Press release: PT Timah Tbk reported rp331.6 billion net income for the full year of 2000

PT Timah Tbk announced today its consolidated net income of Rp 331.6 billion for the year 2000, 4.25% higher than that of Rp 318 billion in 1999. Consequently, earning per share of Rp 659 or Rp 6.590 per GDR in 2000 was also 4.27% higher compared to Rp 632 per share or Rp 6.320 per GDR in 1999.

Gross profit in 2000 was Rp 624.3 billion, 16.8% lower than Rp751 billion in 1999, while operating profit was Rp 384.7 billion, a decrease of 24.5% from that of Rp510 billion in 1999. Lower gross profit figure in 2000 was mainly due to the increase of cost of goods sold.

In 2000, the Company restructured its marketing system by the launching of e-timah.com, a collaborative order management facility, as an addition to the Company's web: www.timah.com. With the availability of e-commerce facility, the Company has discontinued the operation of Indometal Corporation in New Jersey, United States since 31 December 2000.

The Company's investment in Indometal Corporation was made on 1 February 1968. Indometal Corporation was responsible for marketing and selling of tin metal on behalf of the Company throughout the United States and Canada. The formal legal process of the closure is underway, and sales transactions of Indometal Corporation have been transferred to Indometal (London) Limited and PT Timah Tbk since 31 December 2000.

Review of tin mining operation

Tin-in-concentrate production was 8% higher, from 37,076 tonnes in 1999 to 40,050 tonnes in 2000. Tin-in-concentrate production from offshore dredges in 2000 was 5% higher - from16, 981 tonnes in 1999 to 17,751 tonnes, while inland tin-in-concentrate production was 11% higher - from 20.095 tonnes in 1999 - to 22.300 tonnes.

Higher tin-in-concentrate production from inland mining was attributable to the Company's policy to increase the compensation of tin-in-concentrate paid to the contractors. The policy that has been in effect since May 2000 was to anticipate the illegal mining and tin smuggling activities.

Refined tin production was 9% lower - from 39,030 tonnes in 1999 to 35,550 tonnes in 2000. This was caused by higher tin-in-concentrates production at the end of the year which the smelter could not catch-up refining, resulted in increased the tin-in-concentrates stock, as well as by lower Sn content in tin-in-concentrates specially in the fourth quarter of 2000.

Tin exploration

New tin resources discovered during the year 2000 amounted to 32,163 tonnes, consisted of 7,005 tonnes of inland tin resources with an average grade of 0.38 kg Sn per cubic meter, and 25,159 tonnes of offshore tin resources with an average grade of 0.38 kg Sn cubic meter. The new discoveries were 6% lower than that in 1999.

Lower inland new discovery was due to decreasing and scattered availability of tin resources in sporadic area, as well as cases of land use conflict in some of the inland exploration permit areas.

Offshore exploration activities during 2000 were directed to ascertain the discovery of high grade resources in Kundur Sea, and North and East Bangka Sea.

At the end of 2000, measured tin resources were 589,319 tonnes Sn, which consist of 235,920 tonnes inland tin resources and 353,399 tonnes offshore tin resources. Of those resources, proven and probable reserves were 382,384 tonnes Sn, which consist of 153,561 tonnes inland tin reserves and 228,822 tonnes offshore tin reserve.

In September 2000, the Company retained the LPM-ITB (the Intitute for Community Services of Bandung Institute of Technology) to carry out technical appraisal of PT Tambang Timah operations which comprised geological conditions, resources and reserves, as well as offshore and inland mining operations.

Verification of tin resources and proven tin reserves of PT Tambang Timah by the LPM-ITB provided the following conclusions that:

-There was no significant difference (less than 10%) of measured resources and proven reserves of PT Tambang Timah between that were computed by the LPM-ITB and that were provided by PT Tambang Timah.

-The total measured resources estimated by PT Tambang Timah is 591,527.05 tonnes of Sn, which consist of: (a) 486,527.05 ton Sn measured resources completed up to 31 December 1999, and (b) 105,000 tonnes of Sn estimated measured resources from the exploration program for the period of 2001-2005.

-The total proven reserves of PT Tambang Timah is 279,798.86 tonnes of Sn, which consist of: a) 227,298.86 tonnes of Sn proven reserves computed as of 31 December 1999, and b) 52,500 tonnes of Sn estimated proven reserves from the exploration program for the period of 2001-2005.

-The probable reserves of 311,728.19 tonnes of Sn - need further considerations. With the above resource and reserve and considering the total production will be gradually decreasing, the tin mining activities will continue to 2016 for the offshore and 2004 for the inland tin mining.

