,249,792)
12,381,290
6,969,948
4,922,541
2009
REVENUES
External parties sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF REVENUES
External parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESULT
Segment result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING EXPENSES UNALLOCATED . . . . . . . . . . . . . . .
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gainsnet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realization of difference in value from restructuring transactions
of entities under common control . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from early redemption of Senior Notes . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing charges . . . . . . . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other chargesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME BEFORE INCOME TAX EXPENSE. . . . . . . . . . . . . .
INCOME TAX EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME OF CONSOLIDATED SUBSIDIARIES. . . . . . . . .
Minority interest in net income of consolidated subsidiaries . . . . . .
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-120
Financing
Coal Mining
Elimination
Consolidated
279,554
8,318,616
(279,554)
8,318,616
280,421
4,921,417
279,554
(279,554)
4,921,417
280,421
(867)
3,117,645
3,116,778
371,576
2,745,202
259,674
175,876
7,996
(156,260)
(67,583)
(38,641)
4,918
2,931,182
(1,291,658)
1,639,524
(785,811)
853,713

REVENUES
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF REVENUES
Finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESULT
Segment result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange lossesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
Elimination
Financing
Coal Mining
294,349
6,110,247
(294,349)
6,110,247
294,411
4,458,822
294,349
(294,349)
4,458,822
294,411
(62)
1,357,076

NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
REVENUES
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF REVENUES
Finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESULT
Segment result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange lossesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-121
Consolidated
1,357,014
243,462
1,113,552
243,263
(155,731)
(21,072)
(49,326)
4,915
1,135,601
(597,411)
538,190
(368,093)
170,097
2007
Elimination
Financing
Coal Mining
300,432
3,445,023
(300,432)
3,445,023
300,580
2,658,385
300,432
(300,432)
2,658,385
300,580
(148)
486,206
Consolidated
486,058
159,437
326,621
225,411
(39,067)
(19,888)
(49,326)
4,825
448,576
(256,613)
191,963
(166,305)
25,658

Secondary Segment
Sales Based on Market
The following are sales based on geographical market regardless of the location of the production of coal:
2009
2008
2007
Geographical market
Domestic
Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,244,538
2,495,147
1,269,606
International
South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hong Kong. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,575,319
978,207
891,754
837,067
309,854
294,779
187,098
5,074,078
8,318,616
870,695
431,665
802,484
516,310
409,877
434,860
149,209
3,615,100
6,110,247
449,660
275,630
472,362
382,444
181,664
83,962
329,695
2,175,417
3,445,023

Beraus activities are governed by the provisions of the CCoW, which was entered into by Berau and
Perusahaan Negara Tambang Batubara on April 26, 1983, and which was subsequently transferred to PT
Tambang Batubara Bukit Asam (PTBA) in 1991.
Based on Presidential Decree No. 75/1996 dated September 25, 1996, and amendment to the
CCoW No. O2/I.DD/50/96 between PTBA and Berau dated June 28, 1997, all rights and obligations of PTBA
under the CCoW were transferred to the Government of the Republic of Indonesia, represented by the Ministry
of Mines and Energy, with effect from July 1, 1997.
mining operations in an area located in East Kalimantan, the coordinates of which are detailed in Annexure A
and which measures approximately 487,217 hectares. Since April 7, 2005, the concession area has been reduced
to 118,400 hectares.
Significant financial provisions of the CCoW include:
a. Entitlement under the agreement
Berau is entitled to take 86.5% of total coal produced from the final production processes established by
Berau and available for sale in each calendar year, while the Government reserves and retains the remaining
portion (i.e. 13.5%) as its share of total production.
F-122

b. Operating period
Government.
c. Dead rent
Berau shall pay dead rent to the Government in half-yearly installments during the term of the CCoW,
which is recoverable by Berau as operating costs. Dead rent is calculated by reference to the number of hectares
included in the CCoW area in accordance with the rates stipulated in the CCoW for each period/stage of
operation.
d. Initial cost
Berau paid to the Government the sum of USD500,000 within 30 days of signing the CCoW in 1983 as a
contribution to the Governments initial costs.
e. Equipment
Berau shall finance the cost of purchasing materials, supplies, plant, and equipment (the Equipment) and
such Equipment shall become the property of the Government when landed at the Indonesian port of import or
purchased locally. For the purpose of tax computation pursuant to Annexure D of the CCoW and all similar
government revenue charges and for the purpose of Annexure E thereof , Berau shall be in the same position as
if such Equipment was owned by Berau itself.
f. Corporation taxes
Corporation taxes in respect of the annual profits of Berau should be computed in accordance with the
prevailing laws and regulations in Indonesia, except that during the first full ten years from and after
commencement of the operating period the annual corporation tax rate shall only be 35% of the taxable income,
taxable income.
Berau has the right to an investment allowance of 20% of the total investment (i.e. at a rate of 5% a year
from the taxable income provided for in article 4(b) of the Corporation Tax Law 1925 amended by Law No. 8 of
1970).
g. Divestment of foreign interest
Berau shall ensure that its shares owned by foreign investor(s) are offered either for sale or for issue to the
Government of Indonesia, Indonesian nationals, or Indonesian companies controlled by Indonesians in each year
following the end of the fourth full calendar year after commencement of the operating period as set out in the
Coal Agreement. By the end of the tenth full calendar year of the operating period, the cumulative amount to be
offered for sale shall reach the maximum of 51%. As at December 31, 2009, 2008 and 2007, Indonesian
shareholders owned 51% of the shares of Berau.
F-123

h. Accelerated depreciation
Berau may apply accelerated depreciation at the rate of 10% per year for buildings and 25% per year for
other assets used in coal operations, for one year within any of the first four years for acquisition of such assets.
i. Other financial obligations and taxes
The CCoW further provides that Berau, shall, subject to the terms of the Coal CCoW, pay to the
Government the following taxes and levies:
Dividends paid to shareholders, interest and royalties on patents paid by Berau at a rate of 10%.
Remuneration of Beraus employees. Expatriates who are employed or engaged by Berau or Beraus
contractors or affiliates and who remain in Indonesia for more than 90 days in aggregate in any one
calendar year shall be liable in Indonesia for personal income tax on remuneration paid to them for
services rendered in Indonesia.
Other payments made by Berau including but not limited to fees for technical services based on the
prevailing laws and regulations in Indonesia at a rate of 10%.
period and annually thereafter. In the event payment is made in Rupiah the exchange rate for Rupiah
Reconstruction and Development (IBRD). All the regional taxes were paid by Berau for the years
ended December 31, 2009, 2008 and 2007.
iii. Sales taxes on services rendered to Berau in Indonesia in accordance with prevailing laws and
calculating the sales tax on the fee for services rendered in Indonesia shall be at a percentage of the total
contract sum as approved by the Ministry of Finance.
F-124

Berau has mining and coal hauling contracts with the following:
Mine Area
Ref
Lati
a1
Binungan
a2
2009, 2008 and 2007

Sambarata
a3
a1. Lati Mine Site

On December 1, 1998, Berau entered into an agreement with PT Mentari Bukit Makmur (MBM), for mining
operations and coal haulage at the Lati mine site. The term of the contract was until December 31, 2010. Starting
2007, the contract with MBM was assumed by BUMA, affiliated company of MBM. In 2008, the contract was
December 31, 2005, which has been extended until December 31, 2008. In 2008, the contract was extended to
December 31, 2009. In 2009, the contract was extended to December 31, 2010
On January 1, 2006, Berau entered into an agreement with SIS for mining operation and coal haulage of
Binungan Block 1-4 with an original contract term until December 31, 2010.
BUMA
On January 1, 2003, Berau entered into an agreement with BUMA, for mining operations and coal haulage
at the Meraang mine site. The contract will expire on December 31, 2010. In 2008, the contract was extended to
December 31, 2018.
F-125

BUMA
Berau has an agreement with BUMA, for coal haulage at the Binungan mine site to the Suaran Coal
December 31, 2018.
Mining Operations
On May 1, 2005, Berau entered into an agreement with SIS for the operation of the coal mine and
to December 31, 2011 for mining operation and coal haulage.
On July 15, 2007, Berau entered into another agreement with SIS for the operation of the coal mine and
processing plant in Sambarata Block B1 with a contract term until July 14, 2012.
Coal Barging
On April 1, 1998, Berau entered into an agreement with PT Kartika Samudra Adijaya for coal barging at the
Lati Port and Suaran Port. The contract expired on December 31, 2007.
On January 1, 2005, Berau entered into an agreement with PT. Kartika Samudra Adijaya for coal barging at
the Sambarata Port. The contract expired on December 31, 2007. On January 1, 2008 the contract was renewed
and expired on December 31, 2008.
On January 1, 2009, Berau entered into an agreement with PT. Kartika Samudra Adijaya for coal barging at
the Lati, Suaran, and Sambarata Port. The contract will expire on December 31, 2013.
On January 1, 2009, Berau entered into an agreement with PT. Trada Tug and Barge for coal barging at the
Lati and Suaran Port. The contract will expire on December 31, 2013.
On April 1, 2009, Berau entered into an agreement with PT. Mitra Bahtera Segarasejati for coal barging at
the Lati, Suaran, and Sambarata Port. The contract will expire on March 31, 2011.
On April 1, 2009, Berau entered into an agreement with PT. Mitra Bahtera Segarasejati for Assist Tug at
Transshipment Point. The contract will expire on October 31, 2010.
On April 1, 2009, Berau entered into an agreement with PT. Pelayaran Karya Samudera Mandiri for LCT at
Transshipment Facility. The contract will expire on April 26, 2011.
On April 1, 2009, Berau entered into an agreement with PT. Pelayaran Karya Samudera Mandiri for Assist
Tug (TB. DL 05) at Transshipment Point. The contract will expire on April 30, 2010.
F-126

On April 1, 2009, Berau entered into an agreement with PT. Pelayaran Karya Samudera Mandiri for Assist
Tug (TB. Nadia 02) at Transshipment Point. The contract will expire on April 30, 2010.
On November 25, 1999, Berau entered into an agreement with Lati Trans-shippers Inc. for coal shipments
for a period of 11 years. The contract will expire in August 2010. The minimum loading rate governed by this
agreement is 20,000 metric tons per day, except for Taiwan Power Company where the loading rate is 24,000
metric tons per day. The agreement governs the contract rate and rate adjustment.
On January 1, 2009, Berau entered into an agreement with PT Mitra Swire CTM for coal shipments. The
agreement governs the contract rate and rate adjustment and will expire on December 31, 2011.
On September 20, 2007, Berau entered into an agreement with FOTP Transshipment INC for coal
On January 1, 2005, Berau entered into an agreement with PT Tirta Sarana Borneo for stevedoring of
On September 1, 1998, Berau entered into an agreement with PT Sucofindo for coal analysis and
superintending for coal shipment. This agreement ended on December 31, 2007 and Company has renewed the
contract starting January 1, 2008 until December 31, 2010.
On July 1, 2005, Berau entered into an agreement with PT Geoservices for coal analysis and superintending
for coal shipment which expired on September 30, 2008. Berau has renewed the contract starting November 1,
2008 until October 31, 2011.
On April 1, 1999, Berau entered into an agreement with PT Roda Teknik for heavy equipment hire. This
agreement ended on December 31, 2007 and Berau has renewed the contract for a year starting January 1, 2008
until December 31, 2008. In 2008, the contract term was extended to December 31, 2012.
On June 1, 2005, Berau entered into an agreement with PT Surya Teknik Anugerah for heavy equipment
hire. This agreement will be ended on May 31, 2010.
On January 1, 2008, Berau entered into an agreement with PT Bukit Makmur Mandiri Utama for heavy
On January 1, 2005, Berau entered into an agreement with PT Sentra Baruna Hijau for heavy equipment
hire. This agreement will expire on December 31, 2010.
F-127

Drilling
On January 1, 2006, a Contract was entered into agreement with PT Recsalog Geoprima for hire logging and
well logging services for a period of one year. The agreement was extended until December 31, 2008. In 2008,
the contract was renewed and will expire on December 31, 2009.
On February 1, 2009, Berau entered into an agreement with CV Kassam Drilling Group for drilling services.
The contract will expire on January 31, 2010 and was subsequently renewed on February 1, 2010 and will expire
on December 31, 2011.
On June 21, 2009, Berau entered into an agreement with CV Sarana Seisindo Utama for drilling services.
This agreement expired on December 31, 2009 and was extended until December 31, 2010.
On December 30, 2009, Berau entered into a 10-year marketing service agreement with Maple Holdings
Limited (Maple), an affiliate of PT Risco, which is 99.6% indirectly owned by Recapital. Under the agreement,
Berau appointed Maple as its exclusive agent for the purposes of providing marketing, pricing and sales agency
services on a worldwide basis, excluding Japan. Existing marketing agreements will continue until expiry date
and shall not be renewed (but if it expires within 12 months from December 30, 2009, Berau shall extend the
agreement for a further term but such term shall not exceed such 12 month period). Maple shall receive a fee of
2.0% of the proceeds Berau receives for the sale of coal outside of Japan. Maple has the right to purchase up to
10 million tons per annum of Beraus products from December 30, 2010 for 10 years. The agreement may be
terminated by either party with 30 days prior notice if the other party fails to comply with a material obligation
and such failure is not remedied within 30 days. The agreement can be renewed for a further period of ten
(10) years by mutual agreement.
C. Commitments
Restoration
As stated in Note 23, Berau has obligations in respect of restoration, rehabilitation and environmental
expenditure.
Long-term Sales
Berau has long-term sales commitments as follows:
In July 2004, Berau entered into a 4-year sales contract from 2005 to 2008 with Taiwan-based company,
Taiwan Power Company. The quantity of coal to be delivered by Berau was 500,000 metric tonnes per each
contract year, subject to a tolerance of up to plus or minus 20% at the buyers option. Berau shall be liable to
buyer for any and all losses, damages and cost (including, without limitation, third party claims against buyer)
caused by or related to Beraus failure to perform in accordance with the representations and warranties. The
selling price is based on certain formulas as set forth in the contract.
F-128

In November 2008, Berau also agreed to 6 and 8 years long-term contracts up to 2014 and 2016,
500,000 metric tonnes annually for each contract, meaning the total quantity is 1,000,000 metric tonnes per
annually subject to a tolerance of up to plus or minus 20% at the buyers option. The term of contract is mainly
similar to the previous long-term contract, the selling price of which is also based on certain formula set out in
the contract and determined on a yearly basis.
PT Jawa Power
Berau entered into a coal supply agreement (CSA) with PT Jawa Power dated December 18, 1995. The
initial term of this agreement shall be for a period commencing from the date of the agreement and ending, unless
extended or earlier terminated in accordance with terms of this agreement, on the date that falls ten (10) years
after the commercial operation date in November 2000.
The quantity of coal to be delivered by Berau was 2,000,000 metric tonnes per year, subject to a tolerance of
up to plus or minus 20% at the buyers option. On January 2009, the term of contract was extended by 5 years to
November 2015. The buyer may extend the term in the aforesaid manner on no more than (4) occasions, such
that the term shall not extend for a aggregate period of more than thirty (30) years from the start of commercial
operation. The selling price is determined on a yearly basis.
PT Indonesia Power
On August 27, 2008, Berau entered into a 10-year sales contract from January 2008 up to December 2018
with Indonesia-based company, PT Indonesia Power. The quantity of coal to be delivered by Berau was
3,000,000 metric tonnes per year, subject to a tolerance of up to plus or minus 5% at the buyers option. The
Bank Guarantees
Berau had the following outstanding bank guarantee facility issued in relation to sales contracts and in
respect of contractor commitments.
Indonesian Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
(full amount)
2008
(full amount)
2007
(full amount)
132,790,000,000
11,425,600
206,859,500,000
16,767,946
113,945,000,000
11,585,000
215,900
As of December 31, 2009, 2008 and 2007, total guarantee facility provided by the bank amounted to USD40
million, USD50 million and USD35 million, respectively.
38. CONTINGENCIES
a. Offsetting VAT claims against coal sharing liability
Berau has a contingent liability in respect of its coal sharing liability to the Government that it offset against
its VAT claims (Note 24d). Although the management believes that Berau has followed the appropriate treatment
under the CCoW and Indonesia Civil Code, on July 20, 2007, Berau received a letter from the State Claims
F-129

Commission (Panitia Urusan Piutang Negara (PUPN) No. SKPBN-433/ PUPNC.11.05/2007collecting unpaid
royalty on coal for the years 2001 to 2005 amounting to Rp312,703 and USD26,198,343. Furthermore, the
Directorate General of State Assets (Direktorat Jenderal Kekayaan Negara) issued a Final Notice of Collection
(Berita Acara Pemberitahuan Surat Paksa) ordering Berau to pay the said royalty liabilities on or before
September 11, 2007, otherwise, the Government will restrain Beraus assets to the extent of such liabilities.
Berau, through its legal counsel Kusumanegara and Partners, filed a petition for Restraining Order to
restrain the PUPN from executing the Final Notice of Collection and impending appropriation of Beraus assets.
In its petition, Berau argued, among others, that:
The CCoW explicitly exempts Berau from the harm of present and future Indonesian taxes except those
set forth therein.
Restraining Order with reference case number 127/G/2007/PTUN-JKT dated March 3, 2008 granting Beraus
appropriation of Companys assets while awaiting final decision. On March 18, 2008, Berau received the verdict
from the Jakarta Court of State Affairs upholding its petition and argument. Pursuant to the Decision of Jakarta
Court of State Affairs, PUPN is thereby ordered to permanently withdraw its Final Notice of Collection. The
court however did not rule on the issue on whether the PUPN should not pursue the collection of royalty duly
offset by Berau against the input VAT. Hence, PUPN still has the recourse to pursue the collection through the
international arbiter as stipulated in the CCoW.
On March 19, 2008, PUPN filed its appeal to Jakarta High Court of State Affairs. The verdict dated
August 28, 2008, which was delivered formally to Berau on January 17, 2009 stated that Jakarta Court of State
Affairs does not have the capacity to issue a verdict concerning PUPNs Decree. Therefore, Jakarta High Court
of State Affairs annulled the previous verdict made by Jakarta Court of State Affairs.
On January 28, 2009, Berau filed cassation to Supreme Court and on March 17, 2009, the cassation was
officially registered with case No. 94 K/TUN/2009. As of the completion date of the consolidated financial
statements, Berau is waiting for the final decision from Supreme Court.
b. Claims by Lati Transshippers Inc. for Payment of VAT
On August 14, 2009, Lati Transshipers Inc. (LTI) registered charges against Berau by sending Notice of
Arbitration to the Singapore International Arbitration Center (SIAC) in relation to the demand of LTI to Berau
for the payment of VAT arising from the performance of the agreement between Berau and LTI (Note 37a4)
during the years 2000 to 2003 amounting to Rp14,203 plus penalty as assessed by the Indonesian tax authorities.
On December 21, 2009, LTI had sent the Statement of Claim to Berau.
On February 10, 2010, Berau provided its response by sending a Statement of Defense to SIAC disputing
the claim of LTI. Also, Berau included counterclaim such as damages for breach of contract and cost of the
arbitration, in case LTI will win the case. As of the completion date of the consolidated financial statements,
Berau has not yet received the Response Letter of Statement of Defense from the LTI.
F-130

c. Case with a resident in Berau
During land clearing for hauling road construction to support Beraus mining activities, five residents
complained and demanded for payment for damages of their property amounting to Rp800 per hectare. Berau
refused to pay because the restitution required by the five residents are significantly higher than the market value
of the land. Berau changed the plan for the hauling road without passing the land of the five residents. However,
one of the five residents filed a complaint against Berau to the residential police under report No. Pol.LP/96/K/K/
2008/KSPK dated October 22, 2008 for using others land and/or damages of property. As of the completion date
of the consolidated financial statements, Berau is preparing for the defense of the case.
standards that may have certain impacts to the Company and Subsidiaries consolidated financial statements.
January 1, 2010:
PSAK No. 50 (Revised 2006)Financial Instruments: Presentation and Disclosure.
PSAK No. 55 (Revised 2006)Financial Instruments: Recognition and Measurements.
PSAK No. 26 (Revised 2008)Borrowing Cost.
January 1, 2011:
PSAK 5 (Revised 2009)Operating Segments.
PSAK 12 (Revised 2009)Interest in Joint Ventures.
PSAK 15 (Revised 2009)Investments in Associates.
ISAK 9Changes in Existing Decommissioning, Restoration and Similar Liabilities
ISAK 12Jointly Controlled Entities: Non-Monetary Contributions by Venturers.
F-131

date of the provisions of the other related PSAKs, as follows:
PPSAK No. 2Revocation of PSAK 41 Accounting for Warrants and PSAK 43 Accounting for
Factoring.
PPSAK No. 3Revocation of PSAK 54 Accounting for the Restructuring of Troubled Debt.
PPSAK No. 4Revocation of PSAK 31 (Revised 2000): Accounting for Banking Industry, PSAK 42:
Accounting for Securities Companies and PSAK 49: Accounting for Mutual Funds.
The Company and Subsidiaries are evaluating the potential impact on the consolidated financial statements
as a result of the adoption of the above new accounting standards.
40. RECLASSIFICATION OF ACCOUNTS
Certain comparative figures in the 2008 and 2007 consolidated financial statements have been reclassified to
conform to the 2009 consolidated financial statements presentation. These reclassifications are as follows:
2008
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental restoration obligationcurrent . . . . . . . . . . . . . . . . . . .
Environmental restoration obligationnon-current . . . . . . . . . . . . . . .
Net cash flows provided by operating activities. . . . . . . . . . . . . . . . . . .
Net cash flows used in investing activities . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental restoration obligationcurrent . . . . . . . . . . . . . . . . . . .
Environmental restoration obligationnon-current . . . . . . . . . . . . . . .
Net cash flows provided by operating activities. . . . . . . . . . . . . . . . . . .
F-132
As Previously
Reported
Reclassification
As Reclassified
3,039,710
31,160
27,216
872,026
(124,457)
(253,445)
2,393,592
20,271
24,992
271,267
(252,922)
(5,734)
18,486
(18,486)
8,956
(8,956)
88,519
(76,933)
(12,587)
5,898
(5,898)
13,479
(13,479)
11,734
(11,075)
(659)
3,058,196
12,674
8,956
18,260
960,546
(201,390)
(266,032)
2,399,490
14,373
13,479
11,513
283,001
(263,997)
(6,393)

41. RESTATEMENT OF FINANCIAL STATEMENTS
The 2007 consolidated statement of income has been restated from gross presentation (by combining
revenues and expenses of the acquired Subsidiaries from the beginning of the year to December 31, 2007, and
deducting by the net income of the acquired Subsidiaries before acquisition date) to become net presentation (by
combining revenues and expenses of the acquired Subsidiaries from the acquisition date to December 31, 2007).
The 2007 consolidated statement of income before and after restatement was as follows:
As Previously
Reported
As Restated
SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF GOODS SOLD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,509,955
2,705,341
3,445,023
2,658,385
GROSS PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
804,614
786,638
OPERATING EXPENSES
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
122,935
39,658
120,310
39,127
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162,593
159,437
OPERATING INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
642,021
627,201

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and financial expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange lossesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Othersnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
231,348
(308,712)
(39,968)
(49,326)
(19,888)
3,853
225,411
(300,580)
(39,067)
(49,326)
(19,888)
4,825
Other ChargesNet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(182,693)
(178,625)
INCOME BEFORE INCOME TAX EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income tax expensenet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
459,328
(262,190)
448,576
(256,613)
INCOME BEFORE PRE-ACQUISITION INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . .

PRE-ACQUISITION INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
197,138
(5,175)
191,963
INCOME BEFORE MINORITY INTEREST IN NET INCOME OF

CONSOLIDATED SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED
SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
191,963
191,963
(166,305)
(166,305)
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,658
25,658
Notes 29, 30, 31 and 32 have been revised due to above restatement.
statements that were completed on March 17, 2010.
F-133
INDEPENDENT ACCOUNTANTS REPORT

Report No. P019/2010
PT Berau Coal
We have reviewed the accompanying consolidated balance sheets of PT Berau Coal (the Company) and
Subsidiary as of March 31, 2010 and 2009, and the related consolidated statements of income, changes in equity
and cash flows for the three-month periods then ended. These consolidated financial statements are the
responsibility of the Companys management.
We conducted our reviews in accordance with the standards established by the Indonesian Institute of
Certified Public Accountants. A review of financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the
accompanying consolidated financial statements for the three-month periods ended March 31, 2010 and 2009
referred to above in order for them to be in conformity with generally accepted accounting principles in Indonesia.
Previously, we have issued independent accountants report No. P014/2010 dated May 14, 2010, upon the
consolidated financial statements of PT Berau Coal and Subsidiary as of March 31, 2010 and for the three-month
period then ended. As disclosed in Note 34 to the consolidated financial statements, the Company reissued the
consolidated financial statements in connection with the plan of issuance of Guaranteed Senior Secured Notes
and to meet the requirements of issuance of said Notes.
June 22, 2010
Tjiendradjaja Yamin
NOTICE TO READERS
standards, procedures and practices utilized to review such consolidated financial statements may differ from those generally accepted in
countries and jurisdictions other than Indonesia. Accordingly, the accompanying consolidated financial statements and the accountants report
F-134
PT BERAU COAL AND SUBSIDIARY

MARCH 31, 2010 AND 2009 (UNAUDITED)
(Expressed in United States Dollar, unless otherwise stated)
Notes
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables
Related party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
3
4
5
6
214,802,628
75,004,855
75,000,000
81,226,651
123,526,998
19,902,997
91,403,613
7,28
7
8
9
10
11,204,265
37,560,585
14,259,029
10,050,113
2,029,387
8,072,219
29,616,753
2,661,493
8,719,568
519,108,126
285,933,028
395,891,715
30,656,313
17,427,926
40,069,352
1,081,590
362,150,129
28,869,967
31,396,547
31,839,370
1,135,370
Total Non-Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
485,126,896
455,391,383
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,004,235,022
741,324,411
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NON-CURRENT ASSETS
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred exploration and development costsnet. . . . . . . . . . . . . . . . . . . . . .
Deferred stripping costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assetsnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
11
12
13
14
F-135

MARCH 31, 2010 AND 2009 (UNAUDITED)(Continued)
Notes

CURRENT LIABILITIES
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables
Related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current maturities of long-term debts
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under finance lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
15
291,997,222
16,28
16
17
21
213,953
107,841,636
60,233,885
149,481,521
9,667,358
63,277,388
63,793,651
83,258,265
2,673,513
22,823,133
14,424
2,551,668
612,441,730
245,385,887
11,355,262
2,800,321
10,292,580
1,705,098
265,031,186
Total Non-Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,155,583
277,028,864
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
626,597,313
522,414,751
17,250,000
360,387,709
17,250,000
201,659,660
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
377,637,709
218,909,660
TOTAL LIABILITIES AND EQUITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,004,235,022
741,324,411
18
19
20
Total Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred tax liabilitiesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debtsnet of current maturities Senior Notes. . . . . . . . . . . . . . .
EQUITY
Share capital
Authorized174,000 shares at par value USD100 (Rp70,200) each
Issued and fully paid172,500 shares . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
27
18
22
F-136

Notes
2010
2009
23,28
24
220,465,772
149,474,439
147,974,613
89,151,471
70,991,333
58,823,142
3,135,615
13,533,722
1,907,119
3,368,320
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,669,337
5,275,439
OPERATING INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,321,996
53,547,703
7,249,561
4,738,577
(3,687,500)
(4,238,452)
(17,212)
7,252,236
(2,796,903)
(544,217)
(7,018,843)
21,792
4,044,974
(3,085,935)
SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF GOODS SOLD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GROSS PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on foreign exchangenet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing charges . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Othersnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
28
26
Other Income (Charges)Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INCOME BEFORE
INCOME TAX EXPENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME TAX EXPENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
58,366,970
50,461,768
(25,900,761) (22,492,440)
32,466,209
27,969,328
F-137

Capital Stock
2010
Retained Earnings
Total Equity
Balance, January 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income for the period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,250,000
327,921,500
32,466,209
345,171,500
32,466,209
Balance as of March 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,250,000
360,387,709
377,637,709
Capital Stock
2009
Retained Earnings
Total Equity
Balance, January 1, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,250,000
173,690,332
27,969,328
190,940,332
27,969,328
Balance as of March 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,250,000
201,659,660
218,909,660
F-138

2010

Cash receipts from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments to suppliers and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments to Government for coal sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for employee salaries, wages and allowances . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
232,025,716 141,881,876
(121,564,266) (86,739,563)
(24,478,782) (18,603,859)
(8,962,461) (3,967,609)
(300,338)
(314,822)
Cash receipts from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76,719,869
(2,069,784)
32,256,023
(1,631,178)
Net Cash Flows Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74,650,085
30,624,845

Withdrawal of restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest receipt from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Placement of short-term investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for exploration and development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37,480,450
552,722
(75,000,000)
(1,944,087)
(1,693,321)
10,502,898
345,277
(1,181,269)
(811,139)
Net Cash Flows Provided by (Used in) Investing Activities . . . . . . . . . . . . . . . . . . . . .
(40,604,236)
8,855,767

Payment of interest for short-term loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions of due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of interest on Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of obligation under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of interest for finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,178,222)
(6,964,412)
(211,681)
(6,250,000)
(1,197,135)
(21,335)
(484)
Net Cash Flows Used in Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,142,634)
(7,680,635)
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . .

