Tabang Coal Upgrading Plant

PT Kaltim Supacoal Joint Venture Structure

White Energy’s first commercial joint venture is with PT Bayan Resources Tbk (Bayan). Bayan is one of the largest coal miners in Indonesia and owns several large sub-bituminous deposits in Tabang, East Kalimantan. White Energy and Bayan have established a joint venture company, PT Kaltim Supacoal (KSC), which is owned 51% by White Energy and 49% by Bayan to pioneer the BCB technology in Indonesia.

KSC owns and operates the Tabang coal upgrading plant. KSC is responsible for the marketing and sale of the upgraded coal, to be known as KSC Supacoal.

Location

The Tabang mine is located in East Kalimantan, Indonesia and is well positioned to key South East Asian and North Asian markets. KSC’s advantageous location will ensure that KSC Supacoal will be highly competitive with other coals exported from Indonesia and Australia.

Operation of the Tabang Coal Upgrading Plant

KSC has completed construction of the initial one million tonne per annum coal upgrading module at the Tabang mine. Due to the remote location of the Tabang mine, KSC, with the support of its shareholders, succeeded in building the plant in challenging conditions and delivering the plant on time. KSC is currently ramping up production with a focus on improving product quality and production rates. Certain modifications are currently being made to the Tabang Coal Upgrading Plant to address remaining technical issues. It is expected that the modification works will be completed by September, 2011 and that the plant will be operating at name plate capacity at the end of 2011.

Joint Venture Capacity

White Energy and Bayan have agreed to expand the capacity of the joint venture from a total capacity of 5 million tonnes per annum to 15 million tonnes per annum. As part of the expanded arrangement White Energy and Bayan have agreed that the expanded capacity will be constructed in priority to any other BCB plants built in Indonesia by White Energy.

Marketing and Sales

KSC has produced over 60,000 tonnes of upgraded coal from the Tabang Plant. KSC made its first sales of upgraded coal through its joint venture partner, PT Bayan Resources, pending issuance of KSC's export permits.

KSC has established a clear marketing strategy and has received significant interest from end-users, and is in active discussions with both Asian and US based energy companies. KSC wishes to enter into agreements with a reasonably large number of selected buyers in order to establish a strong, long term distribution network. Due to the appealing characteristics of “KSC Supacoal” the product will be marketed as a premium product.

KSC Supacoal Specifications

KSC is currently producing upgraded coal with an energy content of approximately 5,900 kcals/kg GAR, which represents a significant increase on the feedstock coal with an average energy content of 4,300 kcals/kg GAR.

Following the completion of the modification works being made to the Tabang Coal Upgrading Plant to address the remaining technical issues being completed later this year, KSC is targeting the production of upgraded coal briquettes with the following expected coal specifications.

Assessment of Feedstock Coal and Upgraded Coal

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