Review of engineering services

The business of PT Timah Industri as an engineering service profit center of the Company, which consist of general, constructions, electrical machinery, and foundry workshops, oxygen plant, sea transportation fleet, dockyard, electrical generating power, telecommunication systems, as well as procurement and warehousing facilities, has become stronger.

During 2000, PT Timah Industri had supported offshore and inland mining operations, including implementation of automation and control of two dredges (Kebiang dan Kundur-1 dredges) and one cutter suction dredge, reconditioning of five dredges and reconstruction of Singkep-1 dredge. PT Timah Industri has also built a cutter suction dredge with capacity 1000 meter cubic per hour, which was 96% completed by end of 2000 and now is being completed. In addition, PT Timah Industri has started to modify the function of Klanci dredge into a stripping dredge since 31 October 2000.

Meanwhile the two projects of building palm-oil refinery plants which started in 1999 were still in progress. Both projects, one in Belitung with contract amount of Rp23.13 billion and US$1.38 million that was 99% completed, and one Bangka with contract amount Rp25 billion and US$1.49 million that was 74% completed, are scheduled to be fully completed in March 2001.

Financial performance

Consolidated sales revenue of PT Timah Tbk in 2000 was 3.4% lower than that in 1999 to Rp 1,637 billion. Sales of tin metal remained the largest contributor, i.e. 96% or Rp 1,568 billion, 5.8% lower compared to that in 1999. Contribution of engineering services group was 4.2% or Rp 69.2 billion was an increase of 128% compared to that of the 1999.

Sales volume of refined tins in 2000 was 34,106 metric tonnes, 16% lower or 6,454 metric tonnes than 40,560 metric tonnes in 1999. However, the tin price received by the Company was US$5,520 per metric tonnes, 1.8% higher than the realized average price in 1999, which was US$5.422 per metric tonnes. During the 2000, tin price fluctuated between the low of US$5,111 per metric tonnes and the high of US$6,404 per metric tonnes, while the average tin price in the international market in 2000 was US$5,544. In general, the tin prices movement in international market were tend to be weakening.

The strengthening of US Dollar against Rupiah in 2000 has highly contributed to the Company's profitability. Average realized exchange rate of the Company's US Dollar revenue in Rupiah in 2000 was 10% higher compared to that of the 1999, from an average of Rp 7,569 per US Dollar in 1999 to Rp 8,327 per US Dollar in 2000.

Cost of goods sold were 7,25% higher - from Rp944 billion in 1999 - to Rp1,012 billion in 2000 due to higher tin production expenses. Three factors have contributed to this condition. First, the tin-in-concentrates compensation paid by Company to contractors were 93% higher - from Rp290 billion in 1999 - to Rp560 billion in 2000. Second, depreciation expenses were 28% higher - from Rp117 billion in 1999 - to Rp150.12 billion in 2000. Third, royalty expense was 69% higher - from Rp23 billion in 1999 - to Rp39 billion in 2000. Based on Government Regulation No. 13 of 2000, effective from 23 February 2000, the royalty has changed from US$59 per tonnes to 3% of refined tin sales.

Diversification

The Company's decision in May 1999 to suspend non-tin exploration activity of PT Kutaraja Tembaga Raya, in Aceh, and PT Timah Investasi Mineral, in Kalimantan, was continued due to security issues that remained in those area.

By end of 2000, PT Timah Investasi Mineral retained six Exploration Permits (KP's) for gold exploration covering a total area of 51,992 hectares and one KP for coal exploration covering area of 53,920 hectares. The KP for gold exploration were located in Aceh (3 KP), West Kalimantan (2 KP), and 1 KP in East Java. While KP for

coal exploration is located in East Kalimantan.

The Board of Commissioners has recommended to the Management to redefine its strategy into two groups of factors, i.e. reserve efficiency factor and organization factor to merge the shipyard function of PT Dok Air Kantung and the Workshop, and to refunctionalise PT Timah Eksplomin and PT Timah Investasi Mineral.

The following is the performance summary, consolidated income statement, balance sheet, and cash flow statement of PT Timah Tbk and its subsidiaries, audited, for the period ended 31 December 2000.

Contact: Prasetyo B. Saksono, Corporate Secretary, Tel: +62 21 391 5814 / 310 1185 ext. 6111; or Ria W. Pawan, Investor Relations Officer Tel: +62 21 310 1185 ext. 6170, Fax: +62 21 392 0056, http://www.timah.com. (*)