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FOCUS mandiri er aa PEE ee OL) Uidics Tatoo Tunis: aod DR: ENERGY ‘ri Ptoyo,cra Integrated coal producer Geographical proximity between its mines, strong management team and snced shareholders are key drivers for a robust profitability and stable ‘operating performance for Harum Energy. Volume growth 2009-2012F CAGR of 34.4% gives revenue CAGR of 17.0%, and net income CAGR of 36.9%. Upside potentials are provided from new business expansion funded by its strong financial position as capex is limited, Efficient and stable mining operations as a result of favorable geographic locations and integrated coal process. The favorable geographic locations of the Company's mines, which are close to the coastline, allow the Company to reduce haulage and transportation costs. The total processing time from mine to port is less than 2 hours, The Company's effective control of the coal supply chain from mine to transportation to customers, have increased the Company's ability to better control costs, reduce working capital needs and increase its flexibility and reliability in coal production, sales and delivery Attractive and visible growth prospects with substantial proven and probable reserves and resources. Supported by high level of reserves and resources, the company plans to ramp-up coal production from 5.8Mt to 7-4Mt in 2010, 10.5Mt in 2011, and 145Mt in 2012, These will be done with minimum infrastructure upgrade and capex spending due to mine proximity within each other. Strong management team with experienced and knowledgeable founding shareholders. The Company's founding shareholder, the Barki Family, is regarded as a pioneer in the coal mining industry in Indonesia with proven experience in developing greenfield mining opportunities into successfully producing mines The Company's senior management draws on more than 150 years of accumulated technical, operational and marketing experience in the coal industry. The Tanito Group was the recipient of one of the first CCOWs in 1987 and in addition to the Company, the Tanito Group has developed and operated a number of coal mines inthe Kutal Basin for more than 20 years, Valuations. We valued the company using DCF and comparative valuations such as PER and EV/EBITDA for 10F and 11F resulted in equity value range between Rp14,391bn to Rp18,596bn. Underlying risks. Material risks in our view mainly related to change in government regulatory which will expose the company to risk of business continuance. Other risks included but not limited to price fluctuations in thermal coal, diesel fuel price fluctuations, regional and country risks. mandiri sekuntas, Harum Energy Tbk | 23 August 2010 Along history in coal production Harum Energy (HE) was established on October 12, 1995 as PT Asia Antrasit, which then changed its name to PT Harum Energy in November 2007. HE operates two coal mines, Mahakam Sumber Jaya (MSJ) and Santan Batubara (SB) with a third coal mine, Tambang Batubara Harum (TBH) undergoing preparation for exploitation. HE, through subscription of LLJ rights offering in November 2009 and acquisition of additional shares in June 2010, owned 99.1% of Layar Lintas Jaya (LLJ), a company with barging and transshipment assets which owns and operates 17 tugboats ‘and 23 barges and in a process of having additional 7 tugboats and 7 barges, LL through 35.0% interest in Lotus Coalindo Marine (LCM) also has four floating cranes. HE is currently wholly-owned indirectly by the Barki Family through PT Karunia Bara Perkasa and PT Bara Sejahtera Abadi. HE’s historical consolidated financials statements shown in this report have been restated to include LLJ, consolidated using the pooling of interest method as if the acquisition had taken place on January 1, 2007, as required by the Indonesian GAAP, Each of MSJ and SB operate under a third generation CCOW with a 30-year term from the date of commencement of production at the mine, with the contracts expiring in 2034 and 2038, respectively. TBH holds a Mining Business License for Exploration for the construction of a processing facility granted by the Regent of Kutai Timur. TBH's license is valid for the