Press Release: KEM to explain compensation settlement

(West Kutai, 29 September 2004) ? Following the issuance of Memorandum of Understanding between compensation claimants and KEM dated Wednesday, 15 September 2004, and to respond to a number of responses and misunderstanding among community members, KEM needs to explain the following matters.

The issue that there will be compensation for loss of income (Rp 17 million) and compensation for house yard for claimants covered by Long Iram Agreement based on Memorandum of Understanding dated 15 September 2004 is incorrect. Memorandum of Understanding dated 15 September 2004 between KEM and claimants is a confirmation of KEM?s commitment to settle all valid and truthful claims based on the previous agreements.

KEM remains committed to making payments to claimants covered by Long Iram Agreement dated 4 July 2001 as soon as possible before KEM ceases its operations in February 2005. This agreement was jointly made by Pemkab Kutai Barat, Dewan Adat Kutai Barat, representative of claimants, village coordinators and KEM. Up to the third week of September 2004, KEM has made payments to claimants covered by this agreement, i.e. to 4,760 claimants or approximately 98.2% of all claimants entitled to receive payments. This means that only 87 claimants have not yet received compensation under Long Iram Agreement dated 4 July 2001.

In addition, KEM remains committed to settling compensation for loss of income of Rp 17,000,000 (seventeen million rupiah) to entitled claimants under agreement of 1 March 2003. Up to the third week of September 2004, KEM has made payments for loss of income under this agreement to 123 claimants or approximately 94.6% of all claimants entitled to received compensation for loss of income. This means that only 6 claimants have not yet received compensation for loss of income under the agreement of 1 March 2003.

Based on the agreement of 1 March 2003, 49 claimants covered by Long Iram Agreement are entitled to receive compensation for loss of income. This is because those 49 claimants have valid evidence/ receipts from KEM during the period of 1990 ? 1995 for land compensation. Up to the third week of September 2004, KEM has made payments to 47 out of those 49 claimants. This means that 2 other claimants have not received compensation due to a dispute with another party.

Communities are requested not to get provoked by incorrect information which is deliberately disseminated by irresponsible people for their own interests. Community members harmed by misleading information should immediately report to the authority (the police). Claimants, both individuals and groups, who are not satisfied with or refuse the contents of previous agreements may make legal suit to the court, instead of using violent actions, compulsion and illegal actions.(end of release)

For further information, please contact
Ali Ahmid, Manager Employee and Community Relations
Phone: +(62-542) 765 861, ext. 504
Fax: +(62-542) 761 818
Email: ali.ahmid@ptkem.co.id
Website: www.keliangold.com