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD . . .
22,903,215
191,899,413
31,799,977
91,727,021
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD. . . . . . . . . . . .
214,802,628
123,526,998
Supplementary Cash Flows Information:

Activity not affecting cash flows
Capitalization of unpaid interest to due from related parties . . . . . . . . . . . . . . . . . . . . .
6,696,839
6,906,959
F-139

1. GENERAL
PT Berau Coal (the Company) was established in the Republic of Indonesia under the framework of the
Foreign Capital Investment Law No. 1 of 1967, as amended by Law No. 11, Year 1972, based on Notarial Deed
No. 2 of Tan Thong Kie dated April 5, 1983. The Deed of Establishment was approved by the Ministry of Justice
in its decision letter No. C2-3523-HT.01.01.TH.83 dated April 30, 1983, and published in the State Gazette of
the Republic of Indonesia No. 519, Supplement No. 38 dated May 13, 1983. The latest amendment to the articles
of association was in relation to Law 40/2007 regarding Limited Liability Companies by Deed No.72 of Imas
Fatimah, S.H. dated June 19, 2008, which was approved by the Ministry of Law and Human Rights in its
decision letter No. AHU-50818.AH.01.02.Year 2008 dated August 13, 2008 and published in the State Gazette
No. 50 dated June 23, 2009.
According to Article 3 of the Companys articles of association, the scope of activities of the Company
comprises of exploration, development, mining, marketing and trading, and transporting of coal deposits in
Kalimantan. The main office of the Company is located in Tanjung Redeb and its mining sites are located in Lati,
Binungan and Sambarata, which are all in Kabupaten Berau, East Kalimantan. The Company started its
commercial operations on April 27, 1995 and its concession right is valid for 30 years.
The members of the Companys Boards of Commissioners and Directors as of March 31, 2010 were as
follows:
Commissioner
Commissioner
Commissioner
Commissioner
Commissioner
:
:
:
:
:
:
Muhammad Lutfi
Erick Thohir
Rosan Perkasa
Bernardi Djumiril
Bob Kamandanu
Subagyo Hadi Siswoyo
Board of Directors
President Director
Vice-President Director
Director
Director
:
:
:
:
Y.A.Didik Cahyanto
Julianto Halim
Michiaki Furusho
John Joseph Ramos
F-140

The members of the Companys Boards of Commissioners and Directors as of March 31, 2009 were as
follows:
Commissioner
Commissioner
Commissioner
Commissioner
:
:
:
:
:
Rizal Risjad
Dedey Risjad
Erick Thohir
Christian Wijayanto
Board of Directors
President Director
Director
Director
:
:
:
:
Bob Kamandanu
Michiaki Furusho
Julianto Halim
As of March 31, 2010 and 2009, the Company had 660 and 589 employees, respectively (unaudited).
c. Structure of the Subsidiary
On November 2, 2006, in connection with the Senior Notes obtained by the Company, the Company
established Empire Capital Resources Pte. Ltd. (EC), as its wholly-owned Subsidiary, with the main purpose of
issuing the Senior Notes (Note 18) and on-lending the gross proceeds of the Senior Notes to the Company
pursuant to the Inter-company Loan Agreement. EC was incorporated as a limited liability company under the
laws of Singapore. On December 28, 2009, EC obtained a new loan from Credit Suisse AG, the proceeds of
which were used for the payment of the Senior Notes on December 28, 2009.
d. Exploration and Exploitation / Development Areas
The Company has exploration and exploitation / development areas as follows:
Exploration Areas
Location
Lati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Date of
Concession
End Date
April 30, 1983

April 30, 1983
April 30, 1983
April 30, 1983
April 30, 1983
April 30, 1983
April 30, 1983
April 26, 2025

April 26, 2025
April 26, 2025
April 26, 2025
April 26, 2025
April 26, 2025
April 26, 2025
F-141
Percentage of
Ownership
100%
100%
100%
100%
100%
100%
100%
Total Exploration
Costs
Recognized as of
Balance Sheet Date
35,511,196
10,506,104
5,740,188
4,022,662
2,783,091
449,249
141,230

Exploitation / Development Areas
Location
Date of
Concession
End Date
Lati . . . . . . . . . . . . . . April 30, 1983 April 26, 2025

Binungan . . . . . . . . . April 30, 1983 April 26, 2025
Sambarata. . . . . . . . . April 30, 1983 April 26, 2025
Total Production
(in million tonnes)
Proven
Balance of
Reserve (P1)*
Accumulated Proven Reserve
Percentage of (in million Current
Total
(in million
Ownership
tonnes)
Period Production
tonnes)
100%
100%
100%
97.2
63.9
26.0
2.2
1.0
0.5
59.8
38.6
9.1
37.4
25.3
16.9
* Total proven reserves (P1) are based on the survey result by Minarco-Mine Consult as of December 31,
2008.
The accompanying consolidated financial statements have been prepared in accordance with the generally
accepted accounting principles and practices in Indonesia. The accounting principles applied consistently in the
preparation of the consolidated financial statements were as follows:
a. Basis of Preparation of the Consolidated Financial Statements
The consolidated financial statements, except for the statements of cash flows, are prepared under the
accrual basis of accounting, with the measurement basis being historical cost, except for certain accounts that are
measured on the basis described in the related accounting policies.
The reporting currency used in the preparation of the consolidated financial statements is United States
Dollar (USD) as required under the Coal Contract of Work (CCoW), for which approval was obtained from the
Ministry of Finance No. KEP-168/PJ.42/1993 dated July 26, 1993.
The consolidated financial statements include a Subsidiary that is controlled by the Company. Control is
presumed to exist when the Company owns, directly or indirectly (through Subsidiary), more than 50% of the
voting rights of the Subsidiary. Even when the Company owns 50% or less of the voting rights, control exists
b) having the right to govern the financial and operating policies of the Subsidiary under the articles of
c) ability to appoint or remove the majority of the members of the Subsidiarys management;
d) ability to control the majority of votes at meetings of management.
F-142

c. Cash and Cash Equivalents
three months or less and not pledged as collateral nor restricted in use.
d. Restricted Cash
time deposits that are restricted in use are presented under non-current assets.
e. Financial Instruments
Effective January 1, 2010, the Company and Subsidiary have applied PSAK 50 (Revised 2006), Financial
Instruments: Presentation and Disclosures, and PSAK 55 (Revised 2006), Financial Instruments: Recognition
and Measurement, which supersede PSAK 50, Accounting for Certain Investments in Securities and PSAK 55
(Revised 1999), Accounting for Derivative Instruments and Hedging Activities, respectively.
1. Financial Assets
Initial Recognition
Financial assets are recognized initially at fair value, plus transaction costs, except for those financial assets
classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are
classified as financial assets at fair value through profit or loss (FVTPL), held-to-maturity investments (HTM),
loans and receivables or available-for-sale financial assets (AFS). The Company and Subsidiary determine the
classification of their financial assets at initial recognition and, where allowed and appropriate, re-evaluate the
designation of such assets at each balance sheet date.
The subsequent measurement of financial assets depends on their classification as follows:
Financial Assets at Fair Value Through Profit or Loss (FVTPL)
Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is
designated as at FVTPL at initial recognition. Financial assets are classified as held for trading if they are
acquired for the purpose of selling or repurchasing in the near term. Derivative assets are also classified
as held for trading, unless they are designated as effective hedging instruments. Financial assets at
FVTPL are carried in the consolidated balance sheets at fair value, with gains or losses recognized in the
consolidated statements of income. The net gain or loss recognized in the consolidated statements of
income includes any dividend or interest earned on the financial asset.
Held-to-Maturity (HTM) Investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Company and Subsidiary have the positive intent and ability to hold to maturity are classified as HTM.
After initial measurement, HTM investments are measured at amortized cost using the effective interest
method, less any impairment. Gains and losses are recognized in the consolidated statements of income
when the investments are derecognized or impaired, as well as through the amortization process.
F-143

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such financial assets are carried at amortized cost using the effective interest
rate method, less any impairment. Gains and losses are recognized in the consolidated statements of
income when the loans and receivables are derecognized or impaired, as well as through the amortization
process.
Available-for-Sale (AFS) Financial Assets
AFS financial assets are non-derivative financial assets that are designated as available-for-sale or are not
classified in any of the three preceding categories. After initial recognition, AFS financial assets are
measured at fair value with unrealized gains and losses being recognized as a separate component of
equity until the investment is derecognized or until the investment is determined to be impaired, at which
time the cumulative gain or loss previously reported in equity is included in the statement of income.
These financial assets are classified as non-current assets, unless the intention is to dispose such assets
within twelve months from the balance sheet date.
Derecognition of Financial Assets
The Company and Subsidiary derecognizes a financial asset only when the contractual rights to the cash
flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity. When the Company and Subsidiary have transferred their rights to
receive cash flows from an asset and have neither transferred nor retained substantially all the risks and rewards
of the asset nor transferred control of the asset, the asset is recognized to the extent of the Company and
Subsidiarys continuing involvement in the asset.
2. Financial Liabilities and Equity Instruments
Initial Recognition
The Company and Subsidiary determine the classification of their financial liabilities at initial recognition.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
Financial liabilities are classified as financial liabilities at fair value through profit or loss, loans and
borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Financial
liabilities are recognized initially at fair value and, in the case of loans and borrowings, inclusive of directly
attributable transaction costs.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Company and Subsidiary are recorded at the
proceeds received, net of direct issue costs.
For compound instruments issued by the Company and Subsidiary, the component parts are classified
separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At
the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for
a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis using the
F-144

effective interest method until extinguished upon conversion or at the instruments maturity date. The equity
component is determined by deducting the amount of the liability component from the fair value of the
compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not
subsequently remeasured.
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial Liabilities at Fair Value Through Profit or Loss (FVTPL)
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as FVTPL. Financial liabilities are classified as
held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivative
liabilities are also classified as held for trading unless they are designated as effective hedging
instruments. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss
recognized in the consolidated statements of income. The net gain or loss recognized in the consolidated
statements of income incorporates any interest paid on the financial liability.
Loans and Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost using the effective interest rate method. Gains and losses are recognized in the consolidated
statements of income when the liabilities are derecognized as well as through the amortization process.
Derecognition of Financial Liabilities
The Company and Subsidiary derecognizes financial liabilities when, and only when, the Company and
Subsidiarys obligations are discharged, cancelled or they expire.
3. Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance
sheets if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
4. Amortized Cost of Financial Instruments
Amortized cost is computed using the effective interest method less any allowance for impairment and
principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and
includes transaction costs and fees that are an integral part of the effective interest rate.
f. Receivables
Receivables, which are non-interest bearing and generally have less than a year term, are recognized and
carried at amount billed less an allowance for any uncollectible amounts. Provision is made when there is
objective evidence that the Company and Subsidiary will not be able to collect the receivables.
F-145

g. Inventories
The Company applied PSAK No.14 (Revised 2008), Inventories (Revised PSAK 14). Inventories are
valued at the lower of cost or net realizable value. Cost is determined using the average method. Allowance for
inventory obsolescence is provided based on a review of the condition of inventories at the end of the period.
h. Prepaid Expense
i. Fixed Assets
The Company applied PSAK No. 16 (Revised 2007), Fixed Assets (Revised PSAK 16). Based on
Revised PSAK 16, an entity shall choose between the cost model and revaluation model as the accounting policy
for its fixed assets measurement. The Company has chosen the cost model as the accounting policy for their fixed
assets measurement.
computed on a straight-line method at a rate of 12.5% per year except for buildings and several land
Land improvement represents cost incurred (i.e. land-clearing cost, road development, and others) in
preparing the land area for mining operations.
The assets useful lives and method of depreciation are reviewed and adjusted if appropriate, at the end of
the period.
benefits associated with the item will flow to the Company and Subsidiary, and the cost of the item can be
are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in
consolidated statements of income in the period the asset is derecognized.
j. Impairment of Assets Values
of an asset exceeds its recoverable amount, an impairment loss is recognized in the current period consolidated
F-146

k. Leases
The Company applied PSAK No. 30 (Revised 2007), Leases (Revised PSAK 30). Under Revised PSAK
30, leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the
lessee are classified as finance leases. Finance leases are capitalized at the inception of the lease at the fair value
of the leased assets or at the present value of the minimum lease payments if the present value is lower than the
fair value. Lease payments are apportioned between finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recorded in the
consolidated statements of income. Leased assets held by the lessee under finance leases are included in fixed
assets and depreciated over the estimated useful life of the assets or the lease term, whichever is shorter, if there
is no reasonable certainty that lessee will obtain ownership by the end of the lease term.
l. Deferred Exploration and Development Costs
m. Deferred Stripping Costs
(i) initial stripping of the top soil to open up the mining area before production commences and
F-147

n. Estimated Environmental Restoration Obligation
The Companys policy is to meet or surpass the requirements of the CCOW and all applicable
environmental regulations issued by the Government of Indonesia (GOI), by application of technically proven
and economically feasible measures. Environmental management at Berau includes, but is not limited to, top soil
replacement, dredging of sediment ponds and dams, water quality control and waste handling, planting and
seeding.
Recognition of current portion is based on the estimates of the management.
o. Revenue and Expense Recognition
the coal has been dispatched to the customer and is no longer under the Companys physical control; and
p. Transactions with Related Parties
The Company and Subsidiary have transactions with certain parties, which have a related party relationship,
as defined in PSAK No. 7 Related Party Disclosures.
All significant transactions with related parties, whether or not conducted under the same terms and
q. Foreign Currency Transaction and Balances
Transactions denominated in currencies other than USD are recorded at the prevailing rates of exchange in
effect on the date of transactions. At balance sheet date, monetary assets and liabilities denominated in foreign
currencies are adjusted to reflect the exchange rates prevailing at that date. The resulting gains or losses are
credited or charged to the current consolidated statement of income.
The exchange rates used as of March 31, 2010 and 2009 were as follows:
2010
Indonesian Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese Yen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singaporean Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australian Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-148
2009
9,115.00 11,575.00
93.29
98.14
1.40
1.52
1.09
1.46
0.75
0.76

r. Income Taxes
Current tax expense is provided based on the estimated taxable income for the period. Tax rates specified in
the CCoW are used to determine income tax. Under the CCoW, the annual tax rate is 35% during the first full ten
years from the commencement of the operating period (through 2001), and 45% during the remainder of the
operating period. Current tax expense of the Subsidiary that is domiciled and registered as a tax subject in
Singapore is determined based on the taxable income for the period computed using prevailing tax rates in the
relevant country.
temporary differences to the extent it is probable that future taxable profit will be available against which the
appealed against by the Company and Subsidiary, when the result of the objection and/or appeal is determined.
s. Employee Benefits Obligation
The Company adopted PSAK No. 24 (Revised 2004), Employee Benefits (Revised PSAK 24) to
determine their employee benefits obligation under the Labor Law No. 13/2003 dated March 25, 2003 (the
Law). Under Revised PSAK 24, the cost of employee benefits based on the Law is determined using the
Projected Unit Credit actuarial valuation method. Actuarial gains or losses are recognized as income or
period exceeded the higher of 10% of the defined benefit obligation and 10% of the fair value of plan assets at
that date. These gains or losses are recognized on a straight-line basis over the expected average remaining
working lives of the employees. Past-service costs arising from the introduction of a defined benefit plan or
The Company has a defined contribution retirement plan covering all of its qualified permanent employees,
the Company and its employees. The plan is managed by PT Bank Negara Indonesia (Persero) Tbk. The
Companys contributions to such plan are recognized and directly charged to operations when incurred.
t. Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. They are disclosed in the
notes to consolidated financial statements unless the possibility of an outflow of resources embodying economic
benefits is remote. Contingent assets are not recognized in the consolidated financial statements, but are
disclosed in the notes to consolidated financial statements when an inflow of economic benefits is probable.
F-149

u. Use of Estimates
2010
2009
Cash on hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
386,363
86,965
Cash in banks
US Dollar
Hongkong and Shanghai Banking Corporation Limited . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Internasional Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
187,433,903
7,842,394
1,153,724
261,992
84,935,533
3,549,992
366,475
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
196,692,013
88,852,000
Rupiah
Hongkong and Shanghai Banking Corporation Limited . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Negara Indonesia (Persero) Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Internasional Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,848,576
2,968,287
1,409,772
1,244,923
55,766
19,413,535
315,730
13,751,215
182,252
93,965
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,527,324
33,756,697
Total cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
207,219,337
122,608,697
Cash equivalents
Time deposits
US Dollar
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rupiah
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Negara Indonesia Tbk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,131,103
54,855
10,970
43,197
8,639
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,196,928
51,836
Total cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,196,928
831,336
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
214,802,628
123,526,998
All placements in cash and cash equivalents are with third parties.
F-150
779,500

Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
5.50% 7.00%
7.75% 11.50%
2.00% 3.50%
4. RESTRICTED CASH
2010
2009
Cash in banks
US Dollar
Hongkong and Shanghai Banking Corporation Limited. . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rupiah
Hongkong & Shanghai Banking Corporation Limited . . . . . . . . . . . . . . . . . . . . . . .
27,929,144
12,561,459
13,549,107
9,479,973
3,651,744
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49,970,576
17,200,851
10,465,600
1,807,794
14,568,294
385
480,644
413,708
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,034,279
2,702,146
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75,004,855
19,902,997
Time Deposits
US Dollar
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesian Rupiah
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank accounts in Hongkong and Shanghai Banking Corporation Limited (HSBC) denominated in US Dollar
and Rupiah represent cash under the Cash and Accounts Management Agreement pursuant to the conditions as
set forth in the Senior Note Facility obtained by the Company (Note 18) in 2007 and 2008 and Credit Suisse loan
facility in 2009 and 2010 (Note 15). Restricted cash in banks and time deposits in HSBC are used for payment of
interest and currently maturing principal of Senior Notes and short-term loan.
Time deposits placed with PT Bank Danamon Indonesia Tbk are pledged for bid bonds and performance
Time deposits placed with PT ANZ Panin Bank are used to secure the Companys short-term sales
performance bonds required by several third party customers.
As of March 31, 2010 and 2009, restricted cash in HSBC is used as collateral for the short-term loan (Note
15) and Senior Notes (Note 18), respectively.
All restricted cash were placed with third parties.
F-151

Interest rates of time deposits ranged as follows:
2010
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.25% 5.75%
0.40% 0.70 %
2009
6.50% 9,75%
1.80% 3.75%
5. SHORT-TERM INVESTMENT
On January 26, 2010, the Company entered into an investment agreement with Chateau Asean Fund 1, a
third party, (the Issuer). The Issuer issued premium convertible unsecured loan notes with a principal amount
of USD75 million (the Notes). The Notes shall be non-interest bearing but will receive a return based on the
performance of the underlying assets prior to conversion date.
The Issuer has the right to convert all or any part of the Notes into Redeemable Preference Shares at any
time during the duration of the agreement. As of March 31, 2010, the fair value of investments amounted to
USD75 million. These investments are intended as available-for-sale investments. The management plans to
liquidate these investments within a year, thus, the investments are classified as current assets.
F-152

6. TRADE RECEIVABLES
2010
2009
Rupiah
PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT PLN Tanjung Jati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Sumber Segara Prima Daya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Karyatama Nagasari. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,348,917
16,103,810
5,490,035
5,136,700
24,875
28,706,067
6,367,231
4,720,414
7,694,727
101,892
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41,104,337
47,590,331
US Dollar
CLP Guangxi Fangcheng Power Co. Ltd., China . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Southern Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea Midland Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guodian Fuel Co.,Ltd., China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shanxi Coal Import & Export Group Co., Ltd., China . . . . . . . . . . . . . . . . . . . . . . . .
Rizhao Honglu Electricity and Energy Co. Ltd., China. . . . . . . . . . . . . . . . . . . . . . . .
Korea South-East Power Co.,Ltd., South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China National Minerals Co.,Ltd., China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bhatia International Ltd., India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IEG Limited, Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan Power Company, Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Castle Peak Power, Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unique Mining Services Public Co., Ltd. Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,016,929
4,195,423
3,786,691
3,724,925
3,655,898
3,633,336
3,486,291
3,325,465
3,120,852
2,842,481
1,334,023
14,352,242
11,056,867
12,105,680
3,902,259
2,396,234
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,122,314
43,813,282
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81,226,651
91,403,613
As of March 31, 2010 and 2009, the Company and Subsidiary have no trade receivables from related
parties.
The details of aging schedule of trade receivables from third parties were as follows:
2010
2009
Up to 30 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
More than 31 days up to 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
More than 61 days up to 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
More than 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59,107,651
17,419,316
2,704,533
1,995,151
68,206,053
20,688,933
2,508,627
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81,226,651
91,403,613
F-153

2010
2009
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41,104,337
40,122,314
47,590,331
43,813,282
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81,226,651
91,403,613
As of March 31, 2010 and 2009, the Company did not provide any allowance for doubtful accounts since the
management believes that all trade receivables from third parties are collectible.
As of March 31, 2010 and 2009, trade receivables were used as collateral for the short-term loan (Note 15)
and Senior Notes (Note 18), respectively.
F-154

2010

PT Saptaindra Sejati. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
2,029,387
Third parties
PT Bukit Makmur Mandiri Utama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Arpeni Ocean Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jaya Samudra Karunia Shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andhika Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Agung Buana Rejeki . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Saptaindra Sejati. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,363,543
194,048
142,635
138,988
77,894
586
6,281,463
194,048
64,840
Dispatch receivable from customers

Korea Midland Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT PLN Tanjung Jati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bhatia International Ltd., India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korean Southern Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan Power Company, Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korean East-West Power Co., Ltd., South Korea. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CLP Guanxi Fang Cheng Power Co. Ltd., China . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Castle Peak Power, Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tohoku Electric Power Company Inc., Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unique Mining Services, Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
403,434
330,820
312,521
233,374
103,340
100,336
89,372
89,109
84,547
61,868
60,356
51,525
1,503,953
192,163
227,953
503,176
102,186
182,384
95,465
433,919
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less allowance for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,342,249
(137,984)
8,277,597
(205,378)
Sub-totalthird-parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,204,265
8,072,219
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,204,265
10,101,606
The management of the Company believes that the allowance for doubtful accounts is adequate to cover
possible losses from non-collectibility of other receivables.
F-155

8. INVENTORIES
2010
2009
Coal inventories:
Clean coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-pit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,557,593
21,756,939
14,834,372
12,024,026
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stores and consumable supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,314,532
3,246,053
26,858,398
2,758,355
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37,560,585
29,616,753
Based on the review of the condition of inventories at the end of the period, the Companys management
believes that no allowance is necessary to cover possible losses and obsolescence.
statements remain the property of the Government of Indonesia with an exclusive right of use granted to the
Company (Note 30A).
As of March 31, 2010 and 2009, inventories were not insured.
9. ADVANCES
2010
2009
Sub-contractor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuel purchase and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,211,985
1,047,044
2,197,796
463,697
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,259,029
2,661,493
2010
2009

Guarantee deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,873,834
176,279
8,219,178
500,390
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,050,113
8,719,568
In September 2008, the Company paid Rp90 billion to the Government of Indonesia (GOI) as deposit for
coal sharing representing the Companys commitment to the GOI for the settlement and payment of the coal
sharing obligation.
F-156

11. DEFERRED EXPLORATION AND DEVELOPMENT COSTS
The cost and accumulated depletion of this account as of March 31, 2010 and 2009 were as follows:
2010
2009
Carrying value
Lati I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,518,195
12,993,001
5,740,188
5,044,034
4,882,821
4,022,662
2,783,091
579,249
449,249
141,230
22,518,195
10,201,053
5,740,793
5,044,034
4,882,821
1,500,044
2,543,036
571,406
429,100
141,230
Total Carrying Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59,153,720
53,571,712
Accumulated Amortization
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,520,690
976,717
23,920,218
781,527
Ending balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,497,407
24,701,745
Deferred Exploration and Development CostsNet . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,656,313
28,869,967
Amortization expense charged to cost of goods sold amounted to USD976,717 and USD781,527 for the
three-month periods ended March 31, 2010 and 2009, respectively (Note 24).
The unit-of-production depletion rate used for the amortization of deferred exploration and development
costs is based on managements best estimate of proven reserves in 2005. The proven reserves were further
updated in 2006 and 2008 when the Company hired a third party consultant to reassess the Companys estimated
coal reserves based on the Australian Joint Ore Reserves Committee Code.
As of March 31, 2010 and 2009, the Company did not recognize any asset impairment and believed that
F-157

Deferred stripping costs as of March 31, 2010 and 2009 amounted to USD17,427,926 and USD31,396,547,
respectively. The deferred stripping costs will be expensed as production costs for areas where the actual ratio is
significantly lower than the planned stripping ratio.
2010
Actual
Planned
Stripping Stripping
Ratio
Ratio
Lati. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - H3N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - H4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan - K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata B1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.98
38.22
5.60
7.02
7.54
12.01
10.44
9.11
5.93
5.93
8.41
12.06
6.88
9.29
2009
Actual
Planned
Stripping Stripping
Ratio
Ratio
8.83
4.72
31.77
7.21
8.70
9.60
15.20
8.69
7.11
7.11
8.21
9.59
8.47
7.32
As of March 31, 2010 and 2009, the Company did not recognize any asset impairment and believed that
13. FIXED ASSETS
Details and changes of fixed assets were as follows:
Beginning
Balance
Additions
2010
Reclassifications/
Disposals
Carrying value
Direct ownership
Land improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements. . . . . . . . . . . . . . . . . . . . . . . . .
Transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
32,649,937
5,128,640
43,989,166
5,395,374
2,065,757
8,883,518
336,448
20,669
1,586,970
32,649,937
5,128,640
43,989,166
5,731,822
2,086,426
10,470,488
Total carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98,112,392
1,944,087
100,056,479
Direct Ownership
Land improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements. . . . . . . . . . . . . . . . . . . . . . . . .
19,098,481
2,487,978
32,986,464
3,079,528
1,142,710
524,417
64,355
445,765
104,548
52,881
19,622,898
2,552,333
33,432,229
3,184,076
1,195,591
Total accumulated depreciation . . . . . . . . . . . . . . . . . . . . .
58,795,161
1,191,966
59,987,127
Net Book Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,317,231
F-158
Ending
Balance
40,069,352

Additions
2009
Reclassifications/
Disposals
Ending
Balance
30,853,645
5,045,921
31,014,447
4,531,427
734,055
9,648,542
111,084
1,070,185
30,853,645
5,045,921
31,014,447
4,642,511
734,055
10,718,727
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81,828,037
1,181,269
83,009,306
Indirect Ownership
Leased assets
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Motor vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,607,600
909,313
3,607,600
909,313
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,516,913
4,516,913
Total carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,344,950
1,181,269
87,526,219
Direct Ownership
Land improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements. . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . . . .
Transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,028,215
2,233,360
28,252,130
2,736,467
451,626
516,915
63,320
312,721
74,673
10,833
17,545,130
2,296,680
28,564,851
2,811,140
462,459
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,701,798
978,462
51,680,260
Indirect Ownership
Leased assets
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Motor vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,344,546
520,889
112,738
28,416
3,457,284
549,305
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,865,435
141,154
4,006,589
Total accumulated depreciation . . . . . . . . . . . . . . . . . . . . . .
54,567,233
1,119,616
55,686,849
Net Book Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,777,717
Beginning
Balance
Carrying value
Direct ownership
Land improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements. . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . . . .
Transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,839,370
Depreciation expenses are allocated as follows:

2010
2009
Cost of goods sold (Note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General and administrative expenses (Note 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,122,472
69,494
1,063,743
55,873
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,191,966
1,119,616
remain the property of the Government of Indonesia. However, the Company has an exclusive right to use the
fixed assets over the contract period or the remaining period (Note 30A).
F-159

The Company entered into finance lease agreements for machinery and equipment and motor vehicles that
are used for mining operations (Note 19).
Machinery and equipment and transportation equipment are covered by insurance against losses under
blanket policies amounting to USD3,744,899 as of March 31, 2010. Management believes this is adequate to
cover possible losses from such risk.
As of March 31, 2010 and 2009, the Companys management did not recognize any asset impairment and
believed that there were no circumstances that would give rise to asset impairment.
2010
2009

PT ANZ Panin Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refundable deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
800,000
43,884
204,976
32,730
800,000
34,557
264,849
35,964
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,081,590
1,135,370
Restricted guarantee deposits consist of:

ownership program.
15. SHORT-TERM LOAN
2010
2009
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing charges
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300,000,000
10,690,278
(2,687,500)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,002,778
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
291,997,222
EC and the Company, who acted as the Borrower and Guarantor, respectively, entered into a Loan
Agreement (the Loan Agreement) with Credit Suisse AG, Singapore Branch (Credit Suisse), as the arranger,
facility agent and security agent, on December 23, 2009. Pursuant to the Loan Agreement, the Company shall
make a single drawing at the time and in the amount agreed upon by both parties amounting to three hundred
F-160

million US Dollars (USD300,000,000) (the Loan) The Loan will bear interest at three-month London Interbank
Offered Rate (LIBOR) plus margin at 4.75% per annum for the first two quarters, margin of 6.25% per annum
for the third quarter and 7.75% per annum for the fourth quarter. The maturity date under the Loan Agreement
shall be the earlier of the date falling twelve (12) months after the date of the loan disbursement and the date on
which the Vendor Notes (each of the USD580,000,000 aggregate principal amount of 8% secured notes due
December 2010 to be issued by PT Bukit Mutiara, an intermediate parent company) become due and payable in
full (whether on or before the stated maturity).
The Loan is secured by (1) pledges of all the shares in the Company and Subsidiary (other than the 10% of
shares in the Company held by Sojitz Corporation) and certain other group companies and intermediate holding
companies in which the beneficial owners of the Company and Subsidiary hold their shares; (2) liens over certain
offshore bank accounts and receivables of the Company and Subsidiary; (3) various fiduciary security covering
the Indonesian assets of the Company; (4) assignment of certain principal operating agreements of the Company;
and (5) pledges of certain inter-company loans or advances payable to the Subsidiary or to any other pledgor.
On December 28, 2009, the proceeds of the Loan from Credit Suisse amounting to USD290,861,927 were
directly transferred to HSBC Bank USA, National Association to fully repay the outstanding balance of the
Senior Notes. The remaining balance of the loan amounting to USD9,138,073 was withheld by Credit Suisse for
payment of fees, costs and expenses earned by it in connection with obtaining the Loan.
In accordance with the Loan Agreement, the Company is required to comply with certain financial ratio
covenants, such as debt service coverage ratio and total debt to EBITDA, commencing from March 31, 2010. As
of March 31, 2010, the Company was in compliance with the financial covenants required by the Loan
Agreement.
F-161

16. TRADE PAYABLES
2010
2009
Related parties
Sojitz Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
213,953
9,667,358
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
213,953
9,667,358
Third parties
PT Bukit Makmur Mandiri Utama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Kartika Samudera Adijaya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Trada Tug and Barge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Andhika Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demurrage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Wijaya Karya. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Mitra Bahtera Segarasejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Lintas Wahana Indonesia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Roda Teknik. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Pembangunan Perumahan (Persero) Cabang VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati Shippers, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Mitra Swire CTM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77,538,146
14,565,894
2,547,880
1,523,200
1,003,518
925,482
601,845
591,872
456,033
271,672
227,249
7,588,845
56,733,403
1,218,940
761,600
1,045,937
468,587
493,894
252,388
2,302,639
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
107,841,636
63,277,388
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,055,589
72,944,746
2010
2009
The details of aging schedule of trade payables from third parties were as follows:
Up to 30 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
More than 31 days up to 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
More than 61 days up to 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
More than 90 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72,607,008
1,823,936
163,063
33,461,582
70,374,352
98,736
2,471,658
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,055,589
72,944,746
The details of trade payables from third parties based on currencies were as follows:
2010
2009
Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,543,023
63,135,707
376,859
27,510,828
45,227,368
206,550
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,055,589
72,944,746
F-162

2010
2009
Mining and haulage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Coal sharing to the Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for coal sharing to Government (Note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demurrage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transshipment facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,379,013
8,830,728
7,533,161
4,275,233
3,602,201
2,766,192
1,377,772
1,147,674
143,574
8,178,337
27,638,566
15,943,675
4,399,265
2,924,389
398,540
1,697,734
1,264,709
6,297,578
3,229,195
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,233,885
63,793,651
18. SENIOR NOTES

2010
2009
Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,000,000
(2,176,867)
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,823,133
Non-Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
268,750,000
(3,718,814)
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
265,031,186
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
287,854,319
On December 15, 2006, the Subsidiary and the Company, who acted as the Issuer and Parent Guarantor,
respectively, issued Senior Notes totaling USD325 million. These Senior Notes comprised of Floating Rate
Notes and Fixed Rate Notes with principal amounting to USD100 million and USD225 million, respectively,
each with a maturity date of December 15, 2011. The aggregate principal amount of Floating Rate Notes will be
amortized in 16 equal installments, beginning March 15, 2008.
June 15, 2007.
The Senior Notes are secured by (1) pledges of all the shares in the Company and Subsidiary (other than the
10% of shares in the Company held by Sojitz Corporation) and certain other group companies and intermediate
holding companies in which the beneficial owners of the Company and Subsidiary hold their shares; (2) liens
F-163

over certain offshore bank accounts and receivables of the Company and Subsidiary; (3) various fiduciary
security covering the Indonesian assets of the Company; (4) assignment of certain principal operating agreements
of the Company; and (5) pledges of certain inter-company loans or advances payable to the Subsidiary or to any
other pledgor.
Certain bank accounts of the Company and Subsidiary will be governed by the Cash and Accounts
Management Agreement (CAMA). The bank accounts will, in the case of United States Dollar accounts, be
maintained with a bank account in Hong Kong and, in the case of Indonesian Rupiah accounts, be maintained
with a bank account in Jakarta (Note 4). The collection and disbursement of all cash balances by the Company
and Subsidiary will be subject to the CAMA.
The Subsidiary may redeem some or all of the Fixed Rate Notes at any time on or after December 15, 2009
at agreed redemption prices. Before December 15, 2009, the Subsidiary may redeem up to 35% of the Fixed Rate
Notes at a redemption price of 109.375% of the principal amount plus accrued and unpaid interest, if any, and up
to 35% of the Floating Rate Notes, at a redemption price of 100% of the principal amount thereof plus a premium
equal to the LIBOR then in effect plus 3.75% of the principal amount, plus accrued and unpaid interest, if any,
with the net cash proceeds from certain equity offerings. In addition, the Subsidiary may redeem in whole or in
part, at any time prior to December 15, 2009 in the case of the Fixed Rate Notes, and at any time, in the case of
the Floating Rate Notes, at a price equal to 100% of the principal amount of the applicable Notes plus an agreed
premium. On December 18, 2006, one of the directors, who represented a shareholder holding a 10% interest in
the Company, submitted a letter to the Directorate General of Energy and Mineral Resources (DEMR) stating an
objection regarding the Senior Notes Facility and requesting the temporary discontinuation of such plan until
further clarification was obtained from the management of the Company. In connection with such objection
letter, on December 20, 2006, DEMR issued a letter ordering the Company not to pursue the Senior Notes
Facility. Subsequent discussions and clarifications between the directors and shareholders were held to resolve
the issue regarding the validity of the Senior Notes Facility and on April 19, 2007, the directors and shareholders
jointly submitted a letter to DEMR expressing their consent and support for the said Notes Facility Agreement.
On April 27, 2007, DEMR issued a letter allowing the Company to record the Senior Notes in its financial
1. The Senior Notes have to be recorded separately between the Senior Notes that have been used by the
shareholders and the Company.
2. The total used loan has to be equal to the actual realization of the investment and should be computed
3. Interest of the loan has to be lower than the interest generally prevailing in the market.
4. The Company has to impose interest on the shareholders.
5. The Government of Indonesia will not guarantee and will not be held liable in the event of failure of
the Company and will not revoke any rights under the CCoW.
6. Copies of agreements and the related documentation have to be submitted to the Government.
7. The loan shall not saddle the operations of the Company in any way that will affect the entitlements of
the Government.
8. Regular reports should be submitted to the Government every time the Company receives a payment
from the shareholders.
F-164

The Company fully accomplished the requirements of DEMR in 2007.
As of March 31, 2009, the loan repayment schedule was as follows:
2009
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,750,000
25,000,000
250,000,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
293,750,000
(25,000,000)
Long-Term Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
268,750,000
PT Orix Indonesia Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Type of Asset
2009
Motor vehicles
14,424
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,424
14,424
Minimum lease payments for lease agreements as of March 31, 2009 consisted of:
2009

2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,424
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less future finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,424
Lease payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,424
14,424
Long-term Portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In May 2009, finance lease obligations were fully settled by the Company.
F-165

20. ESTIMATED ENVIRONMENTAL RESTORATION OBLIGATION
2010
Beginning balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for restoration during the period (Note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual restoration made during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,524,663
449,188
(300,338)
2009
2,485,480
381,010
(314,822)
2,673,513 2,551,668
(2,673,513) (2,551,668)
Long-term Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the mine life. The mine sites of the Company are located in several areas in Kalimantan. Management believes
that the accrual is adequate to meet the obligations for restoration and rehabilitation when coal reserves have
been fully depleted.
21. TAXATION
a. Taxes payable
2010
2009
Income taxes
Article 15 and 4 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value-Added Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
166,508
281,393
9,324,466
1,125,925
138,555,092
28,137
201,877
80,200
3,845,059
906,792
78,224,311
26
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149,481,521
83,258,265
b. Income Taxes
The details of income tax expense were as follows:
2010
2009
Current. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,265,705 22,877,994
(364,944)
(385,554)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,900,761
F-166
22,492,440

Reconciliation between income before income tax expense and taxable income was as follows:
Consolidated income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
58,366,970
50,461,768
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(552,721)
(257,004)
(345,277)
(133,290)
Total permanent difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(809,725)
(478,567)
Temporary differences
Deferred exploration and development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference between commercial and tax on fixed assets net book value . . . . . . . . . . . . .
Fixed assets under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
449,237
87,474
274,277
266,279
388,147
(21,335)
66,188
157,508
Total temporary difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
810,988
856,787
Taxable income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58,368,233
50,839,988
Income tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,265,705
22,877,994
2010
2009
Less prepaid taxes

Article 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98,553
1,455,446
9,336,646
17,889
7,272,778
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,890,645
7,290,667
Income Tax PayableArticle 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,375,060
15,587,327
2010
Income Tax
Benefit
(Expense)
Ending
Balance
c. Deferred Tax
The details of deferred tax were as follows:
Beginning
Balance
Deferred exploration and development costs . . . . . . . . . . . . . . . . . . . . . . . .

Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,151,601)
(4,705,324)
1,136,719
202,155
39,363
123,426
(7,949,446)
(4,665,961)
1,260,145
Deferred Tax LiabilitiesNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,720,206)
364,944
(11,355,262)
F-167

Beginning
Balance
2009
Income Tax
Benefit
(Expense)
Ending
Balance
Deferred exploration and development costs . . . . . . . . . . . . . . . . . . . . . . . .

Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation. . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,810,170)
(2,543,749)
(1,139,095)
1,118,465
696,415
119,824
174,666
(9,601)
29,786
70,879
(8,690,346)
(2,369,083)
(1,148,696)
1,148,251
767,294
Deferred Tax LiabilitiesNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,678,134)
385,554
(10,292,580)
d. Value-Added Tax
stipulates that coal is no longer subject to Value-Added Tax (VAT) and as a result the Company is unable to seek
reimbursement for VAT Input paid starting from the said date. Under the CCoW, the Company is entitled to be
held harmless by the Government for additional taxes. Accordingly, in the consolidated financial statements, the
Company has offset its VAT Input in 2010 and 2009 amounting to USD176,694,607 and USD138,688,091,
respectively, against its coal sharing liability to the Government (Notes 17 and 30a). Based on the independent
advice from its external legal counsel, management believes that such offsetting of VAT Input against the coal
sharing liability is the appropriate treatment for the additional tax burden resulting from GR 144/2000.
Management believes that the Company has followed the appropriate treatment under the CCoW and
Indonesia Civil Code. On July 20, 2007, the Company received a letter from the State Claims Commission
(Panitia Urusan Piutang Negara (PUPN)) No. SKPBN-433/ PUPNC.11.05/2007 collecting unpaid coal sharing
on coal for the years 2001 to 2005 amounting to Rp312.703 and USD26,198,343. Furthermore, the Directorate
General of State Assets (Direktorat Jenderal Kekayaan Negara) issued a Final Notice of Collection (Berita Acara
Pemberitahuan Surat Paksa) ordering the Company to pay the said coal sharing liabilities on or before
September 11, 2007, otherwise, the Government would restrain the Companys assets to the extent of such
liabilities.
The Company, through its legal counsel Kusumanegara and Partners, filed a petition for Restraining
Order to restrain the PUPN from executing the Final Notice of Collection and impending appropriation of the
Companys assets. In its petition, the Company argued, among others, that:
The CCoW explicitly exempts the Company from the harm of present and future Indonesian taxes except
those set forth therein.
Restraining Order with reference case No. 127/G/2007/PTUN-JKT dated March 3, 2008 granting the Companys
appropriation of Companys assets while awaiting final decision. On March 18, 2008, the Company received the
verdict from the Jakarta Court of State Affairs upholding its petition and argument. Pursuant to the Decision of
the Jakarta Court of State Affairs, PUPN was thereby ordered to permanently withdraw its Final Notice of
F-168

Collection. The court however did not rule on the issue on whether PUPN should not pursue the collection of
royalty duly offset by the Company against the VAT Inputs. Hence, PUPN still has the recourse to pursue the
collection through the international arbiter as stipulated in the CCoW.
On March 19, 2008, PUPN filed its appeal to Jakarta High Court of State Affairs (PTTUN). The verdict
dated August 28, 2008, which was delivered formally to the Company on January 17, 2009 stated that PTTUN
does not have the capacity to issue a verdict concerning PUPNs Decree. Therefore, PTTUN annulled the
previous verdict made by the Jakarta Court of State Affairs.
On January 28, 2009, the Company filed cassation to the Supreme Court and on March 17, 2009, the
cassation was officially registered with case No. 94 K/TUN/2009. As of the completion date of the consolidated
financial statements, the Company is waiting for the final decision from the Supreme Court. However, the
Company has made a provision for coal sharing to the Government, which based on managements assessment is
adequate to meet its obligations.
22. SHARE CAPITAL
The Companys shareholders, the number of issued and paid shares and the related balances as of March 31,
2010 and 2009 were as follows:
Number of Issued
and Paid Shares
Shareholders
Percentage of
Ownership
Issued and
Paid Share Capital
PT Armadian Tritunggal (Armadian) . . . . . . . . . . . . . . . . . . . . . . .

Rognar Holding BV (Rognar) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sojitz Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87,975
67,275
17,250
51%
39%
10%
8,797,500
6,727,500
1,725,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
172,500
100%
17,250,000
The shares held by Armadian and Rognar were previously pledged as security for the Senior Notes obtained
in December 2006 (Note 18), and were subsequently pledged as security for the Loan obtained from Credit
Suisse on December 23, 2009 (Note 15) upon redemption of the Senior Notes.
23. SALES
2010
2009
Export . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
160,205,642
60,260,130
93,552,236
54,422,377
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
220,465,772
147,974,613
F-169

2010
2009
Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal sharing to Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight and handling costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal processing and other production cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in coal inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization (Notes 11 and 13). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restoration costs (Note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,377,331
27,938,027
23,044,307
6,791,099
2,775,298
2,099,189
449,188
56,761,998
17,367,987
15,426,883
4,899,876
(7,531,553)
1,845,270
381,010
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149,474,439
89,151,471

2010
2009
Selling and Marketing

Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,495,260 1,643,416
318,346
125,322
230,099
78,603
91,910
59,778
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,135,615
General and Administrative

Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salaries, wages and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Community development and donation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Travel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Representation and entertainment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,831,015
230,286
4,532,283 1,589,991
732,639
650,290
364,214
229,957
162,015
165,108
152,478
105,925
130,735
127,231
105,533
65,280
72,337
57,992
69,494
55,873
63,576
58,452
317,403
31,935
1,907,119
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,533,722
3,368,320
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,669,337
5,275,439
F-170

26. INTEREST EXPENSES
The details of interest expenses were as follows:
2010
2009
Short-term loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligation under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,238,452
7,018,359
484
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,238,452
7,018,843

The employee benefits obligation for the Company for the three-month periods ended March 31, 2010 and
2009 were based on the estimation of the Company, which were computed based on the actuarial reports
prepared by PT Biro Pusat Aktuaria, an independent actuarial firm, in its reports dated on February 23, 2010 and
February 13, 2009, respectively. The computations used the following assumptions:
Discount rate
Mortality table
Disability rate
Retirement age
:
:
:
:
:
10.5% in 2010 and 12% in 2009

10% per annum
10% Mortality Rate
55 years old
Employee benefit expenses were as follows:

2010
2009
Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of past service costplan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of past service costnon-vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115,480
65,996
80,503
897
993
83,211
60,297
17,215
1,072
1,186
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
263,869
162,981
2010
2009

Present value of obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized past service costplan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized past service costnon vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-171
4,566,616 2,163,819
(1,594,345) (314,997)
(81,657)
(68,253)
(90,293)
(75,471)
2,800,321
1,705,098

Movements in the employee benefits obligation were as follows:
2010
2009
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange difference due to financial statements translations . . . . . . . . . . . . . . . . . . . . . . . . .
2,526,044 1,547,590
263,869
162,981
(2,001)
12,409
(5,473)
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,800,321
1,705,098
28. TRANSACTIONS AND BALANCES WITH RELATED PARTIES

In the normal course of business, the Company and Subsidiary have entered into certain transactions with
related parties. The nature of the transactions and relationships with related parties were as follows:
a. Due from Related Parties
2010
2009
Winchester Investment Holdings PLC. (WIH) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PT Risco (Risco) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loan to employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Begarion Capital Ltd. (BCL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
301,884,363
92,135,510
1,871,842
81,777,292
1,900,050
278,472,787
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
395,891,715
362,150,129
a.1 Due from BCL was funded from the proceeds of the Senior Notes (Note 18), which earned interest at a
rate of 10.375%. Interest on loan to BCL is payable semi-annually, commencing June 15, 2007.
Interest income earned from due from BCL amounted to USD5,758,146 in 2009. As of March 31,
2009, due from BCL amounted to USD278,472,787.
Danehill Capital Ltd. (DCL), which transferred the loan from the Company effective December 29,
2009. On December 16, 2009, DCL entered into an Assignment, Assumption and Release Agreement
with Winchester Investment Holdings PLC., which transferred the loan from the Company effective
December 29, 2009. Interest income earned from due from WIH amounted to USD5,833,944 in 2010.
Due from WIH amounted to USD301,884,363 as of March 31, 2009.
a.2 Due from Risco was funded from the proceeds of the Senior Notes (Note 18) and also the result of
novation of Armadians payables to the Company, which was transferred to Risco. This loan to Risco
earns interest at LIBOR plus 4.75%.
Interest income earned from due from Risco amounted to USD862,896 in 2010 and USD1,148,639 in
2009. As of March 31, 2010 and 2009, due from Risco amounted to USD92,135,510 and
USD81,777,292, respectively.
b. Sales
The Company entered into a marketing agency agreement dated October 1, 2001 with Sojitz which owns
10.0% direct equity interest in the Company. The marketing agency agreement is renewable on a yearly basis for
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as long as the Company continues to supply coal to the Japanese market. Under this agreement, Sojitz is required
to use its best efforts to promote, market and seek orders for the Companys coal and maintain good relations
with customers as well as keep the Company informed of any developments in the Japanese market. Sojitz
receives a commission that ranges from 1.5% to 2.0% of the sale proceeds of coal that is delivered to and
accepted by customers and fully paid for at the Company invoiced price. In 2010 and 2009, total sales through
the related party under the marketing agency agreement amounted to USD14,411,017 and USD11,164,629,
respectively (Note 23). There was no outstanding receivable balance as of March 31, 2010 and 2009 from these
transactions. The Company incurred commission expense to Sojitz amounting to USD944,535 in 2010 and
USD248,103 in 2009.
c. Mining Services and Rental of Equipment
The Company, in the regular conduct of its business, has transactions with PT Saptaindra Sejati, a related
party, consisting of mining services and rental of equipment. The outstanding payables arising from these
transactions amounted to USD9,667,358 as of March 31, 2009 and were presented as part of Trade Payables in
the 2009 consolidated balance sheets (Note 16). The outstanding other receivables amounting to USD2,029,387
as of March 31, 2009, pertain to the receivables arising from the coal price and stripping ratio adjustments and
are presented as part of Other Receivables in the 2009 consolidated balance sheets (Note 7). In 2009, PT
Saptaindra Sejati was no longer a related party.
d. Nature of Relationship
Related Parties
Relationship
Sojitz Corporation
Corporation)
Shareholder
Begarion Capital Ltd. (2009)

interest income
PT Risco
Intermediate parent company

interest income
PT Saptaindra Sejati (2009)

equipment

PLC. (2010)

interest income
Maple Holdings Ltd. (2010)
Marketing services
Due to these relationships, it is possible that the terms and conditions of these transactions are not the same
as those that would result from transactions between third parties.
F-173

29. FINANCIAL RISK MANAGEMENT
The Company and Subsidiary are affected by various financial risks, including credit risk, foreign currency
risk, interest rate risk and liquidity risk. The Company and Subsidiarys overall risk management objectives are
to effectively manage these risks and minimize potential adverse effects on their financial performance.
a. Credit risk
The financial assets that potentially subject the Company and Subsidiary to significant concentrations of
credit risk consist principally of cash and cash equivalents, restricted cash, trade and other receivables and due
from related parties. The Company and Subsidiary have in place credit policies and procedures to ensure the
ongoing credit evaluation and active account monitoring.
The Company and Subsidiarys exposure to credit risk arises from the default of other parties, with
maximum exposure equal to the carrying amount of these instruments.
b. Foreign currency risk
The Company and Subsidiary use foreign currency-denominated assets as a natural hedge against its foreign
currency-denominated liabilities.
c. Interest rate risk
The Company and Subsidiary are financed through Senior Notes and other borrowings such as short-term
loan. Therefore, the Company and Subsidiarys exposures to market risk for changes in interest rates relates
primarily to its borrowing obligations and interest-bearing assets and liabilities. The Company and Subsidiarys
policies are to obtain the most favorable interest rates available without increasing its foreign currency exposure
by managing its interest cost using a mixture of fixed and variable rate debts and long-term borrowings.
d. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents to support
business activities on a timely basis. The Company and Subsidiary maintain a balance between continuity of
accounts receivable and due from related parties collectibility and flexibility through the use of bank loans and
other borrowings.
The Companys activities are governed by the provisions of the CCoW, which was entered into by the
Company and Perusahaan Negara Tambang Batubara on April 26, 1983, and was subsequently transferred to PT
Based on Presidential Decree No. 75/1996 dated September 25, 1996, and amendment to the CCoW
No. O2/I.DD/50/96 between PTBA and the Company dated June 28, 1997, all rights and obligations of PTBA
under the CCoW were transferred to the Government of the Republic of Indonesia, represented by the Minister of
Mines and Energy, effective July 1, 1997.
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Under the terms of the CCoW, the Company acts as the contractor of the Government and is responsible for
coal mining operations in an area located in East Kalimantan. The coordinates of which are detailed in Annexure
A and measuring approximately 487,217 hectares. Since April 7, 2005, the concession area has been reduced
to 118,400 hectares.
Significant provisions of the CCoW include:
a. Entitlement Under the Agreement
The Company is entitled to take 86.5% of total coal produced from the final production processes
established by the Company and available for sale in each calendar year, while the Government reserves and
retains the remaining portion (i.e. 13.5%) as its share of total production.
b. Operating Period
Government.
c. Dead Rent
The Company shall pay dead rent to the Government in half-yearly installments during the term of the
CCoW, which is recoverable by the Company as operating costs. Dead rent is calculated by reference to the
number of hectares included in the CCoW area in accordance with the rates stipulated in the CCoW for each
period/stage of operation.
d. Initial Cost
The Company paid to the Government the sum of USD500,000 within 30 days of signing the CCoW in
1983 as a contribution to the Governments initial costs.
e. Equipment
The Company shall finance the cost of purchasing materials, supplies, plant, and equipment (the
Equipment) and such Equipment shall become the property of the Government when landed at the Indonesian
port of import or purchased locally. For the purpose of tax computation pursuant to Annexure D of the CCoW
and all similar government revenue charges and for the purpose of Annexure E thereof, the Company shall be
in the same position as if such Equipment was owned by the Company itself.
f. Corporation Taxes
Corporation taxes in respect of the annual profits of the Company should be computed in accordance with
the prevailing laws and regulations in Indonesia, except that during the first full ten years from and after
taxable income.
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The Company has the right to an investment allowance of 20% of the total investment (i.e. at a rate of 5% a
year from the taxable income provided for in article 4(b) of the Corporation Tax Law 1925 amended by Law
No. 8 of 1970).
g. Divestment of Foreign Interest
The Company shall ensure that its shares owned by foreign investor(s) are offered either for sale or for issue
to the Government of Indonesia, Indonesian nationals, or Indonesian companies controlled by Indonesians in
each year following the end of the fourth full calendar year after commencement of the operating period as set
out in the Coal Agreement. By the end of the tenth full calendar year of the operating period, the cumulative
amount to be offered for sale reaches the maximum of 51%. As of March 31, 2010 and 2009, Indonesian
shareholders owned 51% of the shares of the Company.
h. Accelerated Depreciation
The Company may apply accelerated depreciation at the rate of 10% per year for buildings and 25% per
year for other assets used in coal operations, for one year within any of the first four years for acquisition of such
assets.
i. Other Financial Obligations and Taxes
The CCoW further provides that the Company shall, subject to the terms of the Coal CCoW, pay to the
Dividends paid to shareholders, interest and royalties on patents paid by the Company at a rate of 10%.
Remuneration of the Companys employees. Expatriates who are employed or engaged by the Company
or the Companys contractors or affiliates and who remain in Indonesia for more than 90 days in
aggregate in any one calendar year shall be liable in Indonesia for personal income tax on remuneration
paid to them for services rendered in Indonesia.
Other payments made by the Company including but not limited to fees for technical services based on
the prevailing laws and regulations in Indonesia at a rate of 10%.
Reconstruction and Development (IBRD).
iii. Sales taxes on services rendered to the Company in Indonesia in accordance with prevailing laws and
calculating the sales tax on the fee for services rendered in Indonesia shall be at a percentage of the total
contract sum as approved by the Ministry of Finance.
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The Company has mining and coal hauling contracts with the following:
Mine Area
Ref
Lati
a1
Binungan
a2
2010 and 2009

Sambarata
a3
a1. Lati Mine Site

On December 1, 1998, the Company entered into an agreement with PT Mentari Bukit Makmur (MBM), for
mining operations and coal haulage at the Lati mine site. The term of the contract was until December 31, 2010.
Starting 2007, the contract with MBM was assumed by BUMA, affiliated company of MBM. In 2008, the
contract was extended to December 31, 2018.
December 31, 2005, which was extended until December 31, 2008. In 2008, the contract was extended to
On January 1, 2006, the Company entered into an agreement with SIS for mining operation and coal haulage
of Binungan Block 1-4 with an original contract term until December 31, 2010.
BUMA
On January 1, 2003, the Company entered into an agreement with BUMA, for mining operations and coal
haulage at the Meraang mine site. The contract will expire on December 31, 2010. In 2008, the contract was
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BUMA
The Company has an agreement with BUMA, for coal haulage at the Binungan mine site to the Suaran Coal
December 31, 2018.
Mining Operations
On May 1, 2005, the Company entered into an agreement with SIS for the operation of the coal mine and
On July 15, 2007, the Company entered into another agreement with SIS for the operation of the coal mine
and processing plant in Sambarata Block B1 with a contract term until July 14, 2012.
Coal Barging
On January 1, 2009, the Company entered into an agreement with PT Kartika Samudra Adijaya for coal
barging at the Lati, Suaran, and Sambarata Port. The contract will expire on December 31, 2013.
On January 1, 2009, the Company entered into an agreement with PT Trada Tug and Barge for coal barging
at the Lati and Suaran Port. The contract will expire on December 31, 2013.
On April 1, 2009, the Company entered into an agreement with PT Mitra Bahtera Segarasejati for coal
barging at the Lati, Suaran, and Sambarata Port. The contract will expire on March 31, 2011.
On April 1, 2009, the Company entered into an agreement with PT Mitra Bahtera Segarasejati for Assist
Tug at Trans-shipment Point. The contract will expire on October 31, 2010.
On April 1, 2009, the Company entered into an agreement with PT Pelayaran Karya Samudera Mandiri for
LCT at Trans-shipment Facility. The contract will expire on April 26, 2011.
Assist Tug (TB. DL 05) at Trans-shipment Point. The contract will expire on April 30, 2010.
Assist Tug (TB. Nadia 02) at Trans-shipment Point. The contract will expire on April 30, 2010.
On November 25, 1999, the Company entered into an agreement with Lati Trans-shippers Inc. for coal
shipments for a period of 11 years. The contract will expire in August 2010. The minimum loading rate governed
by this agreement is 20,000 metric tons per day, except for Taiwan Power Company where the loading rate is
24,000 metric tons per day. The agreement governs the contract rate and rate adjustment.
F-178

On January 1, 2009, the Company entered into an agreement with PT Mitra Swire CTM for coal shipments.
The agreement governs the contract rate and rate adjustment and will expire on December 31, 2011.
On September 20, 2007, the Company entered into an agreement with FOTP Transshipment Inc. for coal
On January 1, 2005, the Company entered into an agreement with PT Tirta Sarana Borneo for stevedoring of
On September 1, 1998, the Company entered into an agreement with PT Sucofindo for coal analysis and
superintending for coal shipment. This agreement ended on December 31, 2007 and the Company renewed the
agreement starting January 1, 2008 until December 31, 2010.
On July 1, 2005, the Company entered into an agreement with PT Geoservices for coal analysis and
superintending for coal shipment which expired on September 30, 2008. The Company renewed the agreement
starting November 1, 2008 until October 31, 2011.
On April 1, 1999, the Company entered into an agreement with PT Roda Teknik for heavy equipment hire.
This agreement ended on December 31, 2007 and the Company renewed the contract for a year starting
January 1, 2008 until December 31, 2008. In 2008, the agreement term was extended to December 31, 2012.
On June 1, 2005, the Company entered into an agreement with PT Surya Teknik Anugerah for heavy
equipment hire. This agreement will expire on May 31, 2010.
On January 1, 2008, the Company entered into an agreement with PT Bukit Makmur Mandiri Utama for
heavy equipment hire. This agreement will expire on December 31, 2010.
On January 1, 2005, the Company entered into an agreement with PT Sentra Baruna Hijau for heavy
Drilling
On January 1, 2006, a Contract was entered into an agreement with PT Recsalog Geoprima for rental of
logger and logging services for a period of one year. The agreement was extended until December 31, 2008. In
2008, the agreement was renewed and expired on December 31, 2009.
On February 1, 2009, the Company entered into an agreement with CV Kassam Drilling Group for drilling
services. The agreement expired on January 31, 2010 and was subsequently renewed on February 1, 2010 and
will expire on December 31, 2011.
F-179

On June 21, 2009, the Company entered into an agreement with CV Sarana Seisindo Utama for drilling
services. This agreement expired on December 31, 2009 and was extended until December 31, 2010.
On December 30, 2009, the Company entered into a marketing services agreement with Maple Holdings
Limited (Maple) under which Maple has agreed to act as the exclusive marketing agent of the Company for all
coal sales except those coal products that Sojitz Corporation is entitled to market and sell to customers in Japan
under terms of the Japan Marketing Agreement. The agreement shall become effective from December 30, 2009
to December 30, 2019 and can be renewed for a further period of ten (10) years by mutual agreement. As
compensation, the Company is required to pay Maple a commission of 2% of the sales.
C. Commitments
Restoration
As stated in Note 20, the Company has obligations in respect of restoration, rehabilitation and
environmental expenditure.
Long-term Sales
The Company has long-term sales commitments as follows:
In July 2004, the Company entered into a 4-year sales contract from 2005 to 2008 with Taiwan-based
company, Taiwan Power Company. The quantity of coal to be delivered by the Company was 500,000 metric
tonnes per each contract year, subject to a tolerance of up to plus or minus 20% at the buyers option. The
Company shall be liable to buyer for any and all losses, damages and cost (including, without limitation, third
party claims against buyer) caused by or related to the Companys failure to perform in accordance with the
representations and warranties. The selling price is based on certain formulas as set forth in the contract.
In November 2008, the Company also agreed to 6 and 8 years long-term contracts up to 2014 and 2016,
500,000 metric tonnes annually for each contract, meaning the total quantity is 1,000,000 metric tonnes annually
subject to a tolerance of up to plus or minus 20% at the buyers option. The term of the contract is mainly similar
to the previous long-term contract and the selling price is also based on certain formula set out in the contract and
determined on a yearly basis.
PT Jawa Power
The Company entered into a coal supply agreement dated December 18, 1995. The initial term of this
agreement shall be for a period commencing on the date of the agreement and ending, unless extended or earlier
terminated in accordance with terms of this agreement, on the date that falls ten (10) years after the commercial
operation date in November 2000. The quantity of coal to be delivered by the Company was 2,000,000 metric
tonnes per year, subject to a tolerance of up to plus or minus 20% at the buyers option. In January 2009, the term
of agreement was extended by 5 years to November 2015. The buyer may extend the term in the aforesaid
F-180

manner on no more than four (4) occasions, such that the term shall not extend for a aggregate period of more
than thirty (30) years from the start of commercial operation. The selling price is determined on a yearly basis.
PT Indonesia Power
On August 27, 2008, the Company entered into a 10-year sales contract from January 2008 up to December
2018 with Indonesia-based company, PT Indonesia Power. The quantity of coal to be delivered by the Company
was 3,000,000 metric tonnes per year, subject to a tolerance of up to plus or minus 5% at the buyers option. The
Bank Guarantees
The Company had the following outstanding bank guarantee facility issued in relation to sales contracts and
in respect of contractor commitments.
2010
Rupiah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
43,884
34,557
800,000 800,000
31. FINANCIAL INSTRUMENTS

The following table presented the Company and Subsidiarys financial assets and liabilities as of March 31,
2010:
2010
Financial Assets
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available for sale
Short-term investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
214,802,628
75,004,855
81,226,651
11,204,265
395,891,715
Total Financial Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
853,130,114
Short-term bank loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
291,997,222
108,055,589
60,233,885
2,673,513
Total Financial Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
462,960,209
F-181
75,000,000

The following table presented the carrying values and estimated fair values of the Company financial
instruments that are carried in the consolidated balance sheet as of March 31, 2010:
Carrying Amount
Fair Value
214,802,628
75,004,855
81,226,651
11,204,265
395,891,715
214,802,628
75,004,855
81,226,651
11,204,265
395,891,715
75,000,000
75,000,000
Total Financial Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
853,130,114
853,130,114
Short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . .
291,997,222
108,055,589
60,233,885
2,673,513
291,997,222
108,055,589
60,233,885
2,673,513
Total Financial Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
462,960,209
462,960,209

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available for sale
Short-term investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The fair values of the financial assets and liabilities are included at the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.
The following methods and assumptions were used to estimate the fair value of each class of financial
instrument for which it is practicable to estimate such value:
Short-term financial assets and liabilities:
Short-term financial instruments with remaining maturities of one year or less (cash and cash equivalents,
restricted cash, short-term investment, trade and other receivables, short-term loan, trade payables,
accrued expenses and other current financial liabilities).
These financial instruments approximate their carrying amounts largely due to their short-term maturities.
Long-term financial assets (due from related parties).
The carrying amounts of due from related parties approximate their fair values as these are interest bearing.
F-182

32. CONTINGENCIES
The Company is contigently liable for various claims from third parties arising from the ordinary conduct of
business, which are either pending or are being processed by a decision of the court, the outcomes of which could
be substantial, but are not presently determinable. The following are the contingencies as of balance sheet date:
a. Claims by Lati Transshippers Inc. for Payment of VAT
On August 14, 2009, Lati Transshipers Inc. (LTI) registered charges against the Company by sending
Notice of Arbitration to the Singapore International Arbitration Center (SIAC) in relation to the demand of LTI
to the Company for the payment of VAT arising from the performance of the agreement between the Company
and LTI (Note 30a4) during the years 2000 to 2003 amounting to Rp14,202,735,285 plus penalty as assessed by
the Indonesian tax authorities.
On December 21, 2009, LTI had sent the Statement of Claim to the Company. On February 10, 2010, the
Company provided its response by sending a Statement of Defense to SIAC disputing the claim of LTI.
Moreover, the Company included counterclaim such as damages for breach of contract and cost of the
arbitration, in case LTI should win the case.
As of the completion date of the consolidated financial statements, the Company received the Response
Letter to the Statement of Defense from the LTI and in process of preparation for the preliminary hearing on
April 30, 2010.
b. Case with a Resident in Berau
During land clearing for haulage road construction to support the Companys mining activities, five
residents complained and demanded payment for damages to their property amounting to Rp800,000,000 per
hectare. The Company refused to pay because the restitution required by the five residents was significantly
higher than the market value of the land. The Company changed the plan for the haulage road without accessing
the land of the five residents. However, one of the five residents filed a complaint against the Company to the
residential police dated October 22, 2008 for using others land and/or damages of property.
As of the completion date of the consolidated financial statements, the Company is preparing for the defense
of the case.
standards that may have certain impacts to the Company and Subsidiarys consolidated financial statements.
January 1, 2011:
F-183

ISAK 9Changes in Existing Decommissioning, Restoration and Similar Liabilities.
date of the provisions of the other related PSAKs, with one that may be relevant to the Company and Subsidiary
as follows:
The Company and Subsidiary are evaluating the potential impact on the consolidated financial statements as
a result of the adoption of the above new accounting standards.
34. REISSUANCE OF CONSOLIDATED FINANCIAL STATEMENTS
The Company has issued the consolidated financial statements for the three-month period ended March 31,
2010. The consolidated financial statements for the three-month period ended March 31, 2010 have been
reviewed by Tjiendradjaja & Handoko Tomo, Registered Public Accountants, with independent accountants
report No. P014/2010 dated May 14, 2010 with comparative figures of the consolidated financial statements for
the three-month period March 31, 2009. In connection with the plan of issuance of Guaranteed Senior Secured
Notes, the consolidated financial statements were reissued with the effect of the results of the review of the
consolidated financial statements for the three-month period ended March 31, 2009.
statements that were completed on June 22, 2010.
F-184
INDEPENDENT AUDITORS REPORT

Report No. 024/T/1/2010
PT Berau Coal
We have audited the accompanying consolidated balance sheets of PT Berau Coal (the Company) and
Subsidiary as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in
equity, and cash flows for the years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial statements based on our
audits. The financial statements of the Company as of December 31, 2007, were audited by other independent
auditors whose report dated April 29, 2008 expressed an unqualified opinion on those statements and included an
explanatory paragraph that described the Directorate General of Energy and Mineral Resources approval for
recording of the Senior Notes in Companys consolidated financial statements subject to certain requirements.
Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.
F-185
the financial position of PT Berau Coal and Subsidiary as of December 31, 2009 and 2008, and the results of
their operations, and their cash flows for the years then ended in conformity with generally accepted accounting
principles in Indonesia.
March 5, 2010
Tjiendradjaja Yamin
NOTICE TO READERS
standards, procedures and practices utilized to audit such consolidated Financial Statements may differ from those generally accepted in
countries and jurisdictions other than Indonesia. Accordingly, the accompanying consolidated Financial Statements and the auditors report
F-186
Jimmy Budhi & Rekan

Registered Public Accountants
License Number: No. KEP-315/KM.6/2004 dated July 27, 2004
JI. Sisingamangaraja No. 26, 2nd Floor, Jakarta Selatan 12120 - Indonesia T 62 21 720 2605 F 62 21 72788954 E audit@kapjimmybudhi.com
W www.kapjimmybudhi.com
Report of Independent Auditors

Report No. 065/JB/II/2008
The Stockholders, Boards of Commissioners and Directors
PT Berau Coal and Subsidiary
We have audited the consolidated balance sheets of PT Berau Coal and Subsidiary (the Company) as of
December 31, 2007 and 2006 and the related consolidated statements of income, changes in shareholders equity
and cash flows for the years then ended. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements based on our audits. The
financial statements of the Company as of and for the year ended December 31, 2005 were audited by other
independent auditors whose report dated June 8, 2006 expressed a qualified opinion because, the independent
auditors were not able to perform certain necessary audit procedures relating to the loans payable.
Certified Public Accountants. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
the consolidated financial position of PT Berau Coal and Subsidiary as of December 31, 2007 and 2006 and the
consolidated results of their operations and cash flows for the years then ended, in conformity with accounting
principles generally accepted in Indonesia.
TM
F-187
Jimmy Budhi & Rekan

As discussed in Note 18b to the financial statements, in July 2006, as part of the managements effort to
resolve issues relating to the loans facility entered into with Deutsche Bank, which, among others, include the
disagreement of the Directorate General of Energy and Mineral Resources (DEMR) of the Republic of Indonesia
with the Company assuming the loans, the Company entered into a US$39.5 million loan facility agreement with
a syndicate of financial institutions to fully refinance loans payable previously obtained from Deutsche Bank
amounting to US$36.5 million. As also disclosed in Note 18a, in connection with the US$325 million Senior
Notes Facility issued by the Company, on December 18, 2006, one of the directors, who represents a shareholder
holding a 10% interest in the Company, issued a letter to DEMR stating an objection regarding the Senior Notes
Facility and requesting a temporary discontinuation of such plan until further clarification was obtained from the
management of the Company. In connection with such objection letter, on December 20, 2006, DEMR issued a
letter ordering the Company not to pursue the Senior Notes Facility. Subsequent discussions and clarifications
between the directors and shareholders were held to resolve the issue on validity of the Senior Notes Facility and
on April 19, 2007, the director and shareholder jointly issued a letter to DEMR expressing their consent and
support for the said Notes Facility Agreement. On April 27, 2007, DEMR issued a letter allowing the Company
to record the Senior Notes in its financial statements subject to certain requirements as discussed in Note 30. The
Company has subsequently fully satisfied the requirements.
JIMMY BUDHI & REKAN
Jimmy S. Budhi
License No. 03.1.0835
April 29, 2008
NOTICE TO READERS
The accompanying consolidated financial statements are intended to present the consolidated financial position, consolidated results of
operations, consolidated changes in stockholders equity and consolidated cash flows in accordance with accounting principles and practices
generally accepted in Indonesia and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated
financial statements are those generally accepted and applied in Indonesia.
TM
F-188

DECEMBER 31, 2009 AND 2008
(With Comparative Figures as of December 31, 2007)
Notes
2009
3
4
5
6
24a
191,899,413
112,486,636
92,786,595
91,727,021
30,403,922
85,310,876
54,575,300
37,510,753
50,405,794
9,013,576
48,024,682
18,996,880
1,910,194
8,973,854
25,897,631
11,030,057
1,114,372
799,771
6,000,404
2,402,374
473,207,782
255,253,555
152,808,768
380,635,061
39,317,231
29,939,708
18,199,275
10,690,278
2,684,295
353,343,294
31,777,717
28,840,355
20,917,272
6,439,897
2,845,642
324,538,788
25,719,572
28,712,309
29,917,665
8,616,764
2,152,103
Total Non-Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
481,465,848
444,164,177
419,657,201
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
954,673,630
699,417,732
572,465,969
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivablesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
8
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NON-CURRENT ASSETS
Due from related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assetsnet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred exploration and development costnet . . . . . . . . . . .
Deferred stripping costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred financing chargesnet . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24b
11
9
10
12
2008

F-189
2007

DECEMBER 31, 2009 AND 2008(Continued)
(With Comparative Figures as of December 31, 2007)

CURRENT LIABILITIES
Short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current maturities of long-term debts
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under finance lease . . . . . . . . . . . . . . . . . . . . . .
Notes
2009
2008
17
13
24a
300,000,000
13,328,817
46,104,974
74,495,981
59,800,665
9,817,359
30,869,847
48,610,834
28,393,911
25,000,000
35,759
25,000,000
679,793
592,731,217
218,766,196
143,371,744
16c
23
11,720,206
2,526,044
10,678,134
1,547,590
11,601,373
1,367,827
18a
18b
15
2,524,663
275,000,000
2,485,480
300,000,000
135,735
2,653,308
Total Non-Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,770,913
289,711,204
315,758,243
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
609,502,130
508,477,400
459,129,987
17,250,000
327,921,500
17,250,000
173,690,332
17,250,000
96,085,982
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
345,171,500
190,940,332
113,335,982
TOTAL LIABILITIES AND EQUITY. . . . . . . . . . . . . . . . . .
954,673,630
699,417,732
572,465,969
14
16a
18a
18b
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred tax liabilitiesnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debtsnet of current maturities
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under finance lease . . . . . . . . . . . . . . . . . . . . . .
Environmental restoration obligation . . . . . . . . . . . . . . . . . . . . .
EQUITY
Share capital
Authorized174,000 shares at par value USD100
(Rp70,200) each
Issued and fully paid172,500 shares . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
89,055,028
78,152,650
125,523,539
2007

F-190

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(With Comparative Figures for the Year Ended December 31, 2007)
Notes
2009
2008
2007
20
21
800,020,752
473,304,156
631,223,823
460,609,823
384,189,529
296,079,318
326,716,596
170,614,000
88,110,211
9,750,931
23,576,510
6,616,339
18,270,876
4,340,833
13,382,101
Total Operating Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,327,441
24,887,215
17,722,934
INCOME FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . .
293,389,155
145,726,785
70,387,277
SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GROSS PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gain (loss)net . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing charges . . . . . . . . . . . . . . .
Interest and financing charges . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneousnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
24b
17,18
28,668,328
30,445,076
32,124,525
4,336,768
(4,622,058) (1,468,457)
(6,499,620) (2,176,867) (2,176,867)
(26,848,912) (30,414,375) (33,790,736)
(14,592,795)
361,753
772,339
Other ChargesNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(14,936,231)
INCOME BEFORE INCOME TAX EXPENSE

(BENEFIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
278,452,924
INCOME TAX
EXPENSE (BENEFIT)
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16b
16c
(6,406,471)
139,320,314
(4,539,196)
65,848,081
123,179,684
1,042,072
62,639,203
(923,239)
30,674,494
(1,975,921)
Income Tax Expensenet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124,221,756
61,715,964
28,698,573
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
154,231,168
77,604,350
37,149,508

F-191

Issued and Paid
Share Capital
Retained
Earnings
Total Equity
Balance as of January 1, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,250,000
58,936,474
37,149,508
76,186,474
37,149,508

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,250,000
96,085,982
77,604,350
113,335,982
77,604,350

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,250,000
173,690,332 190,940,332
154,231,168 154,231,168
Balance as of December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,250,000
327,921,500

F-192
345,171,500

2009

Receipts from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment to suppliers and operating expenses. . . . . . . . . . . . . . . . . . .
Payment for employee salaries, wages and allowances . . . . . . . . . .
Payment to Government for royalty . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for environmental restoration obligation. . . . . . . . . . . . . . .
2008
2007
792,545,033 596,318,741 374,565,698

(355,117,010) (391,112,819) (240,223,457)
(24,207,931) (14,418,102)
(9,647,434)
(96,366,931) (60,659,563) (38,735,923)
(1,677,519)
(1,080,653)
(552,955)
Cash provided by operation before tax . . . . . . . . . . . . . . . . . . . . . . . .