period of one year, commencing on March 10, 2010. Beforfe its productionTBH will apply for a production operating Mining Business License which will be valid for up to 20 years, subject to two 10 year extension periods. (On November 27, 2009, HE, through its subsidiary company Harum Energy Australia Limited, owned 6.9% shares of. Australian mining company Cockatoo Coal Ltd ("Cockatoo"). Cockatoo produces and exports PCI metallurgical and ‘thermal coal from the Baralaba mine in the Bowen Basin, Queensland, Australia, which in 2009 produced more than 520,000 tonnes of coal. In addition to the Baralaba mine, Cockatoo's key assets as of December 31, 2009 included the Woot coal project, @ proposed 3.0 to 4.0Mt per annum thermal coal project, in the Surat Basin, Queensland, and a Portfolio of coal exploration rights in the Bowen and Surat Basins, Queensland. Cockatoo's Surat Basin exploration portfolio encompasses more than 3,800 square kilometers of tenements with 828Mt of JORC resources already delineated. EXHIBIT 5. BRIEF DETAILS ON THE MINING SUBSIDIARIES HISTORY ccownvr txplraton Fensbty Construction Commerc Concession ate cqstion Phase” Stadyhase Phase Production September ws December 29, August 16 August 28, November 23, MH 28 2004 Foo an so Sooo om ogee aonb 9 me sanway 1 2o08 28 sptanber 9, September 8, Sept 9, September 8 os Feorany 19, SONY, gpa" 2008" ul 2008" antl 2009 url 1998 acaited, bY September’ 8, 8 September September "8, September 9 Tanto Grou gs te me 08) sunny 5 December 17, 2000” ni me - 2007 ‘March 10, - mm Source: Company mandin Harum Energy Tbk | 23 August 2010 sekuritas EXHIBIT 6. COMPANY STRUCTURE Pr Karuna PT ara Sejahtera Bara Perkasa ‘Abad 99.9% 01% PTHarum Energy "Tok. Pecusahaan | Daerah Bara Kalin PrSinarndobatu Foi Selhtera Perdana F 2000 F ooas soow Lawrence Bar 100% 7 F Tantra Pr santan Prayer || Prapens um Energy] | Harum Ee PT Moka . copa tinted} | Austra Sumberoya | |) Batubara ‘atara asaya [rata Ocean usr || Horm eT) se) Tuy [tine Tox cA oom | Gosling CoalMine coatMine 250% 50% Priows coctat00 Cos Frou = ‘Marine com coaiMine Logistic Company Source: Company ACAGR production growth of 34.9% (2007-2012F) In the year 2007-2009, HE registered a revenue CAGR growth of 92.99%. The Company's coal production increased from 2.8Mt, to 3.0Mt and to 5.8Mt, inclusive of SB's production, in the years ended December 31, 2007, 2008 and 2009, a8 a result of increased production at MSJ and the commencement of coal production at $8. Coal production for the first 4 months of 2010 was 1.6Mt and 0.8Mt for each of MSJ and SB, respectively. The Company intends to increase its oal production, inclusive of SB's production, to approximately 10.5Mt in the year ending December 31, 2011 and 14.5Mt by the end of 2012. The boost in production will come through mine development activities in its existing contract areas at MSJ and SB and the commencement of mining operations at TBH. To balance the mining capacity expansion, HE are developing its coal logistics supply chain and processing capacity. The Company has the infrastructure in place to process approximately 15.0Mt of coal per year, which is sufficient to accommodate the current production expansion plan of 14.5Mt in 2012.Through acquisition of LLJ, HE will have more control to ensure effective, timely and reliable transshipment of the coal from the Company's port facilities to its customers’ loading vessels. aoe mandint sekuritas Harum Energy Tbk | 23 August 2010 Robust balance sheet and strong profitability EXHIBIT 26, HARUM ENERGY FINANCIAL & OPERATIONAL HIGHLIGHTS Rpbn 2008A___2009A 102010 __2010F Coal production ($8 equity account) (Mt) 30 52 14 63 ‘Average selling price (USS/t) 65. na 65a ne FOB vessel cash cost per tonne (USS) a7 357, 385 368 Weighted average strip ratio 126 Ba 127 129 Revenues 2592 4,603 ss 3448 Gross Profit 667 1,664 261,358 Income from operations 323222 164 940 EBITDA 366 «1,350 180 351 Income before tax 1974213, 191 1,040 Taxexpense (64 G00) G5) (235) Netincome 120 767 134 805 Gross Margin (%) 257 362 25 394 EBITDA Margin (%) 108 238 252 m7 ‘Operating Margin (9%) a 266 183 273 [Net Profit Margin (%) 46 167, 150 233 Source: Company, Mandi Sekurtas