Kangaroo updates Indonesian coal projects

Operations
Production at MCM remains suspended due to coal markets and pending the results of ongoing drilling targeted at identifying additional mineable coal resources and reserves.

All crushed product coal is located in stockpiles at the Long Hubung port area on the Mahakam River waiting resumption of barging.

A Barging contractor has been on standby with self-unloading vessels, however low river water levels have continued to prevent the ba rging of any coal from site during Q2 of 2014.

Remaining coal product stockpiles of around 67,308 tonnes will be barged to BCT and sold as soon as river levels normalise and allow barging to recommence.

Bedding coal at the port currently totaling 4,199 tonnes, will be also be barged to BCT and sold subject to quality and markets.

Site manpower and resultant overheads have been reduced to the minimum required to cover care & maintenance, barge loading and exploration activity. Further reductions in manpower will occur once barging of remaining coal is complete.

Exploration
Geological mapping of MBE along with additional survey work has been ongoing throughout Q2.

Drilling continued in MCM to complete the remaining 24 holes planned in MCM ?middle? block. A total of 24 boreholes were drilled for an aggregate total of 897.6m linear meters drilling.

Geological models and resources calculations for MCM are currently being reassessed and updated information will be released following review by external consultants.

Limited drilling in MEL Western Area has generated insufficient data to prepare a new geological model. Drilling was suspended in Q2 pending securing additional forestry permits to enable a more substantial exploration program to be commenced over the full MEL concession area.

Forestry & Exploration Permits
A renewal application for the Forestry permit for the MCM mining areas has already been submitted and is being processed by the Ministry of Forestry.

During Q2, additional applications were submitted to the Ministry of Forestry for permissions to explore the central areas of MEL and MBE, currently not covered under existing forestry permits.

Applications were also submitted in Q2, to the Regional Government for extension of time for the exploration permits for both MEL and MBE to reflect potential delays in obtaining the additional forestry permits.

Access to additional areas
Work is ongoing on upgrade of logging tracks and repair of temporary bridges to establish access to new exploration areas in MEL and also MBE. Road access to BKL concession area has yet to be established.

PAKAR COAL PROJECT?100% (TA, TJ, DE, OM, SA, CA, BS, AU & SK)

Title Transfer & Licensing
The Company holds equity in 5 concessions (TJ, DE, OM, SA & SK) the 4 remaining projects (TA, AU, BS and CA) are still in the process of legal hand over between BAYAN and the Company. The Company continues to monitor the situation closely and is reviewing divestment options in more detail with a view to maximising shareholder value.

Work is ongoing towards completing the various legal processes of updating and renewing mining exploration licenses and permits to ensure ongoing compliance with Indonesian laws and regulations.

In Q2 the Regional Government granted extensions for 5 of the PAKAR exploration licenses. New exploration license renewals have been issued for TA, TJ, DE, OM and SA, and the Company has been advised that the remaining 4 licenses are being processed and will follow.

These 5 renewals now enable the BAYAN legal team to make application for Clean & Clear status and also prepare additional applications for forestry usage permits to enable access for further exploration and drilling.

GRAHA PANCA KARSA COAL PROJECT (GPK) ? 84.82%
The Company is required to secure the necessary forestry usage permits which will enable additional confirmation exploration to be carried out prior to the selection of a mining contractor and award of a mining contract.

This permit has not yet been released by the authorities.

In-principle approval has already been granted, however on-site activity cannot be commenced until the formal permit documentation has been issued. (end of release)