Payment of corporate income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
315,175,642
(65,798,008)
129,047,604
(31,232,448)
85,405,929
(25,710,553)
Net Cash Flows Provided by Operating Activities . . . . . . . . . . . . . .
249,377,634
97,815,156
59,695,376

Interest receipt from banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Withdrawals (deposits) of restricted cashnet . . . . . . . . . . . . . . . . .
Acquisition of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exploration and development expenditure . . . . . . . . . . . . . . . . . . . . .
1,376,561
(82,088,737)
(11,767,442)
(4,699,826)
1,640,570
7,447,051
(10,164,764)
(3,392,148)
1,496,665
(15,827,438)
(8,186,857)
(2,608,916)
Net Cash Flows Used in Investing Activities . . . . . . . . . . . . . . . . . . .
(97,179,444)
(4,469,291)
(25,126,546)

Proceeds from short-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for Senior Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest for Senior Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for Senior Notes redemption penalties . . . . . . . . . . . . . . . .
Payment for financing fee for short-term loan . . . . . . . . . . . . . . . . . .
Payment of obligations under finance lease . . . . . . . . . . . . . . . . . . . .
Payment of interest for lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300,000,000
(300,000,000)
(27,819,151)
(15,027,921)
(9,138,073)
(35,759)
(4,894)
(25,000,000)
(30,407,993)
(779,769)
(6,382)
(33,774,530)
(671,780)
(16,206)
Net Cash Flows Used in Financing Activities . . . . . . . . . . . . . . . . . .
(52,025,798)
(56,194,144)
(34,462,516)
NET INCREASE IN CASH AND CASH EQUIVALENTS. . . .

CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,172,392
37,151,721
106,314
91,727,021
54,575,300
54,468,986
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . .
191,899,413
91,727,021
54,575,300
Non-Cash Activity:
Unpaid loan interest from related parties. . . . . . . . . . . . . . . . . . . . . . .
27,291,767
6,499,620
28,804,506
2,176,867
30,627,382
2,176,867

F-193

1. GENERAL
a. Companys Establishment
PT Berau Coal (the Company) was established in the Republic of Indonesia within the framework of the
Foreign Capital Investment Law No. 1 of 1967, as amended by Law No. 11, Year 1972, based on Notarial Deed
No. 2 of Tan Thong Kie dated April 5, 1983. The Deed of Establishment was approved by the Ministry of Justice
in its decision letter No. C2-3523-HT.01.01.TH.83 dated April 30, 1983, and was published in the State Gazette
of the Republic of Indonesia No. 519, Supplement No. 38 dated May 13, 1983. The latest amendment to the
articles of association was in relation to the Law 40/2007 regarding Limited Liability Companies by Deed No.72
of Imas Fatimah, S.H. dated June 19, 2008 and was approved by the Ministry of Law and Human Rights in its
decision letter No. AHU-50818.AH.01.02.Year 2008 dated August 13, 2008 and was published in State Gazette
No. 50 dated June 23, 2009.
According to Article 3 of the Companys articles of association, the scope of activities of the Company
comprises of exploration, development, mining, marketing and trading, and transporting of coal deposits in
Kalimantan. The main office of the Company is located in Tanjung Redeb and its mining sites are located in Lati,
Binungan and Sambarata, which are all in Kabupaten Berau, East Kalimantan. The Company started its
commercial operations on April 27, 1995 and its concession right is valid for 30 years.
The members of the Companys Boards of Commissioners and Directors as of December 31, 2009 were as
follows:
Commissioner
Commissioner
Commissioner
Commissioner
Commissioner
Muhammad Lutfi
Erick Thohir
Rosan Perkasa
Bernardi Djumiril
Bob Kamandanu
Board of Directors
President Director
Director
Director
Y.A.Didik Cahyanto
Julianto Halim
Michiaki Furusho
John Joseph Ramos
The members of the Companys Boards of Commissioners and Directors as of December 31, 2008 and 2007
were as follows:
Commissioner
Commissioner
Commissioner
Commissioner
Rizal Risjad
Dedey Risjad
Erick Thohir
Christian Wijayanto
F-194

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008(Continued)
Board of Directors
President Director
Director
Director
Bob Kamandanu
Michiaki Furusho
Julianto Halim
As of December 31, 2009, 2008 and 2007, the Company had 656, 564 and 509 employees, respectively
(unaudited).
c. Structure of the Subsidiary
On November 2, 2006, in connection with the Senior Notes obtained by the Company, the Company
established Empire Capital Resources Pte. Ltd. (EC), as its wholly owned Subsidiary, with the main purpose of
issuing the Senior Notes (Note 18a) and on-lending the gross proceeds of the Senior Notes to the Company
pursuant to the Inter-company Loan Agreement. EC was incorporated as a limited liability company under the
laws of Singapore. On December 28, 2009, EC obtained a new loan from Credit Suisse AG, which was used for
the payment of the Senior Notes on December 28, 2009.
The consolidated financial statements have been prepared in accordance with the generally accepted
accounting principles and practices in Indonesia. The accounting principles applied consistently in the
preparation of the consolidated financial statements were as follows:
a. Basis of Preparation of the Consolidated Financial Statements
The consolidated financial statements, except for the statements of cash flows, are prepared under the
accrual basis of accounting, with the measurement basis being historical cost, except for certain accounts that are
measured on the basis described in the related accounting policies.
The consolidated statements of cash flows present receipts and payments of cash classified into operating,
investing and financing activities. Cash flows from operating activities are presented using the direct method.
The reporting currency used in the preparation of the consolidated financial statements is United States
Dollar (USD) as required under the Coal Contract of Work (CCoW), for which approval was obtained from the
Ministry of Finance No. KEP-168/PJ.42/1993 dated July 26, 1993.
The consolidated financial statements include Subsidiary that is controlled by the Company. Control is
presumed to exist when the Company owns, directly or indirectly (through Subsidiaries), more than 50% of the
b) having the right to govern the financial and operating policies of the Subsidiary under the articles of
F-195

c) ability to appoint or remove the majority of the members of the Subsidiarys management;
d) ability to control the majority of votes at meetings of management;
c. Cash and Cash Equivalents
three months or less and not pledged as collateral or restricted in use.
d. Restricted Cash
time deposits which are restricted in use are presented under non-current assets.
e. Receivables
Receivables are stated at their net realizable value. Allowance for doubtful accounts is provided based on a
review of the status of individual receivable accounts at the end of the year.
f. Inventories
Effective January 1, 2009, the Company and Subsidiary applied PSAK No.14 (Revised 2008), Inventories
(Revised PSAK 14), which supersedes PSAK No. 14 (1994). The adoption of Revised PSAK 14 had no
significant impact on the consolidated financial statements.
Coal inventories comprise of materials, labor and directly and attributable fixed and variable overheads
related to coal mining activities. Inventories are valued at the lower of cost or net realizable value (NRV). Cost is
determined using the average method. Allowance for inventories obsolescence is provided based on a review of
the condition of inventories at the end of the year.
g. Prepaid Expense
h. Fixed Assets
The Company applied PSAK No. 16 (Revised 2007), Fixed Assets (Revised PSAK 16). Based on
Revised PSAK 16, an entity shall choose between the cost model and revaluation model as the accounting policy
for its fixed assets measurement. The Company has chosen the cost model as the accounting policy for their fixed
assets measurement. The adoption of this revised PSAK did not have significant effect on the Companys
consolidated financial statements.
computed on the straight-line method at a rate of 12.5% per year except for building and several land
F-196

The assets useful lives and method of depreciation are reviewed, and adjusted if appropriate, at the end of
the year.
Land improvement represents cost incurred (i.e. land-clearing cost, road development, and others) in
preparing the land area for mining operations.
replacement or major inspection costs are capitalized when incurred if it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can be measured reliably. An item of
fixed assets is derecognized upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition of the asset is included in consolidated statements of income
in the year the asset is derecognized.
i. Impairment of Assets Values
of an asset exceeds its recoverable amount, an impairment loss is recognized in the current year statements of
income. Recoverable amount is the higher of an assets net selling price and its value in use.
j. Leases
The Company applied PSAK No. 30 (Revised 2007), Leases (Revised PSAK 30). Under Revised PSAK
30, leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the
lessee are classified as finance leases. Finance leases are capitalized at the inception of the lease at the fair value
of the leased assets or at the present value of the minimum lease payments if the present value is lower than the
fair value. Lease payments are apportioned between finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recorded in the
consolidated statements of income. Leased assets held by the lessee under finance leases are included in fixed
assets and depreciated over the estimated useful life of the assets or the lease term, whichever is shorter, if there
is no reasonable certainty that lessee will obtain ownership by the end of the lease term.
k. Deferred Exploration and Development Cost
Exploration and development costs are accumulated separately for each area of interest and deferred when
the costs incurred are expected to be recovered through exploitation or sale of proven reserves, or activities have
not yet reached a stage permitting reasonable assessments of the existence or otherwise of economically
recoverable reserves, and active and significant exploration of the area of interest is continuing. Deferred
exploration and development costs are amortized using the unit-of-production method.
F-197

The net carrying value of deferred exploration and development costs for each area of interest is reviewed
regularly and the excess of its carrying value over its recoverable amount is written off in the year in which it is
determined.
l. Deferred Stripping Costs
Stripping cost of top soil is divided into (i) initial stripping of the top soil to open the mining area before
production commences and (ii) additional stripping that is performed during the production activity.
The initial stripping costs are part of deferred development cost, while the additional stripping costs are
ratio. However, when the actual ratio is significantly higher than the estimated average ratio, the excess stripping
costs are to be deferred and recorded as deferred stripping costs. These deferred stripping costs are expensed as
production costs in years where the actual ratio is significantly lower than the estimated average ratio.
m. Deferred Financing Charges
Fees incurred in connection with the Senior Notes and loans obtained are deferred and amortized over the
term of the Senior Notes and loans. Outstanding balance of the deferred charges is expensed outright upon
settlement of the Senior Notes and loans.
n. Environmental Restoration Obligation
The Company has certain obligations for restoration and rehabilitation of mining areas following the
completion of production. Such obligations are accrued for on an incremental basis, so that the accrual will be
adequate to meet those obligations once production from the resource is fully depleted. Changes in estimated
restoration and rehabilitation costs to be incurred are accounted for on a prospective basis over the remaining life
of the mine.
o. Revenue and Expense Recognition
the coal has been dispatched to the customer and is no longer under the Companys physical control; and
p. Transactions with Related Parties
The Company and Subsidiary have transactions with certain parties, which have a related party relationship,
as defined in Statement of Financial Accounting Standards (PSAK) No. 7 Related Party Disclosures.
F-198

All significant transactions with related parties whether or not conducted under the same terms and
q. Foreign Currency Transaction and Balances
Transactions denominated in currencies other than USD are recorded at the prevailing rates of exchange in
effect on the date of the transactions.
As of balance sheet date, all foreign currency monetary assets and liabilities are translated at the middle
exchange rates quoted by Bank Indonesia on that date. The resulting net foreign exchange gains or losses are
recognized in current years consolidated statements of income.
The exchange rates used as of December 31, 2009, 2008 and 2007 were as follows:
2009
Indonesian Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese Yen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singaporean Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australian Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
9,400.00 10,950.00
92.43
90.32
1.40
1.44
1.11
1.45
0.70
0.71
2007
9,419.00
113.39
1.45
1.14
0.68
r. Income Taxes
Current tax expense is provided based on the estimated taxable income for the year. Tax rates specified in
the CCoW are used to determine income tax. Under the CCoW, the annual tax rate is 35% during the first full ten
years from the commencement of the operating period (through 2001), and 45% during the remainder of the
operating period. Temporary differences from accelerated depreciation and amortization have been measured at
the tax rates in effect when such temporary differences will be settled. Current tax expense of the Subsidiary that
is domiciled and registered as a tax subject in Singapore is determined based on the taxable income for the year
computed using prevailing tax rates in the relevant country.
temporary differences to the extent that it is probable that future taxable profit will be available against which the
appealed against by the Company and Subsidiary, when the result of the objection and/or appeal is determined.
F-199

s. Employee Benefits Obligation
The Company adopted PSAK No. 24 (Revised 2004) on Employee Benefits (Revised PSAK 24) to
determine their employee benefits obligation under the Labor Law No. 13/2003 dated March 25, 2003 (the
Law). Under Revised PSAK 24, the cost of employee benefits based on the Law is determined using the
Projected Unit Credit actuarial valuation method. Actuarial gains or losses are recognized as income or
year exceeded the higher of 10% of the defined benefit obligation and 10% of the fair value of plan assets at that
date. These gains or losses are recognized on a straight-line basis method over the expected average remaining
working lives of the employees. Past-service cost arising from the introduction of a defined benefit plan or
t. Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. They are disclosed in the
notes to consolidated financial statements unless the possibility of an outflow of resources embodying economic
benefits is remote. Contingent assets are not recognized in the consolidated financial statements, but are
disclosed in the notes to consolidated financial statements when an inflow of economic benefits is probable.
u. Use of Estimates
F-200

2009
2008
2007
Cash on hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
169,403
140,925
121,480
Cash in banks
US Dollar
Hong Kong and Shanghai Banking Corporation
Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Internasional Indonesia Tbk. . . . . . . . . . . . . . . . . . .
140,816,034
22,178,857
1,331,092
65,373,464
578,702
507,462
39,664,526
467,039
357,182
Indonesian Rupiah
Hong Kong and Shanghai Banking Corporation
Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk. . . . . . . . . . . . . . . . . . . . . .
PT Bank Negara Indonesia (Persero) Tbk . . . . . . . . . . . . . . .
PT Bank Internasional Indonesia Tbk. . . . . . . . . . . . . . . . . . .
3,323,920
2,910,461
2,650,769
1,654,562
843,039
7,055,100
1,675,997
581,412
1,690,157
157,087
11,866,797
449,925
875,936
607,445
101,269
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
175,708,734
77,619,381
54,390,119
Cash equivalents
Time deposits
US Dollar
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,779,500
Indonesian Rupiah
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Negara Indonesia (Persero) Tbk . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia Tbk. . . . . . . . . . . . . . . . . . . . . .
15,957,447
53,191
10,638
9,132,420
45,662
9,133
53,084
10,617
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,021,276
13,966,715
63,701
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
191,899,413
91,727,021
54,575,300
Time deposits earned interest at annual rates:

2009
Indonesian Rupiah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-201
2008
2007
5.50% 7.50% 6.15% 9.75% 3.00% 9.75%
2.13% 3.75%

4. RESTRICTED CASH
2009
2008
2007
Cash in banks
US Dollar
Hong Kong and Shanghai Banking Corporation Limited. . . . . . . . .
72,917,429
14,076,759
33,739,369
Indonesian Rupiah
Hong Kong and Shanghai Banking Corporation Limited. . . . . . . . .
14,727,772
13,411,734
6,641
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87,645,201
27,488,493
33,746,010
Time Deposits
US Dollar
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,625,600
974,795
2,870,555
Indonesian Rupiah
PT ANZ Panin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia, Tbk. . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,126,596
89,239
1,353,740
586,894
247,956
646,232
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,841,435
2,915,429
3,764,743
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112,486,636
30,403,922
37,510,753
Bank accounts in Hong Kong and Shanghai Banking Corporation Limited denominated in US Dollar and
Rupiah represent cash under Cash and Accounts Management Agreement pursuant to the conditions as set forth
in the Senior Note Facility obtained by the Company (Note 18a) in 2007 and 2008 and Credit Suisse loan facility
in 2009 (Note 17).
Time deposits placed with PT Bank Danamon Indonesia Tbk amounting to USD89,239, USD586,894 and
USD646,232 as of December 31, 2009, 2008 and 2007, respectively, are pledged for bid bonds and performance
Time deposits placed with PT ANZ Panin Bank amounting to USD24,752,196, USD2,328,535 and
USD3,118,511 as of December 31, 2009, 2008 and 2007, respectively, are used to secure the Companys shortterm sales performance bonds required by several third party customers.
Interest rate of time deposits ranged as follows:
Indonesian Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-202
2009
2008
2007
5.25% 9.75%
0.50% 3.75%
7.75% 11.5%
2.25% 4.00%
6.15% 7.50%
4.75% 6.25%

5. TRADE RECEIVABLES
2009
2008
2007
Domestic
PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Indonesia Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Sumber Segara Prima Daya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT PLN Tanjung Jati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Karyatama Nagasari . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Indocement Tunggal Prakarsa Tbk
15,310,112
12,459,901
9,243,106
5,545,884
13,179
18,227,582
35,751,571
6,406,289
4,501,004
101,891
1,737,992
8,916,967
6,539,596
6,915,061
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,572,182
66,726,329
22,371,624
Export
Taiwan Power Company, Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IEG Limited, Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rizhao Honglu Electricity and Energy Co., Ltd., China . . . . . . . . . . .
Bhatia International Ltd., India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CLP Guangxi Fangcheng Power Co, Ltd., China. . . . . . . . . . . . . . . . .
Korea Midland Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . .
Korea East-West Power Co., Ltd., South Korea. . . . . . . . . . . . . . . . . .
Korea Southern Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . .
China National Minerals Co., Ltd., China . . . . . . . . . . . . . . . . . . . . . . .
SCT Co., Ltd., Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Castle Peak Power, Hong Kong. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unique Mining Service Co., Ltd., Thailand . . . . . . . . . . . . . . . . . . . . .
11,764,996
8,725,410
7,000,605
6,821,305
4,275,045
3,202,204
2,896,529
2,891,609
2,636,710
7,171,844
5,471,695
3,195,661
2,745,347
12,297,022
4,351,581
3,993,241
5,895,873
1,496,453
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,214,413
18,584,547
28,034,170
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92,786,595
85,310,876
50,405,794
As of December 31, 2009, 2008 and 2007, the Company did not provide any allowance for doubtful
accounts since the Companys management believes that all receivables are collectible.
2009

PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third parties
PT Bukit Makmur Mandiri Utama. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Arpeni Ocean Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Jaya Samudera Karunia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Agung Buana Rejeki . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Jaya Mandiri Rekabuana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-203
7,160,464
194,048
138,311
75,532
74,477
17,493
2008
2007
1,910,194
1,114,372
6,720,703
194,048
64,840
75,380

2009
2008
2007
Dispatch receivable from customers:

Korea Midland Power Co., Ltd., South Korea . . . . . . . . . . . . . . . . . . . . .
PT Jawa Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Indonesia Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bhatia International Ltd., India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT PLN Tanjung Jati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guangzhou Da You Coal Sell Co., Ltd., China. . . . . . . . . . . . . . . . . . . . .
Others (each below USD100,000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
251,252
301,609
239,855
213,347
192,674
27,265
237,168
Total third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,123,495
(109,919)
9,179,232 1,005,149
(205,378) (205,378)
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,013,576
8,973,854
799,771
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,013,576
10,884,048
1,914,143
2009
2008
2007
Coal inventories:
Clean coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-pit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,332,891
30,071,782
7,302,819
16,406,513
1,981,956
2,747,621
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stores and consumable supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,404,673
2,620,009
23,709,332
2,188,299
4,729,577
1,270,827
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48,024,682
25,897,631
6,000,404
153,367
539,523
144,701
162,157
220,864
225,737
753,292
86,645
77,755
141,104
50,468
573,797
7. INVENTORIES
Based on the review of inventories, the management believes that no allowance is necessary to cover
possible losses and obsolescence.
statements remain the property of the Government of Indonesia with an exclusive right of use granted to the
Company (Note 26A.e).
As of December 31, 2009, 2008 and 2007, inventories were not insured.
2009
2008
2007
Advances:
Sub-contractor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,052,727
160,720
2,261,361
152,985
1,864,760
149,668
Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,213,447
2,414,346
2,014,428
Guarantee deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,574,468
208,965
8,219,178
396,533
387,946
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,996,880
11,030,057
2,402,374
F-204

In September 2008, the Company paid Rp90 billion (or equivalent to USD9,574,468) to the Government of
Indonesia (GOI) as deposit for royalty representing the Companys commitment to the GOI for the settlement
and payment of its obligation to Dana Hasil Penjualan Batubara (DHPB) and VAT.
9. DEFERRED EXPLORATION AND DEVELOPMENT COST
2009
2008
2007
Cost
Lati I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata and Birang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kelai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gurimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,518,195
12,233,055
5,044,034
4,882,821
572,521
5,740,189
3,098,289
446,975
2,783,090
141,230
22,518,195
9,940,370
5,044,034
4,882,821
570,243
5,740,907
1,057,104
428,928
2,436,741
141,230
22,518,195
8,221,702
5,044,034
4,868,517
439,639
5,403,523
26,835
335,829
2,371,007
139,144
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,460,399
52,760,573
49,368,425
Accumulated Amortization
Lati I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata and Birang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meraang. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,299,110
2,839,744
3,006,379
4,830,635
256,995
4,546,196
741,632
10,483,200
2,323,345
2,868,576
4,110,895
204,270
3,273,424
656,508
9,361,384
1,773,542
2,720,287
3,553,603
19,380
2,652,002
575,918
Total Accumulated Amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,520,691
23,920,218
20,656,116
Net Book Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29,939,708
28,840,355
28,712,309
Amortization expense charged to cost of sales amounted to USD3,600,473, USD3,264,102 and

USD4,635,805 for the years ended December 31, 2009, 2008 and 2007, respectively (Note 21).
The unit-of-production depletion rate used for the amortization of deferred exploration and development
costs is based on managements best estimate of proven reserves in 2005. The Unit-of-production depletion rates
were further updated in 2006 and 2008 when the Company hired a third party consultant to reassess the
Companys estimated coal reserves based on the Australian Joint Ore Reserves Committee Code.
Deferred stripping costs as of December 31, 2009, 2008 and 2007 amounted to USD18,199,275,
USD20,917,272 and USD29,917,665, respectively. The deferred stripping costs will be expensed as production
costs in periods where the actual ratio is significantly lower than the planned stripping ratio.
F-205

11. FIXED ASSETS
Balance as of
January 1,
2009
Additions
Carrying Values
Direct ownership
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment. . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . .
30,853,645
5,045,921
31,014,447
4,531,427
734,055
9,648,542
441,979
82,719
9,367,119
863,947
422,389
589,289
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81,828,037
11,767,442
Indirect ownership
Finance lease of machinery and equipment . . . . . . . . . . .
Finance lease of motor vehicles . . . . . . . . . . . . . . . . . . . . .
3,607,600
909,313
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,516,913
Total carrying values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,344,950
Direct Ownership
Reclassifications/
Disposals
Balance as of
December 31,
2009
1,354,313
(1,354,313)
32,649,937
5,128,640
40,381,566
5,395,374
1,156,444
8,883,518
93,595,479
3,607,600
909,313
4,516,913
11,767,442
98,112,392
17,028,215
2,233,360
28,252,130
2,736,467
451,626
2,070,266
254,618
1,126,733
343,061
56,531
19,098,481
2,487,978
29,378,863
3,079,528
508,157
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,701,798
3,851,209
54,553,007
Indirect ownership
3,344,546
520,889
60,465
316,254
3,405,011
837,143
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,865,435
376,719
4,242,154
Total accumulated depreciation . . . . . . . . . . . . . . . . . . . . .
54,567,233
4,227,928
58,795,161
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,777,717
F-206
39,317,231

Balance as of
January 1,
2008
Additions
Carrying Values
Direct ownership
27,948,252
4,727,227
30,751,385
3,205,053
519,665
4,511,691
967,889
318,694
170,417
1,326,374
214,390
7,167,000
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71,663,273
10,164,764
Indirect ownership
3,607,600
909,313
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,516,913
76,180,186
Direct Ownership
Reclassifications/
Disposals
Balance as of
December 31,
2008
1,937,504
92,645
(2,030,149)
30,853,645
5,045,921
31,014,447
4,531,427
734,055
9,648,542
81,828,037
3,607,600
909,313
4,516,913
10,164,764
86,344,950
15,247,972
1,988,260
26,961,050
2,536,624
425,958
1,780,243
245,100
1,291,080
199,843
25,668
17,028,215
2,233,360
28,252,130
2,736,467
451,626
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47,159,864
3,541,934
50,701,798
Indirect ownership
3,068,967
231,783
275,579
289,106
3,344,546
520,889
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,300,750
564,685
3,865,435
Total Accumulated Depreciation . . . . . . . . . . . . . . . . . . . .
50,460,614
4,106,619
54,567,233
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,719,572
F-207
31,777,717

Balance as of
January 1,
2007
Additions
Carrying Values
Direct ownership
22,920,256
4,511,129
30,498,983
3,042,719
519,665
1,983,664
5,027,996
216,098
252,402
162,334
2,528,027
27,948,252
4,727,227
30,751,385
3,205,053
519,665
4,511,691
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63,476,416
8,186,857
71,663,273
Indirect ownership
3,607,600
909,313
3,607,600
909,313
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,516,913
4,516,913
67,993,329
8,186,857
76,180,186
Direct Ownership
13,993,918
1,760,568
25,696,524
2,360,581
409,183
1,254,054
227,692
1,264,526
176,043
16,775
15,247,972
1,988,260
26,961,050
2,536,624
425,958
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,220,774
2,939,090
47,159,864
Indirect ownership
2,523,854
212,354
545,113
19,429
3,068,967
231,783
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,736,208
564,542
3,300,750
Total Accumulated Depreciation . . . . . . . . . . . . . . . . . . . .
46,956,982
3,503,632
50,460,614
Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,036,347
Reclassifications/
Disposals
Balance as of
December 31,
2007
25,719,572
Depreciation expenses are allocated as follows:
Cost of goods sold (Note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General and administrative expenses (Note 22). . . . . . . . . . . . . . . . . . . . . . . . . .
F-208
2009
2008
2007
3,990,534
237,394
3,913,259
193,360
3,328,051
175,581
4,227,928
4,106,619
3,503,632

In accordance with the CCoW, fixed assets recorded in the consolidated financial statements remain the
property of the Government of Indonesia. However, the Company has an exclusive right to use the assets over
the contract period or the remaining period of CCoW (Note 26A.e).
Management believes that the carrying values of all fixed assets of the Company are recoverable, and hence,
no impairment in asset values was considered necessary.
2009
2008
2007
Loan to employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted guarantee deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refundable deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,595,403
842,553
213,609
32,730
1,688,195
626,173
836,530 1,176,750
284,952
316,450
35,965
32,730
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,684,295
2,845,642
2,152,103

a. Time deposits placed with PT ANZ Panin Bank, amounting to USD800,000 as of December 31, 2009
and 2008, and USD980,339 as of December 31, 2007, are pledged for long-term bid bonds and
performance bonds required by several third party customers.
b. Time deposits placed with PT Bank Danamon Indonesia Tbk amounting to USD42,553, USD36,530
and USD196,411, as of December 31, 2009, 2008 and 2007, respectively, are pledged for the employee
housing ownership program.
F-209

13. TRADE PAYABLES
2009

PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
2007
13,328,817
9,817,359
Third parties
PT Bukit Makmur Mandiri Utama. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Saptaindra Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Mitra Swire CTM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Lintas Wahana Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Trada Tug and Barge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Roda Teknik . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Mitra Bahtera Segara Sejati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Jaya Mandiri Rekabuana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Honson Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Karya Budi Mandiri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Surya Teknik Anugrah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Andhika Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Karya Samudera Mandiri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Patra Supplies & Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CV Kasam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Arpeni Pratama Ocean Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Kartika Samudera Adijaya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Pembangunan Perumahan (Persero) Cabang VI . . . . . . . . . . . . . . . . . . .
PT Kaliraya Sari . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lati Transshipers, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Swarma Baja Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Sun Star Prima Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below USD200,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68,761,855
10,944,944
997,743
853,330
767,438
342,890
308,992
187,533
186,469
133,911
115,861
84,206
75,813
63,696
57,428
5,172,919
35,729,455
565,901
468,736
150,022
159,459
168,254
2,349,025
1,793,208
454,859
402,073
351,360
215,233
3,297,389
27,511,497
277,864
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89,055,028
46,104,974
30,869,847
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89,055,028
59,433,791
40,687,206
F-210
203,305
106,948
69,163
87,441
6,082
63,820
243,550
2,300,177

2009
2008
2007
Mining and haulage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accrued sales tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal sharing to Government (Notes 16d and 26a) . . . . . . . . . . . . . . . . . . . .
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demurrage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transshipment facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sample analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Local transport. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on Senior Notes (Note 18a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,281,606
7,999,441
4,905,203
3,820,467
3,708,139
1,876,246
1,611,927
1,176,481
998,997
211,096
166,339
67,407
8,329,301
34,175,916
7,419,297
9,760,250
8,905,726
3,739,839
678,260
835,663
2,513,862
129,550
105,878
225,276
1,058,477
4,947,987
26,461,707
7,806,268
6,851,016
2,673,015
715,684
224,292
702,070
210,733
89,303
222,356
1,267,379
1,387,011
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78,152,650
74,495,981
48,610,834
15. ENVIRONMENTAL RESTORATION OBLIGATION

2009
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision made during the year (Note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for restoration during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008
2007
2,485,480 2,653,308 2,379,552

1,716,702
912,825
826,711
(1,677,519) (1,080,653) (552,955)
2,524,663
2,485,480
2,653,308
The provision for restoration pertains to the accrued portion of costs to be incurred at the end of the mine
life. Management believes that the accrual is adequate to meet the obligations for restoration and rehabilitation
when coal reserves have been fully depleted.
16. TAXATION
a. Taxes payable
2009
2008
2007
Income Taxes
Article 15 and 4 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value-Added Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
122,604
1,100,579
8,408,246
1,532,723
114,359,171
216
93,358
385,228
884,165
1,460,153
56,977,495
266
52,690
271,047
900,323
1,663,608
25,506,104
139
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125,523,539
59,800,665
28,393,911
F-211

b. Reconciliation between income before income tax expense (benefit) as shown in the statements of income
and taxable income was as follows:
Income before income tax expense (benefit). . . . . . . . . . . . . . . . . . . . . . .
2009
2008
2007
278,452,924
139,320,314
65,848,081
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,376,561)
(1,028,016)
(1,640,569) (1,496,664)
(533,160)
(576,809)
Total permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,404,577)
(2,173,729) (2,073,473)
Temporary differences
Deferred exploration and development. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference between commercial and tax on fixed assets net book
value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental restoration obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,463,488
1,190,777
2,821,410
(2,236,418)
(35,760)
(2,485,480)
978,454
1,628,699
(779,768)
(167,828)
179,763
1,713,064
(671,780)
273,757
254,485
Total temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,315,716)
2,051,643
4,390,936
Taxable income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
273,732,631
139,198,228
68,165,544
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123,179,684
62,639,203
30,674,494
Less prepaid taxes

Article 22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(97,102)
(1,449,762)
(7,273,649)
(17,889)
(13,204)
(86) (1,755,810)
(5,643,733) (3,399,376)
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,820,513)
(5,661,708) (5,168,390)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114,359,171
56,977,495
25,506,104
c. Deferred tax assets (liabilities)

The tax effect on temporary differences in the financial reporting and tax bases of assets and liabilities for
the years ended December 31, 2009, 2008 and 2007, using 45% tax rate were as follows:
Balance as of
December 31, 2008
Credited
(Charged) to
Consolidated
Statements
of Income
Balance as of
December 31, 2009
Deferred exploration and development cost . . . . . . . . . . . . . . . . .

Fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental restoration obligation. . . . . . . . . . . . . . . . . . . . . . .
(8,810,170)
(2,543,749)
(1,139,095)
1,118,465
696,415
658,569
(1,006,388)
(16,092)
(1,118,465)
440,304
(8,151,601)
(3,550,137)
(1,155,187)
1,136,719
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,678,134)
(1,042,072)
(11,720,206)
F-212

Balance as of
December 31, 2007
Credited
(Charged) to
Consolidated
Statements
of Income
Balance as of
December 31, 2008

Fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9,346,020)
(3,276,664)
(788,199)
1,193,988
615,522
535,850
732,915
(350,896)
(75,523)
80,893
(8,810,170)
(2,543,749)
(1,139,095)
1,118,465
696,415
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,601,373)
923,239
(10,678,134)
Balance as of
December 31, 2006
Credited
(Charged) to
Consolidated
Statements
of Income

Fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,615,655)
(4,047,543)
(485,898)
1,070,798
501,004
1,269,635
770,879
(302,301)
123,190
114,518
(9,346,020)
(3,276,664)
(788,199)
1,193,988
615,522
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,577,294)
1,975,921
(11,601,373)
Balance as of
December 31, 2007
d. Value-Added Tax
stipulates that coal is no longer subject to Value-Added Tax (VAT) and as a result the Company is unable to seek
reimbursement for VAT Input paid starting from the said date. Under the CCoW, the Company is entitled to be
held harmless by the Government for additional taxes. Accordingly, in the consolidated financial statements, the
Company has offset its VAT Input in 2009, 2008 and 2007 amounting to USD171,270,677 USD130,044,206 and
USD96,155,447, respectively, against its coal sharing liability to the Government (Notes 14 and 26a). Based on
the independent advice from its external legal counsel, management believes that such offsetting of VAT Input
against the coal sharing liability is the appropriate treatment for the additional tax burden resulting from
GR 144/2000 (Note 27).
17. SHORT-TERM LOAN
The Subsidiary and the Company, who acted as the Borrower and Guarantor, respectively, entered into a
Loan Agreement (the Loan Agreement) with Credit Suisse AG, Singapore Branch (Credit Suisse), as the
arranger, facility agent and security agent, on December 23, 2009. Pursuant to the Loan Agreement, the
Company shall make a single drawing at the time and in the amount agreed upon by both parties amounting to
three hundred million US Dollars (USD300,000,000) (the Loan) The Loan will bear interest at three-month
London Interbank Offered Rate (LIBOR) plus margin at 4.75% per annum for the first two quarters, margin
6.25% per annum for the third quarter and 7.75% per annum for the fourth quarter. The maturity date under the
Loan Agreement shall be the earlier of the date falling twelve (12) months after the date of the loan disbursement
F-213

and the date on which the Vendor Notes (each of the USD580,000,000 aggregate principal amount of 8% secured
notes due December 2010 to be issued by PT Bukit Mutiara, an intermediate parent company) become due and
payable in full (whether on or before the stated maturity).
The Loan is secured by (1) pledges of all the shares in the Company and its Subsidiary (other than 10% of
shares in the Company held by Sojitz Corporation) and certain other group companies and intermediate holding
companies in which the beneficial owners of the Company and its Subsidiary hold their shares; (2) liens over
certain offshore bank accounts and receivables of the Company and its Subsidiary; (3) various fiduciary security
covering the Indonesian assets of the Company; (4) assignment of certain principal operating agreements of the
Company; and (5) pledges of certain inter-company loans or advances payable to the Subsidiary or to any other
pledgor.
were directly transferred to HSBC Bank USA, National Association to fully repay the outstanding balance of
Senior Notes. The remaining balance of the loan amounting to USD9,138,073 is withheld by Credit Suisse for
payment of fees, costs and expenses earned by it in connection with obtaining the Loan.
In accordance with the Loan Agreement, the Company is required to comply with certain financial ratio
covenants, such as debt service coverage ratio and total debt to EBITDA, commencing from March 30, 2010.
Bank administrative charges incurred in relation to the Loan were presented as Deferred Charges in the
consolidated balance sheets. Total interest expense amounted to USD83,344 in 2009.
18. LONG-TERM DEBTS
Long-term debts consist of the following:
Ref
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligation under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a
b
2009
2008
2007
300,000,000
35,759
325,000,000
815,528
300,035,759
325,815,528
Total long-term debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Currently maturing portion:
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligation under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a
b
(25,000,000) (25,000,000)
(35,759)
(679,793)
Non-current portion:
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligation under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a
b
275,000,000
300,000,000
135,735
275,000,000
300,135,735
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a. Senior Notes
On December 15, 2006, the Subsidiary and the Company, who acted as the Issuer and Parent Guarantor,
respectively, obtained Senior Notes totaling USD325 million. These Senior Notes comprised of Floating Rate
F-214

Notes and Fixed Rate Notes with principal amounting to USD100 million and USD225 million, respectively,
each with a maturity date of December 15, 2011. The aggregate principal amount of Floating Rate Notes will be
amortized in 16 equal installments, beginning March 15, 2008.
June 15, 2007.
The Senior Notes are secured by (1) pledges of all the shares in the Company and its Subsidiary (other than
10% of shares in the Company held by Sojitz Corporation) and certain other group companies and intermediate
holding companies in which the beneficial owners of the Company and its Subsidiary hold their shares; (2) liens
over certain offshore bank accounts and receivables of the Company and its Subsidiary; (3) various fiduciary
security covering the Indonesian assets of the Company; (4) assignment of certain principal operating agreements
of the Company; and (5) pledges of certain inter-company loans or advances payable to the Subsidiary or to any
other pledgor.
As of December 31, 2009, 2008 and 2007, the loan repayment schedule was as follows:
Years
2009
2008
2007
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,000,000
25,000,000
250,000,000
25,000,000
25,000,000
25,000,000
250,000,000
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300,000,000 325,000,000
(25,000,000) (25,000,000)
Non-Current Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
275,000,000
300,000,000
Certain bank accounts of the Company and its Subsidiary will be governed by the Cash and Accounts
Management Agreement (CAMA). The bank accounts will, in the case of US Dollar accounts, be maintained
with a bank account in Hong Kong and, in the case of Indonesian Rupiah accounts, be maintained with a bank
account in Jakarta (Note 4). The collection and disbursement of all cash balances by the Company and Subsidiary
will be subject to the CAMA.
The Subsidiary may redeem some or all of the Fixed Rate Notes at any time on or after December 15, 2009
at agreed redemption prices. Before December 15, 2009, the Subsidiary may redeem up to 35% of the Fixed Rate
Notes at a redemption price of 109.375% of the principal amount plus accrued and unpaid interest, if any, and up
to 35% of the Floating Rate Notes, at a redemption price of 100% of the principal amount thereof plus a premium
equal to the LIBOR then in effect plus 3.75% of the principal amount, plus accrued and unpaid interest, if any,
with the net cash proceeds from certain equity offerings. In addition, the Subsidiary may redeem in whole or in
part, at any time prior to December 15, 2009 in the case of the Fixed Rate Notes, and at any time, in the case of
the Floating Rate Notes, at a price equal to 100% of the principal amount of the applicable Notes plus an agreed
premium.
F-215

Total interest expense for the Senior Notes amounted to USD26,760,674 in 2009, USD30,407,993 in 2008
and USD33,774,529 in 2007.
On December 18, 2006, one of the directors, who represents a shareholder holding a 10% interest in the
Company, issued a letter to Directorate General of Energy and Mineral Resources (DEMR) stating an objection
regarding the Senior Notes Facility and requesting the temporary discontinuation of such plan until further
clarification was obtained from the management of the Company. In connection with such objection letter, on
December 20, 2006, DEMR issued a letter ordering the Company not to pursue the Senior Notes Facility.
Subsequent discussions and clarifications between the directors and shareholders were held to resolve the issue
regarding the validity of the Senior Notes Facility and on April 19, 2007, the directors and shareholders jointly
issued a letter to DEMR expressing their consent and support for the said Notes Facility Agreement.
On April 27, 2007, DEMR issued a letter allowing the Company to record the Senior Notes in its financial
1) The Senior Notes have to be recorded separately between the Senior Notes that have been used by the
shareholders and the Company.
4) The Company has to impose interest on the shareholders.
5) The Government of Indonesia will not guarantee and will not be held liable in the failure of the
Company and will not revoke any rights under the CCoW.
7) The loan shall not saddle the operations of the Company in any way that will affect the entitlements of
the Government.
8) Regular reports should be submitted to the Government every time the Company receives a payment
from the shareholders.
The Company has fully accomplished the requirements of DEMR in 2007.
b. Obligations under Finance Lease
Type of Asset
PT Dianlia Setyamukti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Orix Indonesia Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plant and equipment

Motor vehicles
2009
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Current Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-216
2008
2007
35,759
698,465
117,063
35,759 815,528
(35,759) (679,793)
135,735

Minimum lease payments for lease agreements as of December 31, 2009, 2008 and 2007 consisted of:
Years
2009
2008
2007
2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,141
696,000
135,735
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Portion related to interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,141
(6,382)
831,735
(16,207)
Obligation under finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less: Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,759
(35,759)
815,528
(679,793)
Non-Current Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,735
The Company had a finance lease agreement with PT Sumber Mitra Jaya (SMJ) for the construction of plant
in Sambarata, which was terminated early by the Company in 2004. Due to the early termination, the Company
agreed to pay USD3,693,423, which represents the current value, as agreed to by the Company and SMJ, of the
assets constructed by SMJ in respect of the Sambarata Mine.
The aforesaid termination payment was financed by PT Dianlia Setyamukti (Dianlia), the succeeding
contractor for the Sambarata Mine. In relation to such payment, the legal title of the aforementioned assets was
transferred by SMJ to Dianlia. Based on the mining contract between the Company and Dianlia, the amount due
to Dianlia, arising from the aforesaid payment of finance lease payable to SMJ will be settled by installments
through reductions in the future contractor charges to Dianlia. As of December 31, 2009, finance lease
obligations were fully settled by the Company.
Interest expense incurred from the lease transactions amounted to nil in 2009, USD6,382 in 2008 and
USD16,207 in 2007.
19. SHARE CAPITAL
The Companys shareholders, the number of issued and paid shares and the related balances as of
December 31, 2009, 2008 and 2007 were as follows :
Number of Issued
and Paid Shares
Shareholders
Percentage of
Ownership
Issued and
Paid Share Capital
PT Armadian Tritunggal (Armadian) . . . . . . . . . . . . . . . . . . . . . . .

Rognar Holding BV (Rognar) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sojitz Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87,975
67,275
17,250
51%
39%
10%
8,797,500
6,727,500
1,725,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
172,500
100%
17,250,000
The shares held by Armadian and Rognar were pledged as security for Senior Notes obtained in December
2006 (Note 18a), which were subsequently pledged as security for the Loan obtained from Credit Suisse on
December 23, 2009 (Note 17) upon redemption of the Senior Notes.
F-217

20. SALES
2009
2008
2007
Export . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
487,985,909
312,034,843
373,460,735
257,763,088
243,055,948
141,133,581
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
800,020,752
631,223,823
384,189,529
2009
2008
2007
21. COST OF SALES
Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight and handling costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalties paid to Government (Note 26a)
Coal processing and other production cost . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization (Notes 9 and 11)
Restoration costs (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in coal inventories . . . . . . . . . . . . . . . . . . . . . . . . . .
276,656,674 263,479,330 162,620,589

78,612,008 100,562,870
61,521,237
92,092,029
70,032,842
42,081,266
24,665,808
23,765,458
18,240,441
7,591,007
7,177,361
7,963,856
1,716,702
912,825
826,711
(8,030,072) (5,320,863)
2,825,218
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
473,304,156
460,609,823
296,079,318

2009
2008
2007
Selling and marketing expenses

Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others (each below USD100,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,519,170
954,592
616,929
660,240
5,026,196
841,554
482,501
266,088
3,174,644
510,476
367,466
288,247
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,750,931
6,616,339
4,340,833
13,452,723 8,091,430
4,173,782 3,405,925
1,264,980
999,876
862,995 1,031,085
665,571
448,613
590,133
386,872
414,041
473,655
376,397 1,012,842
290,548
304,856
276,095
298,271
260,620
841,577
6,114,983
2,209,367
861,403
340,457
466,023
358,987
370,587
810,361
326,049
425,230
243,854
General and administrative expenses

Salaries, wages and employee benefits (Note 23) . . . . . . . . . . . . . . . . . . . . . . .
Community development and donation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Travel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuel and lubricants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Representation and entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-218

2009
2008
2007
Promotion and advertising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation (Note 11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Training and education. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
255,857
237,394
83,107
372,267
250,359
193,360
185,264
346,891
195,974
175,581
160,080
323,165
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,576,510
18,270,876
13,382,101
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,327,441
24,887,215
17,722,934

The Company recognized employee benefits as of December 31, 2009, 2008 and 2007 based on the actuarial
calculations prepared by PT Biro Pusat Aktuaria, an independent actuary, in its reports issued on February 23,
2010, February 13, 2009, and March 10, 2008, respectively, using the Projected Unit Credit Method, which
were based on the following assumptions:
Discount rate
Mortality table
Disability rate
Retirement age
:
:
:
:
:
10.5% in 2009, 12% in 2008 and 10.5% in 2007

10% per annum
10% Mortality Rate
55 years old
Net employee benefit expenses were as follows:

2009
2008
2007
Current service cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of past-service costplan amendment . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of past-service costnon-vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
373,817 261,660 178,809

270,877 192,108 152,791
73,815
74,138
49,506
4,816
5,153
5,296
5,326
5,698
5,856
Total Employee Benefits Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
728,651
538,757
392,258

2009
Present value of employee benefits obligation . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrecognized actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized past-service costplan amendment . . . . . . . . . . . . . . . . . . . . . .
Unrecognized past-service costnon-vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee Benefits Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-219
2008
2007
3,715,580 2,134,892 1,880,213

(1,020,937) (432,977) (321,825)
(80,066)
(73,287)
(90,495)
(88,533)
(81,038) (100,066)
2,526,044
1,547,590
1,367,827

Movements in the employee benefits obligation for the years ended December 31, 2009, 2008 and 2007
were as follows:
2009
2008
2007
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net employee benefit expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,547,590 1,367,827 1,113,342

728,651
538,757
392,258
(67,070) (119,052)
(90,611)
316,873 (239,942)
(47,162)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,526,044
1,547,590
1,367,827
24. TRANSACTIONS AND BALANCES WITH RELATED PARTIES

The nature of relationship of the Company with its related parties is as follows:
No.
Related Parties
Nature of
Transaction
Relationship
1. Sojitz Corporation
Shareholder of the Company
Corporation)
2. Begarion Capital Ltd. (2007-2008) Common key management with the
Company
3. PT Risco
4. PT Armadian Tritunggal
5. PT Saptaindra Sejati (2007-2008)
6. Winchester Investment Holdings
PLC. (2009)

and management agreement

interest income
interest income
Shareholder of the Company
Management agreement
Common key management with the Mining services
Company
interest income
a. The Company, in the regular conduct of its business, has transactions with related parties principally
consisting of mining services and rental of equipment. Payable arising from these transactions
amounted to USD13,328,817 and USD9,817,359 as of December 31, 2008, and 2007, respectively
(Note 13). The Company sub-contracted PT Saptaindra Sejati for mining services with total cost
amounting to USD68,234,899 and USD47,870,533 in 2008 and 2007, respectively. In 2009, PT
Saptaindra Sejati was no longer a related party. Other receivables from related party amounting to
USD1,910,194 and USD1,114,372 as of December 31, 2008 and 2007, respectively, pertains to the
receivables arising from the coal price and stripping ratio adjustments.
b. The Company has receivables from the following:
2009
2008
2007
Winchester Investment Holdings PLC. (WIH) . . . . . . . . . . . . . . . . . . . .

PT Risco (Risco). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Begarion Capital Ltd. (BCL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
296,050,419
84,584,642
80,628,653
272,714,641
75,095,103
249,443,685
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
380,635,061
353,343,294
324,538,788
F-220

The loan to BCL and Risco came from the proceeds of Senior Notes (Note 18a), which earned interest at a
rate of 10.375% and LIBOR plus 4.75%, respectively. Interest on loan to BCL is payable semi-annually,
commencing June 15, 2007, while interest on loan to Risco is payable quarterly commencing March 15,
2007. To the extent that the interest payment received on any payment date is less than the amount of the
interest accrued on the loan on that date, the amount of such shortfall shall be capitalized and added to the
principal amount of the loan outstanding so that the principal amount shall be increased and bear interest
accordingly.
Danehill Capital Ltd. (DCL), which transferred the loan from the Company effective December 29, 2009.
On December 16, 2009, DCL into an Assignment, Assumption and Release Agreement with WIH, which
transferred the loan from the Company effective December 29, 2009.
As of December 31, 2009, accrued interest income from loan to WIH and Risco amounted to
USD23,335,778 and USD3,955,989, respectively. As of December 31, 2008, accrued interest income from
loan to BCL and Risco amounted to USD23,270,956 and USD5,533,550, respectively. As of December 31,
2007, accrued interest income from loan to BCL and Risco amounted to USD23,595,064 and
USD7,032,318, respectively.
c. The Companys sales to Sojitz Corporation, a shareholder, amounted to USD38,053,776,
USD44,923,571 and USD9,387,994 in 2009, 2008 and 2007, respectively.
d. Due to these relationships, it is possible that the terms and conditions of these transactions are not the
same as those that would result from transactions between third parties.
F-221

25. MONETARY ASSETS AND LIABILITIES IN CURRENCIES OTHER THAN US DOLLAR
The Company has monetary assets and liabilities denominated in foreign currencies as follows:
2009
Foreign
Currency
2008
Equivalent
in USD
Foreign
Currency
Equivalent
in USD
2007
Foreign
Equivalent
Currency
in USD
Assets
Cash and cash equivalents
Indonesian Rupiah . . . . . . . 258,692,246,076 27,520,452 223,730,090,709 20,431,972 132,037,739,197 14,018,233
Australian Dollar . . . . . . . .
4,736
4,248
1,551
1,070
991
866
European Euro . . . . . . . . . .
3,725
5,354
3,725
5,250
35
51
Singaporean Dollar . . . . . .
1,721
1,226
2,225
1,545
1,804
1,245
Restricted cash
Indonesian Rupiah . . . . . . . 272,069,900,341 28,943,607 168,108,437,705 15,352,368 8,484,908,351
900,829
Accounts receivabletrade
Accounts receivableothers
473,375
European Euro . . . . . . . . . .
7,465
10,729
4,655
3,317
2,613
2,343
Other current assets

Indonesian Rupiah . . . . . . . 90,000,000,000 9,574,468 90,000,000,000 8,219,178
Other non-current assets

Total Assets . . . . . . . . . . . . . . . . .
113,843,517
114,483,975
39,633,908
Liabilities
Trade payables
Indonesian Rupiah . . . . . . . 334.396,424,433 35,574,088 193,260,501,389 17,649,361 138,588,553,320 14,713,723
56,554
50,729
12,573
8,675
4,783
3,302
45,787
32,628
European Euro . . . . . . . . . .
44,147
63,448
91,454
128,891
17,820
26,032
Accrued expenses
European Euro . . . . . . . . . .
14,082
20,238
10,705
7,628
700
627
Taxes payable
611,685
Employee benefits obligation
Total Liabilities. . . . . . . . . . . . . .
125,398,245
61,584,754
55,557,181
Net Assets (Liabilities). . . . . . .
(11,554,728)
52,899,221
(15,923,273)
26. AGREEMENTS AND COMMITMENTS

The Companys activities are governed by the provisions of the CCoW, which was entered into by the
Company and Perusahaan Negara Tambang Batubara on April 26, 1983, and was subsequently transferred to PT
F-222

Based on Presidential Decree No. 75/1996 dated September 25, 1996, and amendment to the CCoW No.
O2/I.DD/50/96 between PTBA and the Company dated June 28, 1997, all rights and obligations of PTBA under
the CCoW were transferred to the Government of the Republic of Indonesia, represented by the Minister of
Mines and Energy, with effect from July 1, 1997.
Under the terms of the CCoW, the Company acts as the contractor of the Government and is responsible for
coal mining operations in an area located in East Kalimantan. The coordinates of which are detailed in Annexure
A and measures approximately 487,217 hectares. Since April 7, 2005, the concession area has been reduced to
118,400 hectares.
Significant financial provisions of the CCoW include:
a. Entitlement under the agreement
The Company is entitled to take 86.5% of total coal produced from the final production processes
established by the Company and available for sale in each calendar year, while the Government reserves and
retains the remaining portion (i.e. 13.5%) as its share of total production.
b. Operating period
Government.
c. Dead rent
The Company shall pay dead rent to the Government in half-yearly installments during the term of the
CCoW, which is recoverable by the Company as operating costs. Dead rent is calculated by reference to the
number of hectares included in the CCoW area in accordance with the rates stipulated in the CCoW for each
period/stage of operation.
d. Initial cost
The Company paid to the Government the sum of USD500,000 within 30 days of signing the CCoW in
1983 as a contribution to the Governments initial costs.
e. Equipment
The Company shall finance the cost of purchasing materials, supplies, plant, and equipment (the
Equipment) and such Equipment shall become the property of the Government when landed at the Indonesian
port of import or purchased locally. For the purpose of tax computation pursuant to Annexure D of the CCoW
and all similar government revenue charges and for the purpose of Annexure E thereof, the Company shall be
in the same position as if such Equipment was owned by the Company itself.
f. Corporation taxes
Corporation taxes in respect of the annual profits of the Company should be computed in accordance with
the prevailing laws and regulations in Indonesia, except that during the first full ten years from and after
F-223

taxable income.
The Company has the right to an investment allowance of 20% of the total investment (i.e. at a rate of 5% a
year from the taxable income provided for in article 4(b) of the Corporation Tax Law 1925 amended by Law
No. 8 of 1970).
g. Divestment of foreign interest
The Company shall ensure that its shares owned by foreign investor(s) are offered either for sale or for issue
to the Government of Indonesia, Indonesian nationals, or Indonesian companies controlled by Indonesians in
each year following the end of the fourth full calendar year after commencement of the operating period as set
out in the Coal Agreement. By the end of the tenth full calendar year of the operating period, the cumulative
amount to be offered for sale reaches the maximum of 51%. As at December 31, 2009, 2008 and 2007,
Indonesian shareholders owned 51% of the shares of the Company.
h. Accelerated depreciation
The Company may apply accelerated depreciation at the rate of 10% per year for buildings and 25% per
year for other assets used in coal operations, for one year within any of the first four years for acquisition of such
assets.
i. Other financial obligations and taxes
The CCoW further provides that the Company, shall, subject to the terms of the Coal CCoW, pay to the
Dividends paid to shareholders, interest and royalties on patents paid by the Company at a rate of 10%.
Remuneration of the Companys employees. Expatriates who are employed or engaged by the
Company or the Companys contractors or affiliates and who remain in Indonesia for more than 90
days in aggregate in any one calendar year shall be liable in Indonesia for personal income tax on
remuneration paid to them for services rendered in Indonesia.
Other payments made by the Company including but not limited to fees for technical services based on
the prevailing laws and regulations in Indonesia at a rate of 10%.
F-224

Reconstruction and Development (IBRD).
iii. Sales taxes on services rendered to the Company in Indonesia in accordance with prevailing laws and
calculating the sales tax on the fee for services rendered in Indonesia shall be at a percentage of the
total contract sum as approved by the Ministry of Finance.
The Company has mining and coal hauling contracts with the following:
Mine Area
Ref
Lati
a1
Binungan
a2


Sambarata
2009, 2008 and 2007
a3
a1. Lati Mine Site

On December 1, 1998, the Company entered into an agreement with PT Mentari Bukit Makmur (MBM), for
mining operations and coal haulage at the Lati mine site. The term of the contract was until December 31, 2010.
Starting 2007, the contract with MBM was assumed by BUMA, affiliated company of MBM. In 2008, the
contract was extended to December 31, 2018.
December 31, 2005, which has been extended until December 31, 2008. In 2008, the contract was extended to
On January 1, 2006, the Company entered into an agreement with SIS for mining operation and coal haulage
of Binungan Block 1-4 with an original contract term until December 31, 2010.
F-225

BUMA
On January 1, 2003, the Company entered into an agreement with BUMA, for mining operations and coal
haulage at the Meraang mine site. The contract will expire on December 31, 2010. In 2008, the contract was
BUMA
The Company has an agreement with BUMA, for coal haulage at the Binungan mine site to the Suaran Coal
December 31, 2018.
Mining Operations
On May 1, 2005, the Company entered into an agreement with SIS for the operation of the coal mine and
On July 15, 2007, the Company entered into another agreement with SIS for the operation of the coal mine
and processing plant in Sambarata Block B1 with a contract term until July 14, 2012.
Coal Barging
On April 1, 1998, the Company entered into an agreement with PT Kartika Samudra Adijaya for coal
barging at the Lati Port and Suaran Port. The contract expired on December 31, 2007.
On January 1, 2005, the Company entered into an agreement with PT. Kartika Samudra Adijaya for coal
barging at the Sambarata Port. The contract expired on December 31, 2007. On January 1, 2008 the contract was
renewed and expired on December 31, 2008.
On January 1, 2009, the Company entered into an agreement with PT. Kartika Samudra Adijaya for coal
barging at the Lati, Suaran, and Sambarata Port. The contract will expire on December 31, 2013.
On January 1, 2009, the Company entered into an agreement with PT. Trada Tug and Barge for coal barging
at the Lati and Suaran Port. The contract will expire on December 31, 2013.
On April 1, 2009, the Company entered into an agreement with PT. Mitra Bahtera Segarasejati for coal
barging at the Lati, Suaran, and Sambarata Port. The contract will expire on March 31, 2011.
F-226

On April 1, 2009, the Company entered into an agreement with PT. Mitra Bahtera Segarasejati for Assist
Tug at Transshipment Point. The contract will expire on October 31, 2010.
On April 1, 2009, the Company entered into an agreement with PT. Pelayaran Karya Samudera Mandiri for
LCT at Transshipment Facility. The contract will expire on April 26, 2011.
Assist Tug (TB. DL 05) at Transshipment Point. The contract will expire on April 30, 2010.
Assist Tug (TB. Nadia 02) at Transshipment Point. The contract will expire on April 30, 2010.
On November 25, 1999, the Company entered into an agreement with Lati Trans-shippers Inc. for coal
shipments for a period of 11 years. The contract will expire in August 2010. The minimum loading rate governed
by this agreement is 20,000 metric tons per day, except for Taiwan Power Company where the loading rate is
24,000 metric tons per day. The agreement governs the contract rate and rate adjustment.
On January 1, 2009, the Company entered into an agreement with PT Mitra Swire CTM for coal shipments.
The agreement governs the contract rate and rate adjustment and will expire on December 31, 2011.
On September 20, 2007, the Company entered into an agreement with FOTP Transshipment INC for coal
On January 1, 2005, the Company entered into an agreement with PT Tirta Sarana Borneo for stevedoring of
On September 1, 1998, the Company entered into an agreement with PT Sucofindo for coal analysis and
superintending for coal shipment. This agreement ended on December 31, 2007 and Company has renewed the
contract starting January 1, 2008 until December 31, 2010.
On July 1, 2005, the Company entered into an agreement with PT Geoservices for coal analysis and
superintending for coal shipment which expired on September 30, 2008. The Company has renewed the contract
starting November 1, 2008 until October 31, 2011.
On April 1, 1999, the Company entered into an agreement with PT Roda Teknik for heavy equipment hire.
This agreement ended on December 31, 2007 and the Company has renewed the contract for a year starting
January 1, 2008 until December 31, 2008. In 2008, the contract term was extended to December 31, 2012.
F-227

On June 1, 2005, the Company entered into an agreement with PT Surya Teknik Anugerah for heavy
equipment hire. This agreement will be ended on May 31, 2010.
On January 1, 2008, the Company entered into an agreement with PT Bukit Makmur Mandiri Utama for
heavy equipment hire. This agreement will expire on December 31, 2010.
On January 1, 2005, the Company entered into an agreement with PT Sentra Baruna Hijau for heavy
Drilling
On January 1, 2006, a Contract was entered into with PT Recsalog Geoprima for hire logging and well
logging services for a period of one year. The agreement was extended until December 31, 2008. In 2008, the
contract was renewed and will expire on December 31, 2009.
On February 1, 2009, the Company entered into an agreement with CV Kassam Drilling Group for drilling
services. The contract will expire on January 31, 2010 and was subsequently renewed on February 1, 2010 and
will expire on December 31, 2011.
On June 21, 2009, the Company entered into an agreement with CV Sarana Seisindo Utama for drilling
services. This agreement expired on December 31, 2009 and was extended until December 31, 2010.
C. Commitments
Restoration
As stated in Note 15, the Company has obligations in respect of restoration, rehabilitation and
environmental expenditure.
Long-term Sales
The Company has long-term sales commitments as follows:
In July 2004, the Company entered into a 4-year sales contract from 2005 to 2008 with Taiwan-based
company, Taiwan Power Company. The quantity of coal to be delivered by the Company was 500,000 metric
tonnes per each contract year, subject to a tolerance of up to plus or minus 20% at the buyers option. The
Company shall be liable to buyer for any and all losses, damages and cost (including, without limitation, third
party claims against buyer) caused by or related to the Companys failure to perform in accordance with the
representations and warranties. The selling price is based on certain formulas as set forth in the contract.
In November 2008, the Company also agreed to 6 and 8 years long-term contracts up to 2014 and 2016,
500,000 metric tonnes annually for each contract, meaning the total quantity is 1,000,000 metric tonnes per
F-228

annually subject to a tolerance of up to plus or minus 20% at the buyers option. The term of contract is mainly
similar to the previous long-term contract, the selling price of which is also based on certain formula set out in
the contract and determined on a yearly basis.
PT Jawa Power
Reference is made to the coal supply agreement (CSA) dated December 18, 1995. The initial term of this
agreement shall be for a period commencing on the date of the agreement and ending, unless extended or earlier
terminated in accordance with terms of this agreement, on the date which falls ten (10) years after the
commercial operation date in November 2000. The quantity of coal to be delivered by the Company was
2,000,000 metric tonnes per year, subject to a tolerance of up to plus or minus 20% at the buyers option. On
January 2009, the term of contract was extended by 5 years to November 2015. The buyer may extend the term
in the aforesaid manner on no more than (4) occasions, such that the term shall not extend for a aggregate period
of more than thirty (30) years from the start of commercial operation. The selling price is determined on a yearly
basis.
PT Indonesia Power
On August 27, 2008, the Company entered into a 10 years sales contract from January 2008 up to December
2018 with Indonesia-based company, PT Indonesia Power. The quantity of coal to be delivered by the Company
was 3,000,000 metric tonnes per year, subject to a tolerance of up to plus or minus 5% at the buyers option. The
selling price will be determined on yearly basis.
Bank Guarantees
The Company had the following outstanding bank guarantee facility issued in relation to sales contracts and
in respect of contractor commitments.
Indonesian Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009
2008
2007
132,790,000,000
11,425,600
206,859,500,000
16,767,946
113,945,000,000
11,585,000
215,900
As of December 31, 2009, 2008 and 2007, total guarantee facility provided by the bank amounted to
USD40 million, USD50 million and USD35 million, respectively.
27. CONTINGENCIES
a. Offsetting VAT claims against coal sharing liability
The Company has a contingent liability in respect of its coal sharing liability to the Government that it offset
against its VAT claims (Note 16d). Although the management believes that the Company has followed the
appropriate treatment under the CCoW and Indonesia Civil Code, on July 20, 2007, the Company received a
letter from the State Claims Commission (Panitia Urusan Piutang Negara (PUPN)) No. SKPBN-433/
PUPNC.11.05/2007 collecting unpaid royalty on coal for the years 2001 to 2005 amounting to
F-229

