Release: Lanna Resources: Revocation of the concession of coal mining project in Indonesia

(18 July 2008)--PT Citra Harita Mineral (CHM), a subsidiary company registered in Indonesia with Lanna Resources Public Co., Ltd. (LANNA) holding 55 percent of the paid-up capital, had entered into the Coal Mining Cooperation Agreement ("CMCA") with PT Cahaya Tiara (CT) (Formerly CV Cahaya Tiara) of Indonesia dated June 15, 2004 in order to conduct exploration and produce coals within the coal concession area covered by the KP License of CT (Coal Mining Project No. 2) in Indonesia of which CHM has the right to conduct coal production and distribution until 2014. Current coal reserve is estimated at 1.37 million tons.

On July 17, 2008, CHM received in writing from CT informing that the Supreme Court of Indonesia had decided to revoke the KP License for coal concession of CT which had granted exclusive right to CHM for exploration, development, commercial exploitation and selling of coals in the KP areas according to the CMCA agreement above. Accordingly, the dispute was between the government sector and the previous concession holder within the land area above and has nothing to do with CHM and CT. However, the matter is considered a "force majeure" which has resulted in a termination of the CMCA agreement and all related agreements and CHM must immediately stop its coal production and distribution activities within the KP License coal concession area of CT.

Nevertheless, even though the coal concession for the Coal Mining Project No. 2 has been revoked, LANNA still has investments in the other two coal mining concessions in Indonesia which can support future coal production and distribution as follows:

Coal Mining Project No. 1: Operated by PT Lanna Harita Indonesia (LHI), a subsidiary company registered in Indonesia, with LANNA holding 55 percent of the paid-up capital, having received coal mining concession (Coal Contract of Work) from the Government of Indonesia directly to produce and distribute coals for a period of 30 years until year 2031 of which its mineable coal reserve has been estimated at over 15 million tons. Current annual coal production and distribution is approximately 1.5 million tons per year.

Coal Mining Project No. 3: Operated by PT Singlurus Pratama (SGP), a subsidiary company registered in Indonesia, with LANNA indirectly holding 65 percent of the paid-up capital, having received coal mining concession (Coal Contract of Work) from the Government of Indonesia directly to produce and distribute coals for a period of 30 years starting from the commencement date of coal production and distribution. Initial assessment has indicated that the mineable coal reserve is approximately over 25 million tons. The coal production and distribution is expected to start by end of 2008 with an estimated coal production capacity for the first year (2009) at 1 million tons and will be increased to 2 million tons for the following years.

Although the volume of coal sales in 2008 will be reduced due to the halt of coal mining activities in the Coal Mining Project No. 2 above; however, the operating results of LANNA and its subsidiaries are not expected to have significant impact due to the fact that coal prices have significantly increased from year 2007.(end of release)