Release: Straits Asia: Jembayan infrastructure update

(Singapore: 16 October 2009)-- Further to the announcement made on 8 October 2009, Straits Asia Resources Limited (Straits Asia, SGX:SAR) hereby provides the following update in relation to the recent conveyor failure at the Group?s Jembayan Operation. The update follows from an on-site review and assessment of the situation by a team comprising the Group?s in-house managers and external consultants led by Straits Asia?s Chief Executive Officer, Richard Ong.

First and foremost, Straits Asia is pleased to confirm that the prompt action of site management in response to this incident meant that all staff were removed from any harm or risk before the actual failure took place and that no injuries occurred.

Before the failure there were 2 similar capacity load-out facilities at the site. The original loadout facility, Line 1, which has a nominal capacity of 5.5Mtpa, has not been affected by the incident.

Following a temporary shutdown to allow for necessary inspections and assessments for safety purposes and structural and ground stability, Line 1 resumed full operation on 14 October 2009. The structural and ground stability assessment of Line 1 was confirmed by an external consultant.

The conveyor structure and jetty of Line 2 cannot be repaired and will be dismantled. The two crushing units that were feeding Line 2 are still fully functional and can continue to supply product coal for alternative loading arrangements.

For the remainder of 2009, Straits Asia expects to be able to achieve its remaining delivery commitments through a combination of continuing to use Line 1 and by using other, smallerscale, temporary loading facilities.

For 2010, management will continue to review other methods for increasing deliveries to keep pace with production increases planned for the mine.

Looking further ahead, the management and consultant team has already started work on the longer-term project to replace the loading capacity of Line 2. One of the key goals of this project is to sequence the availability of a long-term loading facility with the ongoing growth potential of the Jembayan mine, such that existing sales and production targets are achieved.

At the same time the project team will also be working on ways to improve the total infrastructure capacity of Jembayan and deliver further loading efficiencies and cost savings for the operation.

Richard Ong added that, ?The concept for the long-term is to design a new load out facility with a nominal capacity of at least 8.5Mtpa. A dedicated project team has already been established to manage the development of this concept and early indications are that construction of such a facility could be completed within 12 months after construction begins. Given the significant future potential to continue to increase production from the Jembayan mine, the project team will ensure that the design has the ability to be upgraded to cater for higher loading capacities in due course.?

Straits Asia will release further details of the new infrastructure plans once the project team has carefully evaluated the key production requirements and alternative loading arrangements to meet the long-term potential of the Jembayan operation. (end of release)