Rp312,702,698,630 and USD26,198,343. Furthermore, the Directorate General of State Assets (Direktorat
Jenderal Kekayaan Negara) issued a Final Notice of Collection (Berita Acara Pemberitahuan Surat Paksa)
ordering the Company to pay the said royalty liabilities on or before September 11, 2007, otherwise, the
Government will restrain the Companys assets to the extent of such liabilities.
The Company, through its legal counsel Kusumanegara and Partners, filed a petition for Restraining
Order to restrain the PUPN from executing the Final Notice of Collection and impending appropriation of the
Companys assets. In its petition, the Company argued, among others, that:
The CCoW explicitly exempts the Company from the harm of present and future Indonesian taxes except
those set forth therein.
Restraining Order with reference case number 127/G/2007/PTUN-JKT dated March 3, 2008 granting the
Companys petition and simultaneously ordering PUPN to temporarily cease and desist from pursing its
collection effort and appropriation of Companys assets while awaiting final decision. On March 18, 2008, the
Company received the verdict from the Jakarta Court of State Affairs upholding its petition and argument.
Pursuant to the Decision of Jakarta Court of State Affairs, PUPN is thereby ordered to permanently withdraw its
Final Notice of Collection. The court however did not rule on the issue on whether the PUPN should not pursue
the collection of royalty duly offset by the Company against the input VAT. Hence, PUPN still has the recourse
to pursue the collection through the international arbiter as stipulated in the CCoW.
On March 19, 2008, PUPN filed its appeal to Jakarta High Court of State Affairs (PT TUN Jakarta). The
verdict dated August 28, 2008, which was delivered formally to the Company on January 17, 2009 stated that
Jakarta Court of State Affairs does not have the capacity to issue a verdict concerning PUPNs Decree.
Therefore, Jakarta High Court of State Affairs annulled the previous verdict made by Jakarta Court of State
Affairs.
On January 28, 2009, the Company filed cassation to Supreme Court and on March 17, 2009, the cassation
was officially registered with case No. 94 K/TUN/2009.
As of the completion date of the consolidated financial statements, the Company is waiting for the final
decision from Supreme Court.
b. Claims by Lati Transshippers Inc. for Payment of VAT
On August 14, 2009, Lati Transshipers Inc. (LTI) registered charges against the Company by sending
Notice of Arbitration to the Singapore International Arbitration Center (SIAC) in relation to the demand of LTI
to the Company for the payment of VAT arising from the performance of the agreement between the Company
and LTI (Note 26a4) during the years 2000 to 2003 amounting to Rp14,202,735,285 plus penalty as assessed by
the Indonesian tax authorities.
On December 21, 2009, LTI had sent the Statement of Claim to the Company.
F-230

On February 10, 2010, the Company provided its response by sending a Statement of Defense to SIAC
disputing the claim of LTI. Also, the Company included counterclaim such as damages for breach of contract and
cost of the arbitration, in case LTI will win the case.
As of the completion date of the consolidated financial statements, the Company has not yet received the
Response Letter of Statement of Defense from the LTI.
c. Case with a resident in Berau
During land clearing for hauling road construction to support the Companys mining activities, five
residents complained and demanded for payment for damages of their property amounting to Rp800,000,000 per
hectare. The Company refused to pay because the restitution required by the five residents are significantly
higher than the market value of the land. The Company changed the plan for the hauling road without passing the
land of the five residents. However, one of the five residents filed a complaint against the Company to the
residential police under report No. Pol.LP/96/K/K/2008/KSPK dated October 22, 2008 for using others land
and/or damages of property.
As of the completion date of the consolidated financial statements, the Company is preparing for the defense
of the case.
standards that may have certain impacts to the Company and its Subsidiarys consolidated financial statements.
January 1, 2010:
PSAK No. 50 (Revised 2006)Financial Instruments: Presentation and Disclosure
PSAK No. 55 (Revised 2006)Financial Instruments: Recognition and Measurements
PSAK No. 26 (Revised 2008)Borrowing Cost
January 1, 2011:
F-231

ISAK 9Changes in Existing Decommissioning, Restoration and Similar Liabilities
date of the provisions of the other related PSAKs, with one that may be relevant to the Company and Subsidiary
as follows:
The Company and Subsidiary are evaluating the potential impact on the consolidated financial statements as
a result of the adoption of the above new accounting standards.
29. RECLASSIFICATION OF ACCOUNTS
Other payables amounting to USD85,203 and USD11,622 as of December 31, 2008 and 2007, respectively,
were reclassified to accrued expenses to conform to the presentation of accounts in the Company and
Subsidiarys consolidated financial statements for the year 2009.
statements that were completed on March 5, 2010.
F-232
APPENDIX A
STATEMENT OF OPEN CUT COAL RESOURCES AND RESERVES OF THE BERAU COAL
DEPOSITS AS AT 31ST DECEMBER 2009
June 2010
A-1
IMPORTANT INFORMATION ABOUT THIS DOCUMENT

1. Confidentiality
This Minarco-MineConsult report has been produced by PT Runge Indonesia solely for PT Berau
Coal (the Customer).
The Customer may not make available or distribute this report to a third party without PT Runge
Indonesia prior written consent. No third party may rely on anything in this report unless that third party
signs a reliance letter in the form required by PT Runge Indonesia (in its sole discretion) and undertakes an
education programme with PT Runge Indonesia to ensure the context of that reliance letter is clear.
2. Limited liability
PT Runge Indonesia will not be liable for any loss or damage suffered by a third party relying on this
report (regardless of the cause of action, whether breach of contract, tort (including negligence) or
otherwise unless and to the extent that that third party has signed a reliance letter in the form required by
PT Runge Indonesia (in its sole discretion). PT Runge Indonesia liability in respect of this report (if any)
will be specified in that reliance letter.
3. Responsibility and context of this report
The contents of this report have been created using data and information provided by or on behalf of
the Customer. PT Runge Indonesia accepts no liability for the accuracy or completeness of data and
information provided to it by, or obtained by it from, the Customer or any third parties, even if that data
and information has been incorporated into or relied upon in creating this report. The report has been
produced by PT Runge Indonesia using information that is available to PT Runge Indonesia as at the date
stated on the cover page. This report cannot be relied upon in any way if the information provided to PT
Runge Indonesia changes. PT Runge Indonesia is under no obligation to update the information contained
in the report at any time.
4. Intellectual Property
All copyright and other intellectual property rights in this report are owned by and the property of PT
Runge Indonesia.
PT Runge Indonesia grants the Customer a non-transferable, perpetual and royalty-free licence to use
this report for its internal business purposes and to make as many copies of this report as it requires for
those purposes.
5. Mining Unknown Factors
The findings and opinions presented herein are not warranted in any manner, expressed or implied.
The ability of the operator, or any other related business unit, to achieve forward-looking production and
economic targets is dependent on numerous factors that are beyond the control of PT Runge Indonesia and
cannot be fully anticipated by PT Runge Indonesia. These factors included site-specific mining and
geological conditions, the capabilities of management and employees, availability of funding to properly
operate and capitalize the operation, variations in cost elements and market conditions, developing and
operating the mine in an efficient manner, etc. Unforeseen changes in legislation and new industry
developments could substantially alter the performance of any mining operation.
A-2
EXECUTIVE SUMMARY
This Minarco-MineConsult (MMC) report is an independent estimate (hereafter, referred to as the
Statement), prepared for PT. Berau Coal, (PTBC), of the Open Cut Coal Resources and Reserves for the
PTBC Coal Deposits, (Project), located in the Berau Regency of East Kalimantan, Indonesia, as set forth in
Figure 1.
The Statement reports the Coal Resources and Reserves as at 31st December 2009 and has been undertaken
in compliance with the requirements of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore reserves (2004 edition) published by the Joint Ore Reserves Committee of The Australasian
Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (The
JORC Code).
The Project is a First Generation Coal Contract of Work, No. DU 424 Kaltim, currently in the Exploitation
stage. The Project covers a total area of 118,400 ha and includes three active production areas (Lati, Binungan
and Sambarata) with areas of 6,985 ha, 12,130 ha and 15,600 ha respectively. PTBC has one area in
pre-development (Binungan Block 8 (Kelay)), and a number of other areas in varying stages of exploration,
(Binungan Block 9-10 (Kelay), Gurimbang and Punan). The Project area is shown on Figure 2.
The Project area occurs within the Berau sub-basin of the Tarakan Basin with coal seams occurring within
the Berau Formation. The sub-basin is structurally controlled and is structurally complex. The Lati area is within
a shallow-dipping synclinal basin with dips up to 15 degrees. The Sambarata and Binungan areas form the
eastern and southern rim of a steeper-dipping regional basin structure with dips typically ranging up to 45
degrees. The deposit has multiple coal seams with more than 100 seams and sub-seams (seam splits) identified.
Seams are of variable thickness and seam splitting is common. Typical seam thicknesses are in the range of
1.0 m to 3.0 m.
The in situ coal is typically of sub-bituminous rank, with coal quality varying across the project area. Higher
quality coal occurs within the central part of the project area (Sambarata and Binungan) with lower quality in the
outer-lying Lati blocks. Total Moisture (TM), as received (ar), varies from 15.7% in Sambarata (Block A) to
25.8% in Binungan (Block 8 (Kelay)). Calorific Value (CV), gross as received (gar), varies from 6,009 kcal/kg in
Sambarata (Block A) to 4,801 kcal/kg in Binungan (Block 8 (Kelay)). Ash is typically low and ranges from 2.9%
to 6.7%, air dried basis (adb) and TS is variable and ranges from 0.4% to 2.2% (adb). Average in situ coal
qualities by block are summarised in Table ES 1.
The Lati, Sambarata and Binungan areas have been subject to detailed drilling (drill lines at 100 - 200 m
spacing) over active and proposed mining areas. Drilling has been conducted in a number of stages since 1984.
The majority of drilling is typically shallow (average depth of 40 m) while more recent drilling has included
deeper hole drilling (up to 190 m). Geophysical logging of holes has been standard practice throughout all
drilling programmes. MMC is of the opinion that the geological database and geological models are of a good
standard and that the level of confidence of data is adequate for Coal Resource estimates to be reported in
accordance with JORC Code guidelines.
MMC estimates the Coal Resources to total 1,413 million tonnes (Mt) above an elevation (Reduced
Level, RL) cut-off of minus 150 m. This total includes 327 Mt of Measured category, 690 Mt of Indicated
with the balance of 396 Mt as Inferred. Coal Resources by area and block are summarised in Tables ES 1 and
ES 2.
A-3
Table ES 1 PTBC In Situ Coal Quality by Block

Block
TM
%
(ar)
IM
%
(adb)
Ash
%
(adb)
TS
%
(adb)
CV kcal/kg
(adb)
(gar)
RD
(adb)
Na2O
%
(adb)
Seams PQRT . . . . . . . . . . . . . . . . . . .
Seams A to O. . . . . . . . . . . . . . . . . . .
24.8
23.2
18.9
18.1
4.4
5.4
1.25
2.04
5,468
5,425
5,069
5,104
1.35
1.37
6.9
2.7
Block A. . . . . . . . . . . . . . . . . . . . . . . .
Block BC . . . . . . . . . . . . . . . . . . . . . .
Block B1. . . . . . . . . . . . . . . . . . . . . . .
15.7
15.5
20.5
12.5
12.2
16.3
2.9
3.3
4.1
0.40
0.94
0.86
6,241
6,200
5,767
6,009
5,973
5,476
1.30
1.33
1.31
6.0
2.8
3.9
Parapatan . . . . . . . . . . . . . . . . . . . . . .
Blocks 1-2 . . . . . . . . . . . . . . . . . . . . .
Blocks 3-4 . . . . . . . . . . . . . . . . . . . . .
Blocks 5-6 . . . . . . . . . . . . . . . . . . . . .
Block 7 West . . . . . . . . . . . . . . . . . . .
Block 7 East. . . . . . . . . . . . . . . . . . . .
Block 8 (Kelay) . . . . . . . . . . . . . . . . .
21.3
15.9
16.8
20.5
18.8
22.5
25.8
15.2
12.2
13.2
16.7
15.1
17.5
16.6
4.2
4.0
4.3
3.5
6.7
4.3
5.9
0.69
2.24
0.80
0.46
0.90
0.47
0.40
5,831
6,177
6,033
5,691
5,642
5,529
5,390
5,412
5,921
5,781
5,434
5,403
5,199
4,801
1.31
1.33
1.32
1.30
1.34
1.32
1.35
9.4
0.8
4.7
12.0
2.8
7.2
3.5
Weighted Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22.4
16.5
4.8
0.97
5,615
5,224
1.34
4.8
Area
Lati
Sambarata
Binungan
(Note: Coal quality is weighted average of the Measured & Indicated category coal from the geological model)
Table ES 2 PTBC Coal Resources
Area
Coal Resources (Mt)

Indicated Inferred
Block
Measured
Total
Seams PQRT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seams A to O. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103
33
97
89
63
71
263
193
Block A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block BC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
50
29
1
54
35
0
69
4
3
173
68
Parapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 1-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 3-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 5-6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 East. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 8 (Kelay). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
19
6
6
13
32
0
38
22
3
10
22
70
248
21
21
1
0
1
19
126
94
62
10
16
36
121
374
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
327
690
396
1,413
Lati
Sambarata
Binungan
(Note: Estimate has been rounded to reflect accuracy)

The current mining method adopted at Lati, Sambarata and Binungan can be described as multi seam, open
cut coal mining using truck and excavator equipment in a haulback operation. Coal is transported from the pit
directly to one of three coal crushing and handling facilities. From two of these facilities coal is directly barged
and from the third facility it is then trucked to a separate barge loading facility. The coal is then barged
approximately 50 to 100 km to the Muara Pantai offshore transhipment port.
A-4
Coal Reserves were estimated by applying mining factors and exclusion criteria to the Coal Resources. The
mining factors (such as recovery and dilution) were defined based on the open cut mining method. The pit shells,
provided by PTBC and verified by MMC, plus the existing mine plans were used as a basis to determine the coal
reserves.
The Indicated and Measured Resource confidence limits were overlaid on these pit shells and Inferred
tonnes were excluded from the estimate. The Coal Reserves were then categorised into Proved and Probable
based on the Coal Resource confidence and the level of detail in the mine planning.
Based on this approach a total of 346 Mt of Open Cut Coal Reserves, were estimated comprising 146 Mt
of Proved Reserves and 200 Mt of Probable Reserves. Coal Reserves by area and block are summarised in
Table ES 3.
Table ES 3 PTBC Open Cut Coal Reserves and Average Calorific Value
Sub
Total
Average
CV
kcal/kg
(gar)
Coal Reserves (Mt)

Area
Block
Proved
Probable
Lati
Seams PQRT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seams A to O . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
7
81
11
133
18
5,000
5,140
Block A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B West . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0
5
10
20
0
3
2
13
0
8
12
33
6,080
6,170
5,370
5,520
Parapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 1 -2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 3 -4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 5 -6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 East. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 8 (Kelay). . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
5
1
1
5
28
0
7
2
0
0
4
33
45
19
7
1
1
9
61
45
5,260
5,850
5,580
5,380
5,330
5,120
4,820
Total/Weighted Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
146
200
346
5,130
Sambarata
Binungan
(Note: Minor differences in totals shown in table above, due to rounding.)

Coal Resources are reported inclusive of Coal Reserves (that is, Coal Reserves are not additional to Coal
Resources). The coal is sold as a run of mine (ROM) product; hence Marketable Reserves will equal Coal
Reserves.
There are a number of ongoing technical matters, studies and programs, which PTBC is currently undertaking or
plans to undertake. Evaluation and subsequent reviews of the outcomes may impact the stated mining reserves.
These technical matters, studies and programs include:
geotechnical and hydrogeological studies;
ongoing exploration drilling and subsequent updates to the geological model; and
more detailed mine planning.
These issues may cause the pit shell and mining quantities to change in future JORC statements.
A-5
The Coal Resource estimates in the report were estimated by Mr. William Park, BSc (Geology), BEcon,
MAIG who is a Member of the Australian Institute of Geoscientists. The estimates are based on information
compiled and reviewed by Mr Park. He is a full time employee of PT Runge Indonesia and has sufficient
experience which is relevant to the style and type of deposit under consideration and to the activity undertaken to
qualify him as a Competent Person as defined in the 2004 Edition of the JORC Code.
The Coal Reserve estimates in the report were estimated by Mr John Standa, BE (Mining), MBA,
MAusIMM, a Member of the Australasian Institute of Mining and Metallurgy. The estimates are based on
information compiled and reviewed by Mr Standa. He is a full time employee of PT Runge Indonesia and has
sufficient experience which is relevant to the style and type of deposit under consideration and to the activity
undertaken to qualify him as a Competent Person as defined in the 2004 Edition of the JORC Code.
This report may only be presented in its entirety. Parties wishing to publish or edit selected parts of the text,
or use the Statement for public reporting, must obtain prior written approval from MMC and the signatories of
this report.
A-6
Table of Contents
Page No.
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-3
1.
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2
APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.3
RELEVANT REPORT AND STUDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.4
PREVIOUS COAL RESOURCE AND RESERVE STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.5
PURPOSE OF THIS REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.6
REPORTING ENTITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-26
A-26
A-26
A-27
A-28
A-28
A-28
2.
COMPETENT PERSONS STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-28
3.
PROJECT DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.1
LOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2
COAL TENEMENTS, MINING APPROVALS AND LAND TENURE STATUS . . . . . . . . . . . . . . . . . .
3.3
MINING OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4
INFRASTRUCTURE AND COAL HANDLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.5
MARKETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-29
A-29
A-29
A-30
A-30
A-31
4.
GEOLOGY, COAL QUALITY, RESOURCES AND RESERVES. . . . . . . . . . . . . . . . . . . . . . . .

4.1
GEOLOGY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2
LATI AREA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3
SAMBARATA AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4
BINUNGAN AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5
GEOLOGICAL DATABASE AND MODELLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.6
GEOLOGICAL CONFIDENCE AND RESOURCE CATEGORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.7
COAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.8
PREVIOUS COAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-31
A-31
A-33
A-34
A-35
A-36
A-38
A-42
A-43
5.
COAL RESERVE ESTIMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.1
MINERAL RESOURCE ESTIMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2
STUDY STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3
CUT-OFF PARAMETERS AND PIT LIMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4
MINING FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.5
METALLURGICAL FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.6
COST AND REVENUE FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.7
MARKETING AND PRODUCT SPECIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.8
OTHER RELEVANT FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.9
CLASSIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.10 AUDITS AND REVIEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.11 DISCUSSION OF RELATIVE ACCURACY AND CONFIDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.12 RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.13 PREVIOUS RESERVE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-43
A-43
A-43
A-44
A-45
A-45
A-45
A-46
A-46
A-46
A-46
A-49
A-49
A-50
A-7
List of Tables
Table No.
TABLE 3.1
TABLE 4.1
TABLE 4.2
TABLE 4.3
TABLE 4.4
TABLE 4.5
TABLE 4.6
TABLE 4.7
TABLE 4.8
TABLE 4.9
TABLE 5.1
TABLE 5.2
TABLE 5.3
TABLE 5.4
TABLE 5.5
TABLE 5.6
TABLE 5.7
Description
Page No
PRODUCT COAL SPECIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MAIN SEAM APPARENT THICKNESSES BY AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY OF IN SITU COAL QUALITY BY BLOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GEOLOGICAL MODEL PARAMETERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
POINTS OF OBSERVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESOURCE CATEGORISATION PARAMETERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DRILL SPACINGS BY AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
JORC CODE COMPLIANCE CHECKLIST SUMMARYCOAL RESOURCES . . . . . . . . . . . . . . . . .
COAL RESOURCES SUMMARY BY BLOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPARISON WITH PREVIOUS COAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PTBC PIT SHELL STRIP RATIO ANALYSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
KEY PARAMETERSPTBC PIT DESIGN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
JORC CODE COMPLIANCE CHECKLIST SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL OPEN CUT COAL RESERVES BY AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL OPEN CUT COAL RESERVES BY BLOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPEN CUT COAL RESERVES QUALITY BY AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPARISON WITH PREVIOUS COAL RESERVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-31
A-32
A-33
A-37
A-39
A-39
A-40
A-41
A-42
A-43
A-44
A-45
A-48
A-49
A-49
A-50
A-50
List of Figures
(these follow the Executive Summary)
Figure No.
Figure 1
Figure 2
Figures 3
Figures 4
Figures 5
Figure 6
Figure 7
Figure 8
Figures 9
Figures 10
Figures 11
Figure 12
Figure 13
Figure 14
Figure 15
Figure 16
Description
General Location Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Berau Site Layout Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Typical Cross SectionsLati Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Typical Cross SectionsSambarata Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Typical Cross SectionsBinungan Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drillhole LocationsLati Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drillhole LocationsSambarata Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drillhole LocationsBinungan Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General StratigraphyLati Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General StratigraphySambarata Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General StratigraphyBinungan Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Resource BoundaryLati PQRT Seam Q . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Practical Pit ShellsBinungan 7E. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal Reserve LimitsLati PQRT Seam P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal Reserve LimitsSambarata B Seam T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coal Reserve LimitsSeam ELL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-8
A-10
A-11
A-12
A-13
A-14
A-15
A-16
A-17
A-18
A-19
A-20
A-21
A-22
A-23
A-24
A-25
Appendices
Figure No.
Description
Appendix A
Seam Thickness by Area/Sub- Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix B
Coal Quality & Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix C
Coal Resource Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix D
Coal Reserve Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix E
Pit Slope Parameters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix F
Typical Cross Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix G
Drillholes Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix H
General Stratigraphy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix I
Reserve by Seam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Appendices to the Reserve Statement have not been included in this offering circular and are available
upon request at Berau Coals registered office at Menara Karya 11th Floor, Jl. HR. Rasuna Said Block X-5
Kav. 1-2, Jakarta 12950, Indonesia.
A-9
A-10
Pontianak
Banjarmasin
j ar m asi n
Laut
Balikpapan
Samarinda
= Town
= Rivers
= Road
= Transhipment
LEGEND
Tanjung
Redeb
inda
Ba n
Tanjungredeb
See Detail 1
S. KE
LAI
See Detail 1
PT BERAU COAL
mar
Palangkaraya
INDONESIA
Kalimantan
Borneo
MALAYSIA
Bandar Seri Begawan
BRUNEI DARUSSALAM
Carpentaria
INDONESIA
Gulf of
25
KILOMETRE
50
AIT
STR
M AKASSAR
Kalimantan
a
To S
100
A-11
Punan
Rivers
Town
Road
Binungan Block 8-10
Lati Port
Suaran Port
Gurimbang
PT Berau Coal Concession Area
Coal Boundary
Binungan Block 1-7
Tanjung
Redeb
Sambarata B1
Transhipment
LEGEND
Sambarata Port
Sambarata
Lati
0
N
20
Transhipment Area
KILOMETRES
10
7
06
07
-08HD
1
07
5
07
-08-08HD
HD
WH
N
-061
L-06
WH
29
-07-
07
-08-
HD
WH
QU
QL
WH
WH
WHWH
WH
5
01
6
7
9 90 4- 4 01
4-01
17 -98-DR-0 95-1 -0493
R-0
-07-HD H L- HDR
-98HD
HD
HD
LU
LLU
LLL
WH
NU
NL
HD
24
-07-
WH
OU
OL
HD
WH
WH
QU
QU
QL
QL
-26A
-26
L-87
L-87
R
R_1
Q Q
R RU
R_1RL
R_1
3
3-02
Q-0
HD
WH
QQ
RR
WH
WH
-32A
-32
L-88L-88
R
R_1
L-88
95
-98HD
8-94
-9
HD
8-51
-8
HD
-13
L-95
-0843-15
-0
T-04
HD
HD
WH
-08
WH
R
R
QUU
QUL
QL
WH
-55
L-86
WH
RU
RL
WH
WH
WH
RU
RL
-08
L-87
WH
TU
TLU
TLL
WH
TUU
TUL
TL
WH
WH
9
9 -018 1
14
-017238 -076 8 -075
31
-03- 3-3304D 3-34 04D -03-0 T- -0
T- D
T-04-03- T-04
HD HD HD
HD H
HD HD HD
HD
TU
TL
WH
Base of Weathering
WH
TU
TL
WH
TU
TL
WH
TU
TL
WH
TU
TL
TU
TL
WH T
T
WH
T
WH
-78
L-97
05
-07-
HD
WH
RU
RL
Base of Weathering
RU
RL
WH
05
-07-
HD
6
-79
L-97
05
-07-
HD
04
-07-
HD
04
-07-
HD
WH
Q
P
WH
WH
WH
6
04 3
-07- -2
HD L-86
Q
WH
WH
R
QRD
-07-
HD
4
-07-
04
SECTION B
100
200
568213 E
252875 N
SECTION C
WH
HD
Topography
04
Topography
PU
PL
WH
Q
-400
WH
LU
LL
K
-300
LU
WH
WH
O
-400
LU
40
-03- 3-38 28
HD D-0 -03H HD
WH
-300
-200
WH
WH
-200
E EE
WH
WHWH
WH
H
-100
WH
E
2 9
-83 04-4 S1 9 7
7- 11
E-04 DL- -0 3- 3-11
HD D HDHD-0 D-0
H
-100
100
200
562665 E
249955 N
-400
-300
-200
-100
100
200
WH
-400
558929 E
255242 N
-300
100
200
-200
SECTION A
Topography
-400
-08HD
Base of Weathering
-100
PU
PL
WH
-112
L-96
-300
H
GU
GL
WH
LU
LL
-016
L-08
-200
WH
H
-84
L-97
564913 E
261329 N
-100
100
200
558383 E
260627 N
266500N
264500N
262500N
260500N
258500N
256500N
254500N
252500N
556500E
WH
O
-33
L-86
556500E
558500E
558500E
560500E
560500E
564500E
564500E
566500E
566500E
568500E
METRES
500
568500E
570500E
-400
-300
-200
-100
100
200
567830 E
258553 N
1000
570500E
Date: May 2010
PT Berau Coal
Job No: ADV-JA-03637
Figure: 3
TYPICAL CROSS SECTIONS

LATI
JORC RESOURCES AND RESERVES 2010
562500E
562500E
248500N
246500N
250500N
266500N
264500N
262500N
260500N
258500N
256500N
254500N
252500N
250500N
248500N
246500N
A-12
A-13
S-97-11
DD-GT-SMB-08-01
S-97-29
258000N
S-97-12
DD-GT-SMB-08-02
541000E
SA-05-91
SA-04-01
T
T
544000E
545000E
546000E
S-97-13
S-97-14
S-97-15
S-97-16
S-06-89
S-06-105
S-05-01A
S-07-15
S-06-85
SA-05-02
S-07-16
SA-05-03
S-05-02
S-97-18
S-97-41
SECTION A - A
542000E
543000E
S-97-33
S-97-17
LU
LL
L_1
SA-07-213
S-05-03
J
S-97-40SA-07-216
S-05-04
SA-05-04
-50
-25
25
50
75
541364 E
245824 N
-150
-125
-100
-75
-50
-25
25
50
75
100
SA-05-01
U_1
U
U
542000E
543000E
545000E
SECTION LOCATION MAP
546000E
242000N
544000E
242000N
541000E
243000N
246000N
243000N
247000N
246000N
244000N
248000N
247000N
245000N
249000N
248000N
244000N
250000N
249000N
245000N
251000N
250000N
252000N
251000N
253000N
252000N
254000N
253000N
255000N
254000N
256000N
258000N
255000N
540000E
540000E
256000N
539000E
539000E
257000N
538000E
538000E
257000N
P1
Q_1
O1
O
P_2
P_1
P
M
L1
LU
M_1
M_1
L1
LU
I1
HLU
HLL
IU
IL
I1
I1
HLU
HLL
IL
Date: May 2010
HLU
HLL
IU
IL
I1
HU
HLU
HLL
FU
FL
C1L
C1U
C1L
C1U
SECTION B - B
-125
-100
-75
-50
-25
25
50
75
100
125
543930 E
245823 N
-150
PT Berau Coal
ELU
ELL
ELU
ELL
Figure: 4
TYPICALCROSS SECTIONS
- SAMBARATA AREA
FU
FL
150
S-97-19
S-05-05
E_1
S-05-06
E_1
D
175
SA-05-05
200
150
125
225
200
175
543930 E
245823 N
250
543486 E
252490 N
-150
225
541364 E
245824 N
250
540920 E
252491 N
-150
-125
-100
HU
HL
H_1
-75
I1
I1
HL
100
-125
-100
LU
LL
-75
-50
-25
25
50
75
125
S-06-86
150
S-06-98
175
125
S-06-87
200
150
100
225
200
175
543486 E
252490 N
250
225
540920 E
252491 N
250
A-14
MD-97-183
MD-06-103
538000E
225000N
539000E
540000E
MD-97-125
542000E
MD-98-183A
MD-97-99A
MP-96-10
MP-96-22
MD-97-53
547000E
MP-04-20
MP-96-77
MP-04-01
MD-04-03
541000E
MD-98-181
DU
DLU
DLL
EUU
EUL
ELU
ELL
E1UU
E1UL
E1L
F1
MD-98-182
EUU
EUL
ELU
ELL
B4
CUU
CUL
CL
CU
CL
MD-98-80
MP-04-19
F1UU
F1U F1UL
F1L F1L
MD-98-39
SECTION A - A
CU
CL
MD-98-43
544480 E
219507 N
-150
-125
-100
-75
-50
-25
25
50
MP-96-07
MD-06-023
MP-96-06
MD-98-33
Date: May 2010
MD-06-012
540514 E
218788 N
150
542060 E
221276 N
-150
-125
-100
-75
-50
-25
25
OU
OLU
OLL
LU
LL
218000N
SECTION LOCATION MAP
218000N
219000N
220000N
220000N
219000N
221000N
221000N
222000N
549000E
225000N
222000N
548000E
ELL
ELU
EU
E1
F1U
F1L
223000N
546000E
F2
223000N
545000E
F3
224000N
544000E
ELL
ELU
EU
E1
F1U
F1L
F2
F3
F4L
F4U
224000N
F4U
F5
543000E
F5
E1
ELL
ELU
EU
E1
EU
E1
ELU
EU
DU
DL
ELU
ELL
EU
EU
B2
B3
B4
CU
CL
DU
DL
540514 E
218788 N
-150
-125
-100
-75
-50
-25
25
Figure: 5
TYPICAL CROSS SECTIONS

- BINUNGAN AREA
PT Berau Coal
SECTION B - B
CUUU
CUUL
CUL
CLU
CLL
B4
50
MD-98-183
F3
75
MD-98-135
F3
F4U
F5
GU
GL
100
JU
JL
HU
HL
50
OU
OL
125
OU
OL
MP-98-43
75
OU
OL
100
MD-98-149
OU
OL
DU
DL
125
542060 E
221276 N
150
543829 E
221116 N
-150
-125
-100
-75
-50
-25
25
75
MP-96-24
MD-06-102
100
50
125
MP-96-23
75
544480 E
219507 N
150
100
543829 E
221116 N
150
125
560500E
562500E
564500E
566500E
568500E
570500E
266500N
558500E
266500N
556500E
N
0
500
1000
264500N
264500N
METRES
260500N
260500N
262500N
262500N
LEGEND
258500N
258500N
Drillholes
246500N
246500N
248500N
248500N
250500N
250500N
252500N
252500N
254500N
254500N
256500N
256500N
Concession Boundary
PT Berau Coal
556500E
558500E
560500E
562500E
564500E
566500E
Date: May 2010
A-15
568500E
570500E
DRILLHOLE LOCATIONS
LATI AREA
Figure: 6
538000E
539000E
540000E
541000E
542000E
543000E
544000E
545000E
546000E
258000N
258000N
N
257000N
257000N
256000N
256000N
255000N
255000N
254000N
254000N
253000N
253000N
252000N
252000N
251000N
251000N
250000N
250000N
249000N
249000N
248000N
248000N
247000N
247000N
246000N
246000N
245000N
245000N
244000N
244000N
243000N
243000N
242000N
242000N
PT Berau Coal
538000E
539000E
540000E
541000E
542000E
543000E
= Drillhole
544000E
545000E
Date: May 2010
A-16
546000E
DRILLHOLE LOCATIONS
SAMBARATA AREA
Figure: 7
A-17
Date: May 2010
DRILLHOLE LOCATIONS
BINUNGAN AREA
Figure: 8
PT Berau Coal
218000N
218000N
= Drillholes
219000N
549000E
225000N
219000N
548000E
220000N
547000E
220000N
546000E
221000N
545000E
221000N
544000E
222000N
543000E
222000N
542000E
223000N
541000E
223000N
540000E
224000N
539000E
224000N
538000E
225000N
INTERBURDEN
THICKNESS
STRATIGRAPHY
SEAM NAME/
THICKNESS
T - 2.0m
IB = 45.5m
R1 - 0.4m
IB = 12.7m
R - 2.5m
R_1 - 0.6m
IB = 0.8m
IB = 5.9m
QRD - 0.7m
IB = 10.5m
Q - 1.8m
IB = 20.2m
P1 - 0.5m
IB = 4.1m
P - 1.4m
Note: Only Major Seams are Shown
PT Berau Coal
GENERAL STRATIGRAPHY
- LATI AREA
Date: May 2010
A-18
Figure: 9
INTERBURDEN
THICKNESS
STRATIGRAPHY
SEAM NAME/
THICKNESS
W - 0.4m
IB = 51.5m
V - 0.7m
IB = 53.6m
U - 1.4m
U_1 - 0.9m
IB = 26.9m
IB = 41.4m
IB = 1.5m
T - 9.7m
T_1 - 0.5m
IB = >300m
S - 2.0m
IB = 80.2m
R - 1.2m
IB = 112.5m
Q - 2.0m
IB = 49.6m
IB = 25.3m
IB = 37.0m
Q_1 - 1.1m
P1 - 1.1m
P - 3.2m
P_1 - 0.8m
P_2 - 0.6m
O1 - 0.7m
O - 0.8m
N - 1.7m
IB = 24.8m
IB = 16.0m
IB = 19.7m
IB = 10.9m
IB = 20.5m
IB = 39.0m
IB = 25.6m
IB = 21.9m
IB = 26.5m
IB = 7.3m
M - 2.4m
M_1 - 0.9m
L1 - 0.5m
L - 4.0m
L_1 - 0.6m
IB = 50.6m
K - 1.6m
IB = 31.6m
IB = 19.7m
IB = 24.7m
IB = 25.5m
IB = 20.0m
J - 2.7m
I1 - 1.7m
I - 2.3m
H - 6.4m
H_1 - 1.2m
IB = 54.6m
G - 1.6m
F - 4.9m
IB = 27.9m
IB = 46.6m
E - 3.0m
D - 2.3m
C2 - 0.8m
C1 - 2.0m
CU - 3.4m
CL - 1.7m
IB = 33.9m
IB = 23.3m
IB = 28.1m
IB = 13.1m
IB = 4.9m
IB = 138.0m
IB = 1.9m
BU - 1.3m
BL - 3.5m
IB = 61.2m
A - 0.6m
IB = 162.6m
AC - 0.7m
AD - 1.4m
AE - 1.7m
AF - 0.8m
AG - 0.9m
IB = 20.8m
IB = 14.7m
IB = 5.8m
IB = 23.6m
PT Berau Coal
- SAMBARATA AREA
Date: May 2010
A-19
Figure: 10
INTERBURDEN
THICKNESS
STRATIGRAPHY
SEAM NAME/
THICKNESS
V - 1.5m
IB = 35.4m
U2 - 1.0m
U1 - 0.6m
U - 1.4m
IB = 13.7m
IB = 15.8m
IB = 17.9m
T1 - 2.2m
IB = 16.2m
IB = 15.6m
T - 1.5m
S - 1.3m
IB = 36.3m
R3 - 1.3m
R2 - 1.1m
R1 - 0.7m
R - 1.3m
Q - 1.1m
P- 0.7m
IB = 12.9m
IB = 5.7m
IB = 10.5m
IB = 16.8m
IB = 16.8m
IB = 22.8m
O - 4.1m
IB = 43.1m
M - 1.4m
IB = 16.4m
L - 1.3m
IB = 22.4m
IB = 10.4m
IB = 17.9m
IB = 11.4m
IB = 20.3m
K1 - 0.8m
K - 0.9m
J - 2.4m
H - 1.4m
G - 2.1m
IB = 34.8m
F5 - 1.8m
F4U - 1.2m
F4L - 1.3m
F3 - 1.1m
F2 - 1.7m
IB = 16.4m
IB = 2.8m
IB = 11.2m
IB = 15.1m
IB = 34.5m
F1 - 1.0m
IB = 27.6m
F - 1.0m
IB = 27.6m
E1 - 1.9m
EU - 4.6m
EL - 3.1m
IB = 14.3m
IB = 11.4m
IB = 62.5m
D - 1.4m
IB = 64.9m
C - 5.5m
B4 - 1.4m
IB = 9.5m
IB = 28.9m
B3 - 0.8m
IB = 27.9m
B2 - 0.6m
IB = 36.8m
B1 - 0.6m
B - 1.1m
IB = 12.9m
IB = 35.5m
A - 1.0m
PT Berau Coal
- BINUNGAN AREA
Date: May 2010
A-20
Figure: 11
560500E
562500E
564500E
566500E
568500E
570500E
N
0
500
1000
266500N
558500E
266500N
556500E
264500N
264500N
METRES
260500N
260500N
262500N
262500N
LEGEND
ATED
RESOURCE
BOUNDARY
Indicated
Resource
Boundary
INFERRED RESOURCE BOUNDARY
258500N
258500N
MEASURED
RESOURCE
BOUNDARY
Measured
Resource
Boundary
Inferred Resource Boundary