estimates EXHIBIT 25. OPERATIONAL DATA BY MINE FOR THE 3 MONTHS ENDED MARCH 31, 2010 Mss Production volume (Mt) 1 Sales volume (Mt) 1A Coal sales revenie (USS mn) 942 Average selling price per tonne (USS) 65.1 FOB vessel cash cost per tonne (USS) 385 Stripping ratio 127 Source: Company 5B 06 o7 a8 663 354 76 Strong net income performance with growth of 419.7% CAGR over 2007-2009 period ‘The consolidated financial statements in 2007, 2008 and 2009 are reclassified to give retrospective effect to the Company's acquisition of LLJ using the pooling of interests method. In the application of the pooling of interests method, the 2007, 2008 and 2009 reclassified consolidated financial statements were restated to reflect the acquisition asf the subsidiary was acquired by the Company as of January 1, 2007. Dual factor of rising volume sales and higher unit price resulted in revenue grew 91.6% CAGR in 2007-2009 period, and operating income up significantly by 234.0% CAGR. The increase in export sales in the year ended December 31, 2008 was mainly due to increased sales to China and India, while the decrease in local sales was mainly due to a decrease in related party sales to Tanito Harum. The company used coal from its sister companies for blending and inventory maintenance. mandir Harum Energy Tbk | 23 August 2010 sekuritas EXHIBIT 26. REVENUE BREAKDOWN 2007 2008 2009 102010 Rpbn % ~Rpbn —% +=Rpbn -% Apbn—% Revenues! 1.253 100-2592 100-4603.» 100S 895100 Export sales oor 81848 73975 Domestic sales 610527406 9 1082 Other revenues 1 o 16s 1 85 2 3% 4 Production volume 28 30 4s 1 Sales volume 38 4a 60 14 Notes (1) Excluding revenues, production volume, sales volume and average sales price of SB. 2) The coal sold in excess of production volumes is purchased and blended with coal produced by the Company. Source: Company A substantial portion of sales volume for 192010 was delivered to fulfil long term sales contract obligations which ‘were priced in 2009 when coal prices were lower than current market prices. Production volume in the 3M10 was affected by unfavorable weather conditions. MSJ produced 1.1Mt of coal in the first quarter of 2010 and as of March 31, 2010 had committed sales of 4.4 Mt for the remaining nine months of 2010. $8 produced 0.6Mt of coal in the first uarter of 2010, selling the majority of its coal production in the spot market. As of March 31, 2010, $8 had no ‘committed sales contracts of longer than one year. According to the company stripping ratio at MSJ of 12.7 in 12010 ‘was slightly higher than budgeted due to commencement of mining activities in Block E. dint” reais Harum Energy Tb. | 23 August 2010 [EXHIBIT 27. BALANCE SHEET HIGHLIGHTS, Rpbn 2007A___—-2008A_——«2009A 102010 Asset Cash and Cash Equivalent 7 183 sar 485 Trade Receivables - Related Parties 80 20 1s or Trade Receivables Third Parties a7 89 163 102 Inventories 165 131 189 24 Total Current Asset 398 483 11099 07 Total Non-current asset 583 wt 1190 1387 Total Asset 981 1,603 2,289 2.254 Liabilities and Equity Current Liabilities BankLoans 279 259 282 23 ‘Trade payables - Related Party a9 30 124 151 Trade payables Third Party 164 75 381 24 Finance Lease Obligation 6 10 8 5 Bank Loans a a 37 Total Current Liabilities 661 990 1,343, Non-current Liabilities Finance Lease Obligation 4 8 ? ? Bank Loans 137 286 ” 156 ‘otal Non-current Liabilities 218 379 187 m Minority interest in net asset of subsidiaries 19 31 133 150 Total Equity 83 208 626 757 ‘Total Equity and Liabilities 981 1,603 2,289 2,254 Net Gear (6) 4964 2370 (30) os) DER (%) 5866 3122 807 oa ROAA (%) NA 93 394 ne ROAE (8) NA 39 185.1 388 Source: Company Net cash position as of March 31, 2010 ‘As of March 31, 2010, the company is in a net cash position of Rp6bn. On March 30, 2010 the Company obtained a 'US$200.0mn syndicated revolving credit facility arranged by DBS Bank Ltd and PT Bank DBS indonesia (the “Credit Facility’). The Credit Facility bears a floating interest rate of SIBOR plus a margin ranging from 3.75% to 4.00% per annum, The Company is required under the Credit Facility to maintain a net debt to adjusted EBITDA ratio (calculated (on @ consolidated basis) not in excess of 2.50 to 1.00, and a