Straits Asia: Jembayan coal loader update

(Singapore - 5 July 2010)--Further to announcements on 8 October 2009 and 16 October 2009, Straits Asia Resources Limited hereby provides a further update in respect of the Jembayan Line 2 coal loader.

Background
In October 2009, Straits Asia advised that after several days of continuous rain, there had been significant erosion along the Mahakam River foreshore. As a consequence there was a failure of the foundation structure under the Line 2 coal loader and a decision was made to dismantle the Line 2 conveyor structure and jetty.

Insurance
Following the failure, Straits Asia engaged MSN Loss Management to assist with the quantification of the insurance claim. The value assessed in respect of the property and equipment is approximately US$15m and the quantum of a business interruption claim is ongoing and currently under consideration.

An international loss adjusting firm, Cunningham & Lindsey (C&L), was appointed as independent loss assessors by the Insurers to review the claim. The review by C&L has been underway since their appointment.

Straits Asia has been notified by Insurers that the insurance claim in respect of the foundation failure has been declined. This notification included an opinion from Aseli, Aryany & Partners, an Indonesian law firm, indicating that the Insurers have grounds to avoid the Policy.

Straits Asia has received advice that no such grounds exist. Accordingly, Straits Asia maintains that the claims are valid and has appointed an international law firm to advise on a vigorous pursuit of the claims.

Straits Asia and the Insurers have reserved their positions and discussions are ongoing.

Current Loading capacity
The Line 1 coal loader facility, which has a nominal capacity of 5.5Mtpa, was not affected by the problems at Line 2 and its continued operation, together with supplementary coal loading measures, have performed as expected. (end of edited release)