Drillholes
246500N
246500N
248500N
248500N
250500N
250500N
252500N
252500N
254500N
254500N
256500N
256500N
Concession Boundary
PT Berau Coal
556500E
558500E
560500E
562500E
564500E
566500E
568500E
570500E
RESOURCE BOUNDARY
LATI PQRT SEAM Q
Date: May 2010
A-21
Figure: 12
A-22
PT Berau Coal
PRACTICAL PIT SHELL

BINUNGAN 7E
Figure: 13
Mineable Pit
Concession Boundary
Date: May 2010
LEGEND
560500E
562500E
564500E
566500E
568500E
570500E
N
0
500
1000
266500N
558500E
266500N
556500E
264500N
264500N
METRES
260500N
260500N
262500N
262500N
258500N
258500N
LEGEND
Proved Reserves
Probable Reserves
246500N
246500N
248500N
248500N
250500N
250500N
252500N
252500N
254500N
254500N
256500N
Concession Boundary
256500N
Pit Shell Design
PT Berau Coal
556500E
558500E
560500E
562500E
564500E
566500E
568500E
570500E
COAL RESERVE LIMITS - LATI PQRT

SEAM P
Date: May 2010
A-23
Figure: 14
538000E
539000E
540000E
541000E
542000E
543000E
544000E
545000E
546000E
258000N
258000N
N
N
LEGEND
257000N
257000N
256000N
256000N
255000N
255000N
254000N
254000N
Proved Reserves
253000N
253000N
Probable Reserves
Pit Shell Design

252000N
252000N
Concession Boundary
251000N
251000N
250000N
250000N
249000N
249000N
248000N
248000N
247000N
247000N
246000N
246000N
245000N
245000N
244000N
244000N
243000N
243000N
242000N
242000N
PT Berau Coal
538000E
539000E
540000E
541000E
542000E
543000E
544000E
545000E
546000E
COAL RESERVE LIMITS

SAMBARATA B - SEAM T
Date: May 2010
A-24
Figure: 15
223500
222000
220500
219000
540000
540000
541500
541500
543000
543000
544500
544500
546000
N
1000
547000
PT Berau Coal
Concession Boundary
Pit Shell Design
Probable Reserves
Proved Reserves
METRES
500
547000
Date: May 2010
Figure: 16
COAL RESERVE LIMITS - BININGAN 7E

SEAM ELL
LEGEND
546000
223500
222000
220500
219000
A-25
1. INTRODUCTION
1.1 Introduction
This Minarco-MineConsult (MMC) report is an independent estimate (hereafter, referred to as the
Statement), prepared for PT. Berau Coal, (PTBC), of the Open Cut Coal Resources and Reserves for the
PTBC Coal Deposits (hereafter, referred to as Project) located in Berau Regency, East Kalimantan, Indonesia,
as set forth in Figure 2.
MMC has adopted the following terms for the reporting of Coal Resources and Reserves:
Coal Resources as used in this report are the same as Mineral Resource in The JORC Code and
Geological Resources, a common term used in the industry.
Coal Resources have been subdivided into Measured, Indicated and Inferred Resources to reflect the
confidence in the underlying resource data.
Coal Reserves as used in this report are the same as Ore Reserves in The JORC Code and Mining
Reserves, a common term used in the industry. Coal Reserves include geological and mining losses, roof
and floor loss and dilution.
Coal Reserves have been subdivided into Proved and Probable to reflect the confidence in the underlying
resource data and mine planning detail.
Marketable Reserves allow for practical yields in a beneficiation plant, which is commonly known in the
industry as product coal.
Coal Resources are reported inclusive of Coal Reserves, (that is, Coal Reserves are not additional to Coal
Resources).
Additional terminology applied within this report includes the following:
Geological Model (or In Situ Model) is the computerised three dimensional representation of the coal
deposit based on topographic survey data, coal seam data derived from outcrop, drillhole or other data
points, including coal thickness and quality.
Optimiser is the Minex software applied to the geological model to determine the economic pit limits by
the application of such factors as geological and mining losses, loss and dilution, geotechnical slope
design and cost/revenue inputs.
Run of Mine (ROM) Coal (non-JORC terminology) as used in this report is coal in the pit shell after
application of geological and mining losses, roof and floor loss and dilution. ROM may include some
Inferred coal resources.
1.2 Approach
The process adopted for completing the Statement is described below.
1. An in situ geological model was created by PTBC geologists using Mincom software. This model
had no cut off criteria applied, hence the term in situ model.
2. This model and the underlying raw data such as borehole logs, coal quality reports and geophysical
logs were reviewed by MMC geologists under the supervision of Mr William Park.
3. The geological model was categorised into Indicated and Inferred confidence areas and then coal
volumes, tonnages and qualities were estimated and reported in these categories after applying any
cut-off criteria.
A-26
4. Cross sections, plans and deposit characteristics such as structure, number and thickness of seams were
examined in conjunction with the proposed equipment and mining method to decide on minimum
mining thickness, coal losses and dilution factors. These factors were then used to convert the in situ
geological model to a ROM model.
5. Costs and revenue factors were supplied by PTBC and checked for reasonableness by MMC. The break
even strip ratios were then estimated using the costs and revenue for each pit within every mining
block. Using the existing PTBC pit designs, the incremental strip ratios at the highwalls were
estimated.
6. The incremental strip ratios of the PTBC provided pit designs were then compared to the estimated
break even strip ratios from the economic model. Only when a pits incremental strip ratio was lower
than the estimated break even strip ratio, was it used for estimating Reserves.
7. For the Binungan Block 8 (Kelay) and Binungan Block 7 deposits, costs and revenue factors were
supplied by PTBC and checked for reasonableness by MMC. These were then converted in a form to
suit the Optimiser software and together with other criteria such as depth constraints, geotechnical
criteria and minimum mining thickness, a series of pit shells were derived for varying revenue inputs.
8. For the Binungan Block 8 (Kelay) and Binungan Block 7 deposits, pit shells (Optimised Pit Shells)
were selected where the pits incremental strip ratios were lower than the estimated break even strip
ratios. Minor adjustments were made (as necessary) to form practical pit designs (Mineable Pit
Shells). These pit shells formed the basis of the subsequent reserves estimates.
9. The Indicated confidence limits were overlaid on these pit shells and any Inferred tonnes were
excluded from the estimate.
10. LOM plans exist for all the areas where the reserves have been estimated. These plans demonstrated
that mining was practical, the base cost drivers were as per those used in determining the break even
strip ratios and economic models of the plan schedules demonstrated the overall economic viability of
the areas
11. The Coal Reserves were categorised as Proved or Probable based on the Coal Resource confidence and
the level of detail in the mine planning.
12. Checks were undertaken and results and supporting information documented in this report.
1.3 Relevant Report and Studies
The following reports, documents and studies were used as reference material in the preparation of the
Statement.
Preston, KB and Sanders, RH, Estimating the In-Situ Relative Density of Coal, Australian Coal
Geology, Vol 9, pp22-26, May 1993.
Fletcher, I. S., and Sanders, R. H., Estimation of in-situ moisture of coal seams and product total
moisture: Final Report for ACARP Project C10041, 2003.
Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal
Reserves, 2003.
Australasian Code for Reporting of Mineral Resources and Ore Reserves, (The JORC Code), 2004.
PT. Berau Coal Statement of Open Cut Coal Resources and Reserves as at 31st December 2008. MMC
Job number 3530M.
Review of geological data including drill logs, geophysical logs and analytical results.
Meeting with key PTBC personnel to discuss technical aspects of the project and to review key inputs
into the cost model.
A-27
1.4 Previous Coal Resource and Reserve Statements

MMC has previously prepared a Coal Resource and Reserve statements compliant with the JORC Code for
this project dated 31st December 2008.
1.5 Purpose of this Report
This report, on the coal reserves and resources of the PT. Berau Coal deposits in East Kalimantan,
Indonesia, was prepared for PT Berau Coal.
The resources are estimated as of 31st December 2009, and are based on a computer database and model
compiled by Mr. Dadan Ramdan, Group Geologist for PTBC, and audited by the author (the Competent Person).
This report supersedes the December 2008 Reserve and Resource Statement.
The purpose of the report is to provide an objective assessment of coal resources and reserves that are
compliant with the Australasian Code for Reporting of Mineral Resources and Ore Reserves, December 2004,
(The JORC Code), which is the minimum standard required of a Competent Person for the reporting of
Mineral Resources in a public document. This document also conforms to the Australian Guidelines for
Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves (2003).
1.6 Reporting Entity
PTBC commissioned PT Runge Indonesia, (PTRI), to prepare a JORC Code compliant Coal Resources
and Reserves Statement for the Project. This Statement has been issued under the MMC name. MMC is an
associated entity of PT Runge Indonesia.
2. COMPETENT PERSONS STATEMENT
The information in the report, to which this statement is attached, that relates to the Coal Resources of PT.
Berau Coal, is based on information compiled and reviewed by Mr. William Park, who is a Member of the
Australian Institute of Geoscientists and works full time for PTRI.
William Park, signing on behalf of Minarco-MineConsult, is a qualified Geologist who has more than 30
years of relevant mining and geological experience in coal, working for major mining companies and as a
consultant. During this time he has either managed or contributed significantly to numerous mining studies
related to the estimation, assessment, evaluation and economic extraction of coal in Australia, New Zealand, the
Philippines and Indonesia. He has sufficient experience which is relevant to the style and type of deposit under
consideration and to the activity he is undertaking to qualify him as a Competent Person as defined in the 2004
Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.
WILLIAM PARK BSc (Geology), BEcon, MAIG

The estimates of Coal Resources presented in this Statement have been carried out in accordance with the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
(December, 2004).
A-28
The information in the report, to which this statement is attached, that relates to the Coal Reserves of PT.
Berau Coal, is based on information compiled and reviewed by Mr. John Standa, who is a Member of the
Australasian Institute of Mining and Metallurgy and is a full time employee of PTRI.
John Standa, signing on behalf of Minarco-MineConsult, has more than 20 years experience in the mining
industry in both contract and owner operated, projects and has been involved in the mining industry in Indonesia
for over 7 years. He has sufficient experience which is relevant to the style of mineralization and types of coal
deposits under consideration, and to the activity he is undertaking, to qualify him as Competent Person (as
defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves).
JOHN STANDA BE (Mining), MBA, MAusIMM

The estimates of Coal Reserves presented in this statement have been carried out in accordance with the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (December,
2004).
The above-mentioned persons have no interest whatsoever in the mining assets reviewed and will gain no
reward for the provision of this Coal Resource and Reserve statement. PTRI will receive a professional fee for
the preparation of this statement.
3. PROJECT DESCRIPTION
3.1 Location
The Project is located in the Berau Regency, East Kalimantan, Indonesia. The project area is close to the
regional city of Tanjung Redeb which is located approximately 300 km north of the provincial capital city of
Samarinda, (see Figure 1). The Project is a First Generation Coal Contract of Work, No. DU 424 Kaltim,
currently in the Exploitation stage.
The Project covers a total area of 118,400 ha and consists of three active mining areas (Lati, Binungan
Blocks 1-7 and Sambarata Blocks A and B) and one area at varying stages of pre-development (Binungan Block
8 (Kelay)) with a number of other areas in varying stages of exploration (Binungan Block 9-10 (Kelay),
Gurimbang and Punan). The project area is shown on Figure 2.
3.2 Coal Tenements, Mining Approvals and Land Tenure Status
PTBCs contract was awarded on 26 April 1983 as Contract No. J2/Ji.DU/12/83. The Contract is known as a
First Generation Coal Contract of Work. The original concession area available for general prospecting was
487,217 ha.
On 18 March 1986 in accordance with the conditions of the Coal Contract of Works exploration permit DU
424 Kaltim was issued for over 243,126.6 ha or 49.9% of the original concession area.
On 7 April 2005 the status of PTBCs concession was confirmed as a Production area comprising the Lati,
Binungan and Sambarata areas with areas of 6,985 ha, 12,130 ha and 15,600 ha respectively, totalling 34,715 ha
with the remaining area of the concession, 83,685 ha under an exploration permit and comprising of Binungan,
Sambarata, Kelay, Gurimbang and Punan areas.
A-29
MMC has not carried out a review of the sites access issues, however PTBC has informed MMC that there
are no current significant land access issues, related to land compensation, production forest or protection forest
limits, which could impact on the Reserves. MMC has also not carried out a review of the projects permits,
however PTBC has informed MMC that it has in place all the necessary regulatory permits for the operation.
3.3 Mining Operations
The operation currently utilises open pit mining by mining contractors using truck and excavator. The
current production target of the Life-of-Mine Plan is of the order of 25 million tonnes per annum.
Open pit mining is conducted by several mining contractors, using suitably sized trucks and excavators. The
mining method can be described as multi seam, shallow to steep dip, open cut coal mine operating in a
combination of strip mining and haulback configurations. After an initial period of strip mining, where waste
material is taken to out of pit dumps, a box cut is created, where at one end of the pit all waste material and coal
is mined out to the final highwall and then, as mining continues from the box cut along strike, waste is hauled
back into the mined out area.
3.4 Infrastructure and Coal Handling
The project is in advanced stages of operation with respect to infrastructure and site facilities. Upgrades of
the Lati, Sambarata and Suaran Coal Handling Facilities are being planned to support the planned increase in
production.
Coal is hauled to one of four Coal Handling Facilities. The Lati and Sambarata Coal Handling Facilities
comprise ROM coal handling and stockpiles, crushed coal handling and stockpiling and barge loading. The
Binungan Coal Handling Facility comprises ROM coal handling and stockpiles, crushed coal handling and
stockpiling and truck loading. The Suaran Coal Handling Facility comprises processed product coal in-loading
and stockpiling, stockpiled product coal reclaiming and barge loading.
The crushed coal is loaded onto barges from the three loading terminals and transported to the transhipment
point at Muara Pantai. The ports at Lati, Sambarata and Suaran are able to load 7,500 tonne barges, 5,000 tonne
barges and 10,000 tonne barges, respectively. The Sambarata barge capacity is limited by river condition and by
air draft below a bridge under which the barges must pass. The transshipment point is approximately 75 km from
the Lati Port, 100 km from the Sambarata Port and 50 km from Suaran Port.
A-30
3.5 Marketing
PTBC produces a number of different product types, to meet different contracted sales quality
specifications. However the coal products are grouped broadly into four product types, Mahoni, Mahoni-B,
Sungkai and Agathis. The typical product coal quality specifications from PTBC are provided in Table 3.1
below.
Table 3.1 Product Coal Specifications
Item
Total Moisture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inherent Moisture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calorific Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calorific Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ash Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Sulphur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatile Matter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Carbon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hardgrove Grindability Index. . . . . . . . . . . . . . . . . . . . . . . . . .
Unit
Mahoni
% (gar)
%(adb)
kcal/kg (adb)
kcal/kg (gar)
% (adb)
% (adb)
% (adb)
% (adb)
18.0
13.5
5,900
5,600
5.1
0.70
39.3
42.1
45
Products
Mahoni-B Agathis
22.5
16.0
5,740
5,300
4.5
0.87
38.5
41.0
45
26.0
18.0
5,650
5,100
4.8
0.89
38.2
39.0
46
Sungkai
26.0
18.0
5,500
5,000
5.0
0.99
38.0
39.0
47
4. GEOLOGY, COAL QUALITY, RESOURCES AND RESERVES

4.1 Geology Overview
The Project occurs within the Berau sub-basin of the Tarakan Basin with coal seams occurring within the
Berau Formation. The Berau sub-basin is structurally controlled and is structurally complex. The Lati area is a
shallow-dipping synclinal basin with dips up to 15 degrees on the flanks of the structure. The Sambarata (Blocks
A and BC) and Binungan (Blocks 5-8) areas form the eastern and southern rim of a regional, steeper-dipping
structurally complex basinal structure with dips typically ranging up to 45 degrees. The Sambarata (Block B1)
and the Binungan (Parapatan Block and Blocks 1-4) areas lie on a smaller synclinal structure on the eastern flank
of the regional structure. Typical cross-sections across the project are shown on Figures 3 to 5.
Lati, Sambarata and Binungan areas have been subject to detailed drilling (drill lines at 100 200 m
spacing) over active and proposed mining areas with wider exploration drilling (300 m spacing) in
pre-development areas (Binungan Block 8 (Kelay)) . Drilling has been conducted in a number of stages since
1984. Drilling has been typically shallow (less than 80 m), with limited deeper hole drilling (up to 190 m).
Geophysical logging of holes has been standard practice throughout all drilling programmes. Drillhole locations
for each area are shown on Figures 6 to 8.
A-31
The Berau Formation is reportedly up to 600 m in thickness with more than 100 identified coal seams and
sub-seams (seam splits). There is a high degree of variability of the coal seam thicknesses between the different
seams, from 0.1 m to 23.2 m thick. Seam thicknesses stated within this report is apparent thicknesses, i.e.
based on drill intercepts and not true thickness. Seam splitting commonly occurs and seam subcrops are locally
affected by burn zones. The average apparent thickness of a number of main seams for each area are shown on
Table 4.1.
Table 4.1 Main Seam Apparent Thicknesses by Area
Area
Thickness (m)
Minimum Maximum
Block
Seam
Average
PQRT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
P
Q
R
T
L
E
2.6
2.4
3.1
2.4
1.9
1.9
4.7
4.5
5.4
4.1
5.6
3.0
0.2
0.1
0.1
0.2
0.2
0.2
M
H
T
F
L
H
5.2
8.7
9.7
4.9
5.9
5.2
6.9
11.2
23.2
8.6
7.2
7.7
0.9
4.9
1.8
0.7
2.1
1.3
R
Q
EL
D
K
J
J
H
ELL
CU
F2
E
Z
H
2.9
3.4
2.2
3.2
2.1
1.8
3.2
1.6
3.2
3.0
3.9
5.5
8.9
3.5
3.3
3.7
3.7
3.4
5.4
2.1
4.3
3.1
5.5
6.6
5.4
8.2
14.4
6.1
0.6
2.1
0.2
2.8
1.1
0.6
0.8
0.1
0.5
0.3
0.6
1.9
3.6
1.4
Lati
Other Seams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata
Block A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks BC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan
Parapatan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 1-2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 3-4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 5-6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 8 (Kelay) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A detailed tabulation of seam thickness for all modelled seams for all areas is included in Appendix A.
Generalised stratigraphic columns for each area showing seam nomenclature, seam and interburden thickness are
shown on Figures 9 to 11.
A-32
Coal quality data is available for a large number of drillholes. Typically PTBC has drilled a twinned hole
close to a pilot open hole and selectively cored the intersected coal seams. Samples were typically analysed for
Total Moisture (TM), Inherent Moisture (IM), Ash Content (Ash), Total Sulphur (TS), Calorific Value (CV) and
Relative Density (RD) with a significant number of samples also analysed for Hardgrove Grindability Index
(HGI), Ash Fusion Temperatures (AFT) and Sodium content. Sample preparation and sampling was done in
accordance with the appropriate international standards by PT Geoservices and Sucofindo laboratories. Average
coal qualities for Measured and Indicated coal in all areas and sub-blocks are summarised in Table 4.2.
Table 4.2 Summary of In Situ Coal Quality by Block
Block
TM
%
(ar)
IM
%
(adb)
Ash
%
(adb)
TS
%
(adb)
CV kcal/kg
(adb)
(gar)
RD
(adb)
Na2O
%
(adb)
Seams PQRT . . . . . . . . .
Seams A to O. . . . . . . . .
24.8
23.2
18.9
18.1
4.4
5.4
1.25
2.04
5,468
5,425
5,069
5,104
1.35
1.37
6.9
2.7
Block A. . . . . . . . . . . . . .
Block BC . . . . . . . . . . . .
Block B1. . . . . . . . . . . . .
15.7
15.5
20.5
12.5
12.2
16.3
2.9
3.3
4.1
0.40
0.94
0.86
6,241
6,200
5,767
6,009
5,973
5,476
1.30
1.33
1.31
6.0
2.8
3.9
Parapatan . . . . . . . . . . . .
Blocks 1-2 . . . . . . . . . . .
Blocks 3-4 . . . . . . . . . . .
Blocks 5-6 . . . . . . . . . . .
Block 7 West . . . . . . . . .
Block 7 East. . . . . . . . . .
Block 8 (Kelay) . . . . . . .
21.3
15.9
16.8
20.5
18.8
22.5
25.8
15.2
12.2
13.2
16.7
15.1
17.5
16.6
4.2
4.0
4.3
3.5
6.7
4.3
5.9
0.69
2.24
0.80
0.46
0.90
0.47
0.40
5,831
6,177
6,033
5,691
5,642
5,529
5,390
5,412
5,921
5,781
5,434
5,403
5,199
4,801
1.31
1.33
1.32
1.30
1.34
1.32
1.35
9.4
0.8
4.7
12.0
2.8
7.2
3.5
Weighted Average . . . . . . . . . . . . . . . . . . . . . .
22.4
16.5
4.8
0.97
5,615
5,224
1.34
4.8
Area
Lati
Sambarata
Binungan
The in situ coal is typically of sub-bituminous rank, with coal quality varying across the project area. Higher
quality coal occurs within the central part of the project area (Sambarata and Binungan 1-7) with lower quality in
the outer-lying Lati and Binungan Block 8 (Kelay) blocks. TM as received (ar) varies from 15.5% in Sambarata
(Block BC) to 25.8% in Binungan (Block 8). CV gross as received (gar) varies from 6,009 kcal/kg in Sambarata
(Block A) to 4,801 kcal/kg in Binungan Block 8 (Kelay), Ash is typically low and ranges from 2.9% to 6.7% air
dried basis (adb) and TS is variable and ranges from 0.40% to 2.24% (adb). Detailed coal quality by seam for
each area and sub-block is included in Appendix B.
MMC is of the opinion that the geological database and geological models are of a high standard and that
the level of confidence of data is adequate for Coal Resource estimates to be reported in accordance with the
JORC Code.
4.2 Lati Area
The Lati area occurs within the Lati Syncline, which is a shallow dipping, elongated basinal structure with
an axis oriented approximately north-northwest, 17 km in length and 8 km across. The eastern and western limbs
of the syncline, dip towards the centre of the basin at from 5 to 15 degrees. Typical cross-sections are shown on
Figure 3. A number of relatively minor faults have been identified in mining operations, otherwise the deposit is
considered to be structurally simple.
A-33
The deposit has been subject to detailed drilling (drill line spacings at approximately 150 m) around the
southern, western and eastern limbs of the syncline with broader spaced reconnaissance drilling (1,000 m
spacing) in the north. In the central part of the basin, Seam T has been subject to detailed drilling (125 m
spacings) with a limited number of reconnaissance holes drilled to depths to intersect the lower Seams P, Q and
R. Drillhole locations are shown on Figure 6.
PTBC has identified up to 25 coal seams and sub-seams (seam splits) of which four main seams, Seams P,
Q, R and T (in ascending stratigraphic sequence) are currently being mined. The seams average 2.4 m, 2.5 m,
3.0 m and 2.4 m in thickness, respectively. Coal seams commonly exhibit burn zones near the subcrop due to
spontaneous combustion. Seam splitting is common throughout the Lati area although Seam P is more
consistently developed. The area was subject to further drilling since the previous JORC Statement and an
additional 74 holes (2,903 m) and the geological model was updated by PTBC geologists.
Within the underlying sequence of seams (Seams A to O) only seams E and L have been mined. The seams
vary in thickness but include several significant seams such as Seams E and L which both average 1.9 m in
thickness. No additional drilling has been completed in this area.
A generalised stratigraphic column is shown in Figure 9 and seam thicknesses for all modeled seams are
included in Appendix A.
The seams at Lati are generally low ash with moderately high Total Moisture, typically ranging from 21.9%
to 27.3%. Seam T generally has low sulphur content while Seams P, Q and R generally have higher sulphur in
the upper plies of each seam which is usually selectively mined, and either blended or used to produce a separate
marketable product. Seams A to O have high sulphur content, averaging 0.96% to 3.36%. Lati PQRT seams
typically have relatively high Na2O content in the coal ash (average 6.9%) with some seams exceeding 8.0%.
Coal qualities for all modeled seams are included in Appendix B.
4.3 Sambarata Area
The Sambarata area occurs in the northern part of the deposit in a more structurally complex area. Seams are
oriented approximately north-south, with a strike length of approximately 18 km. Sambarata is sub-divided into
three sub-blocks (Blocks A, BC and B1). Blocks A and BC are separated by significant faults and seams dip to
the west from 35 to 55 degrees. Block B1 lies to the east of Blocks A and BC on the northern part of a smaller
synclinal structure which plunges to the northwest area and seams dip towards the axis of the syncline from 15 to
35 degrees. Typical cross-sections are shown on Figure 4.
The deposit has been subject to detailed drilling (drill line spacings at approximately 100 m) in Block A and
over part of Blocks BC with broader spaced reconnaissance drilling (600 m spacing) in the north of Block BC.
Block B1 has drill spacing at 300 m. Drillhole locations are shown on Figure 7.
PTBC has identified up to 120 coal seams and sub-seams (seam splits) in Blocks A and BC. Coal seams
commonly exhibit burn zones near the subcrop due to spontaneous combustion. Seam splitting is common and
seams vary in thickness and distribution. Seams vary in thickness but include several significant seams including
Seams H and M in Block A which average 8.7 m and 5.2 m in thickness, respectively and Seams F and T in
Block BC which average 4.9 m and 9.7 m in thickness, respectively. A generalised stratigraphic column is shown
in Figure 10 and seam thicknesses for all modeled seams are included in Appendix A.
The seams at Blocks A and BC are generally low ash with moderate Total Moisture, typically average
ranging from 15.5% to 15.7%. Sulphur content is variable with a number of seams being greater than 2.5% which
require blending, however average sulphur content is approximately 0.40% to 0.94%. Na2O content of the coal
ash varies but is typically less than 5% but values of 10% and higher do occur. Coal qualities for all modeled
seams are included in Appendix B.
A-34
PTBC has identified up to 54 coal seams and sub-seams (seam splits) in Block B1. Coal seams commonly
exhibit burn zones near the subcrop due to spontaneous combustion. Seam splitting is common and seams vary
in thickness and distribution. Seams vary in thickness but include several significant seams including Seams H
and L which average 5.2 m and 5.9 m in thickness, respectively. A generalised stratigraphic column and seam
thicknesses for all modeled seams are included in Appendix A.
The seams at Block B1 are generally low ash with moderate Total Moisture, typically ranging from 16.5%
to 24.1%. Sulphur content is variable with a number of seams being greater than 2.5% which require blending;
however average sulphur content is approximately 0.86%. Na2O content of the coal ash varies but is typically
less than 5%. Coal qualities for all modeled seams are included in Appendix B.
4.4 Binungan Area
The Binungan area occurs to the south of Sambarata. It is sub-divided into the Parapatan Block, Blocks 1-7
and Block 8-10 (Kelay). The Kelay area is classified as part of the Binungan Block.
The Parapatan Block is to the south of Sambarata Block B1 and is a continuation of the Sambarata Block B1
synclinal structure but with relatively shallow dips towards the synclinal axis at 5 to 10 degrees. Typical crosssections are shown on Figure 5. No significant faults have been identified from drill data.
The deposit has been subject to detailed drilling (drill line spacings at approximately 200 m) Drillhole
locations are shown on Figure 8.
PTBC has identified up to 26 coal seams and sub-seams (seam splits). Coal seams commonly exhibit burn
zones near the subcrop due to spontaneous combustion. Seam splitting is common and seams vary in thickness
and distribution. Seams vary in thickness but include several significant seams including Seams Q and R which
average 3.4 m and 2.9 m in thickness, respectively. A generalised stratigraphic column is shown in Figure 11
and seam thicknesses for all modeled seams are included in Appendix A.
The seams at Parapatan are generally low ash with moderately high Total Moisture, typically ranging from
20% to 21%. Sulphur content is variable with a number of seams being greater than 2.0% which require
blending, however average sulphur content is approximately 0.7%. Na2O content of the coal ash varies and is
relatively high (average 9.4%). Coal qualities for all modeled seams are included in Appendix B.
Blocks 1-4 occur in the continuation of the Sambarata Block B1-Parapatan synclinal structure, while Blocks
5-7 form the southeastern flank of a steeper dipping, basinal structure with an axis oriented approximately eastnortheast with a strike length of approximately 20 km. PTBC has sub-divided the Binungan area into eight
sub-blocks (including a new area, Block 8 which adjoins Block 7W to the west) on the basis of the local drainage
system. Seams are variable but generally dip to the northwest and north at from 15 to 45 degrees.
PTBC has identified 133 coal seams and sub-seams (seam splits). Coal seams locally exhibit burn zones
near the subcrop due to spontaneous combustion. Seam splitting is common and seams vary in thickness and
distribution. Seams vary in thickness but include several significant seams. Seams D and EL in Blocks 1-2
average 3.2 m and 2.2 m in thickness, respectively. Seams J and K (Blocks 3-4) average 1.8 m and 2.1 m, Seams
H and J (Block 5-6) average 1.6 m and 3.2 m, Seams CU and ELL (Block 7 East) average 3.0 m and 3.2 m and
Seams E and F2 (Block 7 West) average 5.5 m and 3.9 m, and Seams Z and H (Block 8 (Kelay)) average 8.9 m
and 3.5 m.
A generalised stratigraphic column and seam thicknesses for all modeled seams are included in
Appendix A.
The seams at Binungan are generally low ash with moderate to high Total Moisture, which increases along
strike from Block 1 to Block 8 (Kelay), ranging from 15.9% to 25.8%. Sulphur content is variable by seam and
between blocks with average sulphur content of approximately 2.24% in Blocks 1-2, 0.80% in Blocks 3-4, 0.46%
A-35
in Blocks 5-6, 0.47% to 0.9% in Block 7 and 0.40% in Block 8 (Kelay). Na2O content of the coal ash varies and
in Blocks 5-6 the average is higher at 12%. Coal qualities for all modeled seams are included in Appendix B.
4.5 Geological Database and Modelling
Geological Database
The geological database used in modelling was independently reviewed and is considered appropriate and
reasonable for the purpose of estimating Coal Resources. MMC conducted a detailed review of the geological
database, including geophysical log interpretation and seam correlation, and a review of drillhole data density in
relation to the resource category.
The key outcomes from the database review are as follow:
PTBC has drilled a total of 13,569 drillholes across the project area with a total depth of more than
500,000 m, including 1,058 holes (56,756 m) in 2009,
all holes were geophysical logged,
drillholes were typically relatively shallow with average drill depth of the order of 40 m, although a
number of drillholes have been drilled to a maximum drill depth of 190 m,
drill cores were sampled on a ply-by-ply basis based on geophysical logs and physical inspection of the
cores, and
coal sample depths and thicknesses were reconciled against geophysical logs.
Geophysical logging which provides a high degree of certainty of data accuracy was conducted in all open
drillholes and a number of the twin coal quality holes. The typical suite of geophysical logs for coal
exploration including natural gamma, in situ rock density (long and short) and calliper (borehole diameter) have
been run. Data obtained includes seam depth and thickness, seam partings and seam correlations.
Overall the database is of a high standard, with the following observations:
open hole drilling supplemented by geophysical logging gives a sufficient order of accuracy for Coal
Resource estimation,
open hole and geophysical log data was supplemented by coring a number of representative twinned
holes for the main seams, and
a number of minor seams have limited or no coal quality data points and were categorised as Inferred
only.
Survey
Detailed topographic survey has been conducted over the entire study area by aerial ALDIS survey. All drill
holes have been surveyed by PTBC using Total Stations.
Geological Modelling
All data including drill logs (reconciled against geophysical logs), coal quality and drillhole survey data was
input into an electronic database. Using Mincom Stratmodel mining computer software, MMC geologists
created a 3-D grid model of the deposit with a grid size of 25 m. The model is built up using topographic,
weathering, seam roofs and floors data. Mincom software is capable of modelling seam splits and faults.
MMC conducted a review of the geological database and geological models for each area and sub-block
including the following:
review of original drill logs and geophysical logs to validate the coal seam intercepts recorded in the
computer database,
A-36
review of drillhole plans for each seam,

review of output from the Mincom Stratmodel for accuracy in relation to the available drilling data,
plotting of cross-sections across the deposit, and
review of coal quality database.
In summary, the database and models are of a high standard and the work has been undertaken by competent
professionals. There are no fatal flaws identified and data is adequate to estimate Coal Resources to JORC code
standards.
Model parameters and data files are shown on Table 4.11 below.
Table 4.3 Geological Model Parameters