free cash flow to debt service ratio (calculated on a consolidated basis) of higher than 1.25 to 1.00, As of June 3, 2010, the Company had drawn down USS80mn under the Credit Facility mandir Harum Energy Tbk | 23 August 2010 sekuntas, HE to grow volume by 34.4% CAGR in 2009-2012F period Volume growth will be achieved through ramp-up productions in MSJ and $8, added with commencement of production in TBH starting 2011. The majority of its production is bituminous coal, making it suitable for electricity generation in the established coal markets of Japan, South Korea and Taiwan, Company has been able to expand its ‘customer base to other non-traditional markets and in 102010 the Company supplied 0.25Mt of coal to China. It has, also continued its sales into India, As of March 31, 2010, the Company (including SB) had contracts with 23 customers located in six countries: South Korea, Taiwan, Japan, India, China and Indonesi [EXHIBIT 28. HE FORECASTED VOLUME SALES Year me 09 10F ue 12F Msi 45 52 75 90 TH 05 1s 8 (equity volume) 06 1 13 20 Total 52 63 93 125 Mine life (yrs) - beginning period (Msi and TBH 167 "3 76 8 73 sa 24 Source: Company, Mandir Sekurias estimates ‘As of December 31, 2009, HE's mines have estimated proven and probable reserves and estimated JORC resources at MSJ of 95.3Mt and 3394Mt, respectively, and at SB of 16.0Mt and 108.6Mt, respectively. In addition, through incremental drilling, the Company believes that it will be able to convert a portion of the resources of MSI's and SB's mines into mineable and marketable reserves that will be a factor in maintaining the current mine life of the mines despite the increased production plan anticipated, particularly so for SB, where a large portion of the contract area remains unexplored Prices remain strong in future years on robust growth from China and India For crude oil price, we are using Bloomberg consensus and for benchmark coal price we are using estimates made by ‘AME, consultant hired by the Company. Company coal selling prices are forecasted using these benchmarks and applying a discount for its calorific value. For 2012-2015, we are using flat price estimates based on 2011 forecasts. ‘AME are optimistic about growth in China's thermal coal imports in the future as growth in domestic demand is likely to outpace local production, This trend is also influenced by the location of major Chinese thermal coal importers in the country’s southeast (e.g. Guangdong and Zhejiang province), away from the northern coak-producing areas. With local freight costs accounting for upto 50% of the delivered price of Chinese coal, thermal coal imports are likely to be ost-competitive with local production. Furthermore, India's coal-fired power station construction plans, highlighted by nine 4GW ultra-mega power plants, as well as numerous smaller plants, suggests that additional thermal coal imports may be needed to supplement local production in meeting domestic thermal coal consumption. According to forecasts made in October 2009 by Coal India Limited and the Indian Government's Planning Commission, power companies are likely to complete between 44 and 65 GW of electrical generation capacity by 2012, even partial completion ofthe Five Year Plan targets will lead to about 200Mtpa of additional coal demand, Indonesia's planned ‘Yast track program’ of 10GW of coal-fired power generation capacity is also expected to demand an additional 30Mtpa of thermal coal mandi sekuritas Harum Energy Tbk | 23 August 2010 EXHIBIT 29. KEY OPERATIONAL ASSUMPTIONS 2009 2010F_——-2011F _—-2012F Average exchange rate 10356 9,112,898 9000 Year-end exchange rate 9400 8927 90839000 Benchmark coal price 700 98010501050 Coal selling prices (USS/t)1) 24 = 2B 780 780 FOB cash cost (USS/t) (2) 337 368374 370 Crude oll price (USS/bb)) 621 800875 ars Diesel price (USS/tr) 046 065 072 {Coal prices are for iS), TBH (2) FOB cash costs are for MS), TBH Source: Bloomberg, AME, Company, Mandi Sekuritas estimates Capital expenditures are minimal ‘The Company has the infrastructure in place to process approximately 15.0Mt of coal per year, which is sufficient to accommodate the current production expansion plan of 145Mt in 