Software
Mincom Minescape
Grid Spacing
25m
Qualities Modelled
TM, IM, ASH, VM, FC, TS, CV

(adb), CV(gar), RD
Lati_jorc10_pqrt
Lati_jorc_oth09_2
Parapatan_J09
Sambarata_A_upd_08
Sambarata_B_07_upd
Birang_1206_jorc_rev2
Geological Model
Bin12_J09
Bin34_J09
Pit_h4_J09
Bin7_east_jorc09
Bin7_west_jorc09
Kelay_J10
Qual_09(Lati_PQRT)
Qual_0901(Lati Others)
Qprox_prp(Parapatan)
Qprox_a(Sambarata A)
Qual_b1(Sambarata BC)
Qual_bir(Birang)
Quality Model
Qprox12(Binungan 12)
Qprox14(Binungan 34)
Qual_h4(Binungan 56)
Qual_bin7 (Binungan 7 East)
Qual_west(Binungan 7 West)
Qprox(Binungan 8/Kelay)
A-37
Coal Density
MMC converted the air dried RD (from analyses of coal cores) to in situ RD by applying the PrestonSanders (1993) formula with in situ moisture derived using the Fletcher-Sanders (2003). The in situ RD
determined by this method is approximately 3-4% lower than the as analysed RD (air dried). It is recognised that
the conversion of air dried to in situ is subject to a number of variables including the in situ pore size distribution
and total pore volume and that no attempt has been made to quantify these parameters for the Project area.
Coal qualities for all modeled seams are included in Appendix B.
4.6 Geological Confidence And Resource Categories
JORC Code Requirements
The JORC Code provides minimum standards for public reporting of Resources and Reserves to the
investment community. For coal deposits, the JORC Code is supplemented by the Australian Guidelines for
Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves (referred to as the Guidelines).
The Code and the Guidelines provide a methodology which reflects best industry practice to be followed
when estimating the quality and quantity of Coal Resources and Reserves.
A Coal Resource is defined as that portion of a coal deposit in such form and quantity that there are
reasonable prospects for economic extraction. The location, quantity, quality, geologic characteristics and
continuity of a Coal Resource are known, estimated or interpreted from specific geological evidence and
knowledge. Coal Resources are subdivided into three categories:
Measuredfor which quantity and quality can be estimated with a high degree of confidence. The level
of confidence is such that detailed mine plans can be generated, mining and beneficiation costs, and
washplant yields and quality specifications can be determined;
Indicatedfor which quantity and quality can be estimated with a reasonable degree of confidence. The
level of confidence is such that mine plans can be generated and likely product coal quality can be
determined; and
Inferredfor which quantity and quality can be estimated with a low degree of confidence. The level of
confidence is such that mine plans cannot be generated.
Resources are estimated based on information gathered from Points of Observation. Points of Observation
include surface or underground exposures, bore cores, geophysical logs, and/or drill cuttings in non-cored
boreholes. It should be noted that Points of Observation for coal quantity estimation need not necessarily be used
for coal quality estimation.
The estimate is calculated using the area, thickness and in situ density of the coal seam. The basis from
which the in situ density is derived should be clearly stated. It is important to note that in-situ density is not the
same as the density reported by the standard laboratory measurement.
The table of estimation of Resources should be accompanied by a report, and a statement by the Estimator
that the Resources comply with the JORC Code. The Estimator should state their qualifications and experience
The Points of Observation used to define the Coal Resources at PTBC are those drillholes with a reliability
type of 1 or 2, as shown in Table 4.3.
A-38
Table 4.4 Points of Observation

Point of Observation
Description
Type
Value and Use of Point of Observation
Cored and analysed intersection of seam with

wireline log, may or may not have
lithology log
Cored and analysed intersection of seam

without wireline log, may or may not have
lithology log
Non cored intersection of seam with wireline

log, may or may not have lithology log
TYPES 1 -2
TYPES 1 -3
Required for
quality
confirmation
Reliable for
structure
and
thickness
Type 3
May support
quality
Non cored intersection of seam without

wireline log, may or may not have
lithology log
Type 4
Supportive
of structure
and
thickness
The categorisation of Coal Resources of the main seams at PTBC are summarised in Table 4.4.
Table 4.5 Resource Categorisation Parameters

Simple
Sedimentation
Coal Quality
Structure
Moderate
Lati - P
Sambarata Blocks ABC
Complex
Lati - other
Sambarata Block B1
Binungan Block (1-8)
Lati
Sambarata Block B1
Binungan Blocks
Lati
Binungan Block (1-8)

Sambarata Block B1
Drill Spacing
Measured
<500m
<250m
<100m
Indicated
500-1,000m
250-500m
100-200m
Inferred
1,000-1,500m
500-1,000m
200-400m
A-39
Based on the level of complexity of the PTBC deposit, MMC sub-divided Coal Resources into categories
based on the following maximum drill spacings as shown on Table 4.5.
Table 4.6 Drill Spacings by Area

Area
Drill Spacing (m)

Measured Indicated Inferred
Block
Lati
Seams PQRT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Seams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
400
300
800
600
1,600
900
All Blocks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300
600
1,200
Parapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan 8 (Kelay). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other Blocks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300
300
300
600
600
600
1,200
1,200
900
Sambarata
Binungan
Coal Resource boundaries have been extrapolated by distances equivalent to half of the above drill spacings
(i.e. radius of influence) beyond the limits of drilling.
The above level of confidence categories have been further modified seam-by-seam on the basis of the
following factors:
For inclusion in Indicated and Inferred categories a minimum of four overlapping drillholes are required
for inclusion in the relevant category, in order to avoid bulls-eyes, or non continuous groups of data
points.
A higher standard has been applied for the delineation of Measured category with the requirement for
demonstrated seam continuity both along strike and down dip.
Areas where there is only along strike definition have been categorised as maximum Indicated even
where drill spacings fall within the above Measured limits.
Irregular shaped or isolated groupings of drillholes or areas have also been categorised as maximum
Indicated even where drill spacing falls within the above Measured limits.
The drillhole density and the resource category polygons for one of the main seams (Seam Q, Lati Area) are
shown as an example in Figure 12. A similar methodology was applied to other seams to determine resource
limits. Figures showing Coal Resource limits, drill intercepts and coal quality data for a number of representative
seams from each area are included in Appendix C.
Within the code is a Checklist of Assessment and Reporting Criteria (Table 1JORC Code). This
checklist has been used as a systematic method to undertake the review of JORC Coal Resources compliance.
A-40
A summary of key points are listed in Table 4.6

Table 4.7 JORC Code Compliance Checklist Summary Coal Resources
Section
Comment
1. Coal sampling techniques.
Coal core samples were collected by twinning of

existing open holes with geophysical logs.
2. Drillhole Logging.
A site geologist was present at all times and

preliminary core logs were derived from cuttings
and core depths. All holes were geophysically logged
and drill logs and coal sample depths subsequently
reconciled against the geophysical logs.
3. Quality of assay data and laboratory tests.
All samples were submitted to an internationally

accredited and all analyses were conducted in
accordance with appropriate international standards.
4. Location of data points.
All drillhole collars were surveyed by Total Station

and elevations compared with topographic survey
data also derived from Total Station survey. A small
number of holes were omitted from geological model
used for Coal Resource estimates due to survey
variance.
5. Data spacing and distribution.
Drillhole spacing is typically 150-500 m which is

considered adequate for classification of Coal
Resources to Measured and Indicated category with
due consideration for the variance in coal seam
thickness, coal quality and structural complexity.
6. Mineral Tenement and land tenure status.
The PT Berau Coal mining concession is held under

Coal Contract of Work , Generation 1 (No DU 424
Kaltim) . Exploitation status was granted in 1990 for a
period of 30 years and covers an area of 118,400 Ha.
7. Database integrity.
All drillholes were geophysically logged and coal

seam data entered into the geological database was
reconciled against the logs.
8. Estimation and modeling techniques.
A three dimensional computer model was created

using Mincom Minescape software. The model is a
surface model designed specifically for coal seam
modeling. Extrapolation distances for Coal Resource
estimation were based on geological continuity (seam
thickness, quality and structure). Check estimates
were undertaken.
9. Moisture and bulk density.
Coal samples were analysed for Total Moisture, Inherent

(air dried) Moisture and RD (air dried basis). Coal
Resources were reported on an in situ basis with the RD
(in situ) being determined using the Preston-Sanders
(1993) formula with the in situ Moisture used being
based on the Fletcher-Sanders (2003) formula.
10. Classification.
The classification of Coal Resource categories

(Measured, Indicated and Inferred) is based on the
opinion of the Competent Person based on drill
spacing, data collection methods and the geological
continuity.
11. Results of audits or reviews of Coal Resource

Statements.
As per findings in this review, plus internal

reconciliation and peer review.
A-41
4.7 Coal Resources

The parameters applied in the estimation of Coal Resources by MMC are as follows:
no geological losses were applied,
no minimum coal seam thickness was applied,
maximum thickness of parting included in seam thickness is 0.1 m,
Coal Resources above elevation (RL) minus 150 m were estimated. Coal Resources were excluded within
mined out boundaries and remaining coal underlying backfill waste dumps was also excluded,
Coal Resources were limited by the lease boundary, and
estimates by seam have been rounded to the nearest 50 kt for Measured, 100 kt for Indicated, and 200 kt
for Inferred.
MMC estimates the Coal Resources to total 1,413 million tonnes (Mt) to an elevation (Reduced Level, RL)
cut-off of minus 150 m. This total includes 327 Mt of Measured category, 690 Mt of Indicated with the
balance of 396 Mt as Inferred.
Coal Resources by area and sub-block are summarized on Table 4.7.
Table 4.8 Coal Resources Summary by Block

Area
Coal Resources (Mt)

Indicated Inferred
Block
Measured
Total
Seams PQRT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seams A to O. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103
33
97
89
63
71
263
193
Block A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block BC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
50
29
1
54
35
0
69
4
3
173
68
Parapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 1-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 3-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 5-6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 East. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 8 (Kelay). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
19
6
6
13
32
0
38
22
3
10
22
70
248
21
21
1
0
1
19
126
94
62
10
16
36
121
374
.....................................................
327
690
396
1,413
Lati
Sambarata
Binungan
TOTAL
(Note: Estimate has been rounded to reflect accuracy)
A-42
4.8 Previous Coal Resources

Total Coal Resource estimates through to the end of December 2009 are higher than for the previous
reporting period to the end of December 2008 with 1, 413 Mt versus 1,110 Mt. During this period a total of
approximately 14.3 Mt was mined. A comparison is provided in Table 4.9.
Table 4.9 Comparison with Previous Coal Resources

Measured
Dec-09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dec-08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
327
382
-55
Coal Resources (Mt)

Indicated Inferred
690
450
240
396
278
118
Total
1,413
1,110
303
Total Coal Resources have increased by approximately 303 Mt principally due to the following:
inclusion of 374 Mt in the new area at Binungan Block 8 (Kelay),
Binungan Block 7E reduced by 36 Mt tonnes due to planned waste disposal dumping by PTBC over the
part of the previous Resources,
Lati Seams A to O Block reduced by approximately 17 Mt also due to recent dumping disposal by PTBC
over the part of the previous Resources,
the extrapolation distances applied to some of the seams in Binungan Block 7E were reduced, resulting in
some Measured coal being reclassified as Indicated, while
other blocks were largely unchanged except for a reduction in quantities due to mining.
5. COAL RESERVE ESTIMATE
The following sections describe the process used in converting the Coal Resources into Coal Reserves. The
order generally follows Table 1Check List of Assessment and Reporting Criteria in The JORC Code. This
process includes defining viable pit limits and applying various mining recovery, metallurgical, cost, revenue and
similar factors to the Coal Resources to estimate Coal Reserves.
5.1 Mineral Resource Estimate
The Coal Resource estimate that is used as a basis for the Coal Reserve estimate is documented in this
report (see Section 4). The Competent person for the Coal Resource estimates is Mr William Park.
Coal Reserves quoted in this report are inclusive of Coal Resources.
5.2 Study Status
Strategic life of mine plans have been completed for all areas except Binungan Block 8 (Kelay). An
optimization has been completed for Binungan Block 8 (Kelay) and a practical pit developed. A high level life of
mine plan was developed for Binungan Block 8 (Kelay) to verify overburden haul assumptions used in the
optimization process.
The Competent Person for Reserves considers the proposed mine plan is technically achievable and viable.
This has been done by reviewing all the modifying factors, geotechnical parameters, current mining practices,
independently evaluating the pit shell limits and reviewing the PTBC life of mine plans.
A-43
5.3 Cut-off Parameters and Pit Limits

The depth was set to a maximum elevation of RL minus 150 m.
Through the application of mining factors (Section 5.4) the in situ geological model was converted to a
ROM coal model. An economic model was prepared for the each mining block to determine the individual
blocks break even stripping ratio. The break even strip ratio determined the point where the costs for mining and
handling the coal equaled the revenue generated by the coal.
For the Binungan Block 8 (Kelay) and Binungan Block 7 East areas the Minex Optimiser software was used
to generate a series of incremental pit shells based on a range of coal selling prices. This is a three dimensional
approach which generates a series of pit shells where each increment reflects different economic scenarios such
as changes to depth, mining cost or coal price. The pit optimisation results were examined and optimized pit
shells selected where the incremental stripping ratios were slightly lower than the strip ratio determined at a point
where the operational costs equaled the revenue generated by the coal. The selected optimized pit shells were
subject to adjustments to form a practical pit design, (Mineable Pit Shells), which formed the basis of the
subsequent reserves estimate.
For all other areas, the Mineable Pit Shells were supplied by PTBC. These pit shells were examined by
MMC and incremental strip ratios were estimated, based on a 30 m wide strip along the pit high walls. Only the
pit shells where the incremental stripping ratios at the highwall were equal to or lower than the break even
stripping ratio, were used for the Reserve estimate.
The ROM coal quantities within the Mineable Pit Shells were then overlaid with the Measured and Indicated
Resource confidence limits. Only coal within the Measured and Indicated Coal Resources were classified as Coal
Reserves. In addition to this, only the coal within the Measured Coal Resource limits, within the limits of the life of
mine plan, and where there is a high level of confidence in the Coal Reserves, is classified as Proved Reserves.
The strip ratios within the PTBC pit shells are provided in Table 5.1. Break even stripping ratios for the pits
are different due to differences in coal quality and mining costs. Key parameters used are shown in Table 5.2.
Table 5.1 PTBC Pit Shell Strip Ratio Analyses
Area
Block
Break Even
Strip Ratio
(bcm/t)
Average
Strip Ratio
(bcm/t)
Seams PQRT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seams A to O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
12.3
10.3
7.8
Block A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B East. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22.7
26.6
15.9
16
7.5
7.7
8.7
8.1
Parapatan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 1-2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 3-4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 5-6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 8 (Kelay) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL / AVERAGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.9
22.3
22.9
16.7
13.4
12.2
9.3
12.4
7.9
7.3
8.3
5.7
8
8.3
7
8.9
Lati
Sambarata
Binungan
(Note:Sambarata Block BC was split into Block B East and Block B West for estimating and evaluating break
even strip ratios and pit shells)
A-44
Table 5.2 Key ParametersPTBC Pit Design

OPT 90 (Binungan 8)
OPT 100 (Binungan7E)
Optimiser Shell Selected
Pit Design
Average Strip Ratio
Cut off ratio used for estimate
Breakeven Strip Ratio
Highwall slopes
Lowwall slopes
bcm/t ROM
bcm/t ROM
bcm/t ROM
degrees
degrees
Provided by PTBC
8.9
See Table 5.1
See Table 5.1
32-45
23-30
Through the application of mining factors (Section 5.4 below), the Mineable In Situ coal within these pit
shells was converted to ROM coal quantities which were then tested so that only Measured and Indicated Coal
Resources were classified as Open Cut Coal Reserves. The selected pit shells are shown on Figure 13.
5.4 Mining Factors
Open cut mining by mining contractors, using suitably sized truck and excavator fleets, is currently being
carried out. The mining method can be described as a multi seam, shallow to steep dip, open cut coal mine in a
combination of strip and haulback operations.
The mining factors applied to the Coal Resource model for deriving mining quantities were selected based
on actual mining practices. Loss and dilution factor guidelines are as follows:
Roof and Floor Loss: It is assumed that an average of 70mm of coal will be lost in the roof and 100mm
of coal lost from the floor of all coal seams (i.e. total loss 170mm).
Global Loss: It is assumed that 4% of mineable in situ coal will be lost. This global allowance covers
both geological and mining losses including those losses which will occur along edges; such as subcrops,
faults, wedges and ramps.
Roof and Floor Dilution: It is assumed that an average of 20mm of waste material will be mined with
the roof and floor of all coal seams. This assumes small equipment, close supervision and good mining
practices.
Minimum Mining Thickness: Coal less than 0.5 m was excluded from the estimate.
Minimum Parting Thickness: Partings less than 0.1 m were assumed to be mined with the coal.
Defaults: Dilution was assumed to have a relative density of 2.1 bcm/tonne and a specific energy of 500
kcal/kg (gar).
5.5 Metallurgical Factors
The coal is sold unwashed so no metallurgical factors have been applied.
5.6 Cost and Revenue Factors
PTBC provided a data sheet of forecast contract mining unit costs, details of current mining contracts and
actual operating costs for review. MMC reviewed these against other mining costs known to MMC for similar
operations in Indonesia and determined that they were reasonable.
In estimating the revenue for the different coal product types from the different mining blocks a benchmark
coal price of $US85 per tonne for coal of CV 6,322 kcal/kg (gar) was used. Various discount factors were then
applied. The benchmark price was adjusted on a pro rata basis using the average calorific value for each area and
A-45
mining block, the resultant price was then discounted further according to historical the factors used in the
previous JORC Resources and Reserves Report. MMC found the unit price revenue estimates, after discount, to
be reasonable and in line with prices of similar coal quality known to MMC.
From this data, using an in-house economic model, MMC estimated the cost and revenue to deliver coal to a
ship from the different mining locations and the subsequent break even strip ratios. The details were compiled in
a separate study. The following points summarise the key cost and revenue parameters used for the estimate:
All costs are in US dollars.
Royalties were set at 13.5% of revenue less marketing, barging, transhipping and allowable
administration fees have been included.
Contractor waste and coal mining costs were reviewed by MMC and used to estimate break even strip
ratios. MMC found the costs to be reasonable and in line with other contractor rates known to MMC.
A fuel price of 65 cents per litre was used for mining costs.
Allowances were made for hauling, crushing, stockpiling, barge loading, barging and ship loading which
varied for each mining area.
Based on advice from PTBC, Value Added Tax (VAT) was not applied.
5.7 Marketing and Product Specifications
A detailed market study has not been carried out by MMC, however PTBC has been operating and
subsequently marketing its coal since 1993. Due to the different product quality specifications which PTBC
needs to meet for its coal sales, PTBC needs to ensure that the Projects existing coal quality control practices,
including blending practices, are continued. In MMCs opinion, PTBC should be able to continue to market its
coals.
5.8 Other Relevant Factors
There are a number of ongoing technical matters, studies and programs, which PTBC is currently
undertaking or plans to undertake. Evaluation and subsequent reviews of the outcomes may impact on the stated
mining Reserves. These technical matters, studies and programs include:
geotechnical and hydrogeological studies,
ongoing exploration drilling and subsequent updates to the geological model, and
more detailed mine planning.
These issues may cause the pit shell and mining quantities to change in future JORC statements.
5.9 Classification
In line with JORC code standards, the Indicated Coal Resources which can be converted to Reserves are
only classified as Probable Reserves. Measured Coal Resources which can be converted to Reserves were
classified as either Proved or Probable Coal Reserves, depending on the level of detail in the mine planning
completed. Inferred Coal Resources in the mineable pit shell have been excluded from the Reserve Statement.
5.10 Audits and Reviews
Checks were done to validate the Coal Reserves estimation. These included:
reviewing resource limits for each coal seam and considering only coal within Measured and Indicated
Coal Resource boundaries,
A-46
checking pit shell volumes in a computer program other than that used to determine the reserves,
comparing estimated ROM qualities to actual 2009 ROM qualities, and
checking quantity estimates through different estimate methods.
The difference of 1,067 Mt between the 1,413 Mt Measured, Indicated plus Inferred Coal Resource and the
346 Mt Open Cut Reserves is explained by the following:
the Indicated Resource polygons extend beyond the Mineable Pit Shell,
there are some Inferred tonnes in the pit shell which cannot be counted as Coal Reserves, and
there are geological and mining losses and dilution gains in the coal reserve estimation.
Within the code is a Checklist of Assessment and Reporting Criteria (Table 1 JORC Code). This
checklist has been used as a systematic method to undertake the review of JORC compliance.
A-47
A summary of key points are listed in Table 5.3.

Table 5.3 JORC Code Compliance Checklist Summary
Section
Comment
1. Is the Reserve derived from JORC compliant

Resource Statement? Who are the competent
persons?
This JORC Reserve is derived from JORC compliant

Coal Resources Statement signed by Mr. William
Park.
2. What is the current project status?
The mine has commenced operations operating. A life

of mine plan has been completed.
3. What cut off parameters and physical limits have

been applied in estimating the Reserves?
Reasonable factors have been used for roof and floor

loss, dilution and minimum coal parting thickness as
well as diluting material properties.
4. What mining and geotechnical assumptions have

been made?
Geotechnical assumptions have been considered in

the design of the pit shell and pit depth. Coal quality
is as per the geological model combined with loss and
dilution adjustments.
5. Is there a metallurgical process used and what is

suitability to the type of operation?
The ROM coal will be crushed and sized prior to

shipment. No coal is washed.
6. How have the project capital, operating costs and

royalties been derived?
The operating costs were provided by PTBC and

verified for reasonableness against known contracted
and operating costs for mines in the vicinity of the
PTBC deposit. Capital costs were not used in
determining the breakeven SR. Royalties are as per
the prevailing regulations.
7. What is the market demand and supply of this

commodity and what are the price and volume
forecasts of the Reserves based upon?
The mine is in production and has a history of coal

sales. Revenues for the coal from the different areas
were check for reasonableness against other coal sale
revenues known to MMC
8. Any other factors that may potentially affect the

viability of the project and the status of titles and
approvals required for the project?
All mining projects operate in an environment of

geological uncertainty. MMC is not aware of any
other potential factors that could affect the operation
viability. Approvals are ongoing.
9. What is the basis for the classification of the ore

reserves and proportion of ore reserves which have
been derived from measured mineral resources?
Classification of Ore Reserves has been derived by

considering Measured and Indicated resources and the
modifying factors. Inferred resources were excluded
from the estimate.
10. Results of audits or reviews of Reserves Statements
As per findings in this review, plus internal

reconciliation and peer review.
11. Relative accuracy and confidence of the Reserves

Estimate
The Reserve calculations have been independently

checked along with the pit shell volumes. LOM plans
including dump designs and haul distances have been
completed for a majority of the Coal Reserves;
consequently there is a high level of confidence in the
estimate. The exception is Binungan Block 8 in which
mining has not commenced and only high level mine
planning completed.
A-48
5.11 Discussion of Relative Accuracy and Confidence

The mine has been producing in 2009 and MMC has reviewed the coal quality estimated for the Reserves
against the actual shipping quality results. While the quality through the pit area does vary within seams and
between seams, the results of this check did not indicate any material differences. MMC has a high level of
confidence in the reserve estimate with the exception of the Binungan Block 8 block in which mining has not
commenced.
5.12 Results
Tables 5.4, 5.5 and 5.6 show the Open Cut Coal Reserves by area, block and coal quality.
Table 5.4 Total Open Cut Coal Reserves by Area

Coal Reserves (Mt)
Proved Probable Total
Area Block
Lati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sambarata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Binungan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59
35
52
155
91
19
90
189
150
54
142
346
(Notes: Estimate has been rounded to reflect accuracy)
Table 5.5 Total Open Cut Coal Reserves by Block
Area
Coal Reserves (Mt)

Sub
Block
Lati
Seams PQRT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seams A to O. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
7
81
11
133
18
Block A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B West. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0
5
10
20
0
3
2
13
0
8
12
33
Parapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 1-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 3-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 5-6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 East. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 8 (Kelay) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
5
1
1
5
28
0
7
2
0
0
4
33
45
19
7
1
1
9
61
45
Total/Weighted Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
146
200
346
Sambarata
Binungan
(Note: Estimate has been rounded to reflect accuracy.)
A-49
Table 5.6 Open Cut Coal Reserves Quality by Area

Block
Reserves
(Mt)
TM
%
(ar)
IM
%
(adb)
Ash
%
(ar)
TS
%
(ar)
Seams PQRT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seams A to O . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133
18
24.9
23.9
19.0
19.0
5.0
4.4
1.10 5,000 5,390

1.60 5,140 5,470
Block A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B East . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B West . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block B1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0
8
12
33
14.9
13.2
21.2
20.3
11.5
10.4
16.8
16.2
3.1
3.9
2.2
3.5
0.30
0.94
0.13
0.80
6,080
6,170
5,370
5,520
6,320
6,370
5,670
5,800
Parapatan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 1-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 3-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blocks 5-6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 West. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 7 East . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 8 (Kelay) . . . . . . . . . . . . . . . . . . . . . . . . . .
19
7
1
1
9
61
45
21.8
15.7
17.6
20.1
20.3
22.4
25.1
15.4
12.3
13.7
16.7
16.4
17.4
16.4
5.2
4.7
5.7
4.3
5.1
5.4
5.9
0.54
2.16
0.40
0.50
0.40
0.50
0.40
5,260
5,850
5,580
5,380
5,330
5,120
4,820
5,690
6,090
5,840
5,610
5,590
5,450
5,370
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
346
23.1
17.4
4.9
0.80
5,130
5,510
Area
CV kcal/kg
(gar)
(adb)
Lati
Sambarata
Binungan
Note: Coal qualities reported for Coal Reserves vary from the qualities reported for Coal Resources (see
Table 4.2) due to two principal factors. Firstly, the Coal Resource qualities are based on the total Coal Resource
while Coal Reserves qualities are only for coal within the Mineable Pit Shell. Secondly, Coal Reserve qualities
have also been modified by coal losses and dilution factors.
5.13 Previous Reserve Estimates
A previous reserve statement dated 31st December 2008 estimated the total reserves at PTBC as 98 Mt
Proved and 219 Mt Probable. Total Open Cut Coal Reserves estimated in that report are summarized on
Tables 5.7.
Table 5.7 Comparison with Previous Coal Reserves
Coal Reserves (Mt)
Dec-09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dec-08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
146
98
200
219
346
317
Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
-19
29
(Note: Totals have reported in Mt and rounded to nearest million)

Coal Reserves have increased by 29 Mt and the difference in reclassification of the reserves is primarily due to:
coal mined of 14.3 Mt from January through December 2009,
changes in pit shells due to different economic parameters and breakeven strip ratios,
re-optimisation and revision of the practical pit in Binungan Block 7 East where allowances were made
for current geotechnical issues and a greater offset was designed from the pit end wall to the Kelay river,
an increase in level of detail in the life of mine plans, and
addition of Binungan Block 8 (Kelay) Reserves.
A-50
Registered Office of the Issuer
Registered Office of the Parent Guarantor

10 Anson Road
#03-05 International Plaza
Singapore 079903
Singapore

Wisma GKBI 38th Floor
Jl. Jend Sudirman No. 28
Jakarta 10210
Indonesia
Trustee, Registrar, Transfer Agent and Principal Paying Agent

HSBC Bank USA, National Association
452 Fifth Avenue
New York, New York 10018
United States
Legal Advisors
To the Issuer and the Guarantors

as to U.S. federal securities and
New York laws
Latham & Watkins
41st Floor
One Exchange Square
8 Connaught Place
Central
Hong Kong

as to Indonesian law

as to Singapore law
Assegaf Hamzah & Partners

Menara Rajawali 16th Floor
Jalan Mega Kuningan Lot #5.1
Kawasan Mega Kuningan
Jakarta 12950
Indonesia
Latham & Watkins LLP

9 Raffles Place
#42-02 Republic Plaza
Singapore 048619
Singapore
To the Initial Purchasers as to

U.S. federal securities and New York laws
To the Initial Purchasers as to Indonesian law
Davis Polk & Wardwell LLP

18th Floor, The Hong Kong Club Building
3A Chater Road
Central
Hong Kong
Hiswara Bunjamin & Tandjung

23rd Floor Gedung BRI II
Jl. Jend. Sudirman Kav. 44-46
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Indonesia
Independent Public Accountants

KAP Tjiendradjaja and Handoko Tomo
(a member firm of the Mazars Group)
Jl. Sisingamangaraja No. 26
Jakarta Selatan 12120
Indonesia
Singapore Listing Agent
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9 Raffles Place
#42-02 Republic Plaza
Singapore 048619
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IMPORTANT: You must read the following disclaimer before continuing.

The following disclaimer

Berau Capital Resources Pte. Ltd.

PT Berau Coal Energy Tbk

Sole Global Coordinator

The date of this confidential offering circular is July 26, 2010.

Bandar Seri Begawan

RELATED PARTY TRANSACTIONS . . . . . . . . . . . .

NOTICE TO NEW HAMPSHIRE RESIDENTS

CERTAIN DEFINED TERMS AND CONVENTIONS

PRESENTATION OF FINANCIAL INFORMATION

INDUSTRY AND MARKET DATA

RESOURCES AND RESERVES STATEMENTS

Assumptions Underlying Berau Coals Coal Reserve Estimates

ENFORCEABILITY OF FOREIGN JUDGMENTS

ENFORCEABILITY OF THE NOTES AND THE GUARANTEES UNDER INDONESIAN LAW

Berau Coal Energy (3)

Regulus International Pte.

12.8% Rognar Holding B.V.

Settlement with Montelena Capital Limited

Berau Capital Resources Pte. Ltd.

PT Berau Coal Energy Tbk.

US$100,000,000 aggregate principal amount of 12.5% Guaranteed

103.5% of the principal amount of the Notes plus accrued interest

Interest Payment Dates . . . . . . . . . . . . . . . .

January 8 and July 8 of each year, commencing on January 8, 2011.

The Notes will:

Ranking of the Parent Guarantee . . . . . . .

The Parent Guarantee will:

PT Armadian Tritunggal, Berau Coal, Empire Capital Resources Pte.

For more details on the Collateral, see Description of the Notes

The Notes Collateral consists of a security interest in the Notes Debt

The Common Security consists of the following:

Pursuant to various Common Security Documents, each of the

On July 20, 2010, we entered into a Cash and Accounts Management

Notes Interest Reserve Account . . . . . . . .

In addition to the amounts required to be deposited and held in the

Optional Redemption of the Notes . . . . . .

Repurchase of Notes upon a Change of

Withholding Tax; Additional

Not later than 30 days following a Change of Control Triggering

Redemption for Taxation Reasons . . . . . .

Subject to certain exceptions, the Issuer may redeem the Notes, in

Selling and Transfer Restrictions . . . . . . .

Form, Denomination and Registration. . .

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Clearstream. For a description of certain factors relating to clearance

We expect to make delivery of the Notes, against payment in

Rule 144A Global Note . . . . . . . . . . . . . . .

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Principal Paying Agent, Transfer Agent

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We have received approval-in-principle for the listing of the Notes on

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SUMMARY FINANCIAL INFORMATION AND OTHER DATA

Year Ended December 31,

Other income (charges):

Year Ended December 31,

Other income (charges)