2012. The company expected total capital ‘expenditure of US$80-90mn to be incurred in 2010-2012, of which US545.2mn related to 2010. Main expansions ‘capex needs are for: (1) haul road construction to TBH and $8, (2) port constructions at TBH, (3) purchase of 10 sets of ‘tug boats and barges by LLI, of which 3 sets have been received. Due to its close proximity with MSJ, capex are ‘minimal in SB. The capex is needed to provide the company with annual production capacity of 20Mt. This capex is light considering a rule of thumb of capex of US$23-25mn per Mt additional capacity. We expect 2009-2012F revenue CAGR of 17.0%, and net income CGAR of 36.9% with no financial leverage We do not assume debt in the company balance sheet, We estimated that company will be able to self funding its capex. Using 2010F EBITDA of Rp9i8bn (USS100mn), company is able to self fund the whole 2010-2012 capex. With no financial leverage, we are estimating a net income CAGR of 36.9%, The strong financial postion the Company has provided them with ample funds for any potential acquisitions or other business expansions in the future. Hence upside to our earmings estimates can be expected Harum Energy Tbk | 23 August 2010 mandi sekuntas, Appendix | - Financial tables ‘EXHIBIT 30, PROFIT AND LOSS STATEMENT ‘YEDec (Rp bn) 2008A —2009A2010F_«2011F— 2012 Revenues 2592 4,603 3,448 5,605 7,368 Cost of sales and direct costs 1925 2938 20903333407, Gross Profit, 667 1,664 135822723041 ‘Operating expenses Selling 258 341 an 485637 General and administrative 86 101 107 na 2 Total 345 42 a8 597 759 Operating Profit 323122206752 EBITDA 280 1,095 1,029 1,800 2,431 (Other Income (Charges) - Net «3 as) 1 23 33 Equity in net earnings of associates 6 6 99138 Pretaxincome 19712131040 1,838,547 Taxexpense (54) G00) 35) a25)—579) Income before minority interest a3 313 8514131968, Minority Interest (146) ° o o Netincome 1200-767 80S 1,413,968 Source: Company, Mandir Sekuritas estimates a EXHIBIT 31, BALANCE SHEET YE Dec Rp bn) 2008A 20098 -2010F—2011F ~—2012F (Cash and Cash Equivalent 1535871426277 3,.9033 Accounts Receivable 3 (Ost 309422 sia Inventories 131 19 379s Other current assets 7s 3 33 3 33 Fixed Assetsinet of depreciation 07622 ost ae ,126 Others 514 ses 527550573 Total assets 1603 2.289 3,483 4823 6,463, ‘Accounts payable 5345064706750 ST borrowings 3a 327 o ° ° Others us 510 515100 Long-term loan 294 178 ° o ° Long term liabilities 85 9 rs 15 18 Minority interest 31 133 133 133 13 Total liabilities 1603 2.289 3,483 4,823 6,463 Shareholders’ funds 204626 -2,358 3,489 4,963 Source: Company, Mandir Sekuritas estimates are mandir sekuritas, Harum Energy Tbk | 23 August 2010 EXHIBIT 32. CASH FLOW YEDec (Rp bn) Cash flows from operating activities Netincome ‘Trade receivables Related Parties ‘Trade receivables Third Parties ‘ther receivables Inventories thers Net cash provided by operating activities Cash flows from investing activities ‘Acquistion of adaltional shares in subsidiaries Acquistion of property and equipment Depreciations Others Net cash used in investing activities Cash flows from financing activities Dividends Payable Proceeds from bankloan Payment of finance lease obligation Payment of dividends interim Subscribed and paid-up Others "Net cash provided by (used in financing activities Beginning cash Net cashflow Ending cash Source: Company, Mandir Sekurtas estimates 20088 120 cy (42) 03) 34 6 22 @ (348) 31 58 (267) 153 20098 767 (105) 3) " (58) 437 979 (033) a9) 34 (109) (256) 19 (128) 8) 75) (282) (289) 153 433 587 2010F 805 (is) 51 36) 802 (600) n a2 (88) (490) a3) (269) 1196 42s. 587 840 1426 2001F 1413 o a3) o (92) 205 1424 (180) 108 23) (04) 1426 1,051 2877 2012F 1,968 (02) (6s) 164 1974 (135) 13 3) 27) 2477 1456 3.933 are mandir Harum Energy Tbk | 23 August 2010 sekumnas EXHIBIT 33. KEY RATIOS. YeDec 2008A —-2009A2010F_-2011F2012F Growth *6Y0¥) Sales 106877651) EBITDA 2789290861) 750350 Net Profit 32385374 49° 75S 393 Profitability (%) Gross margin 27 62394 SS Operating margin 24 663299 Ht. Net margin 46 67352 EBITDA margin ws 8238 Bw ROAA 93 39479340 ROAE 9 1851 5408366 Leverage (%) Net gearing 2370 (130) 05) ) 792) Source: Company, Mandir Sekurtas estimates