A.B.N. 55 082 541 437

Date: 28th October 2010

Company Announcement Platform ASX Limited

Dear Sir/Madam,

ACQUISITION OF JDC

Further to the announcement made on 14 September 2010 attached is a Notice of Meeting and Explanatory Memorandum which is now being despatched to shareholders convening a general meeting for 30 November 2010 to consider resolutions in connection with the proposed transaction.

The enclosed material contains further details of the proposed transaction including variations to those announced on 14 September 2010 arising from a variation deed entered into between the parties in respect of the JDC share sale agreement.

Yours faithfully, ALTERA RESOURCES LTD

BRADLEY G J ABBOTT Company Secretary T| (08) 9321 2642

ALTERA RESOURCES LIMITED ACN 082 541 437

NOTICE OF GENERAL MEETING

AND

EXPLANATORY MEMORANDUM

IMPORTANT INFORMATION This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay.

If you wish to discuss any aspect of this document with the Company please contact Mr Bradley Abbott on telephone (+61 8) 9321 2642

SHAREHOLDERS SHOULD NOTE THAT THE INDEPENDENT EXPERT COMMISSIONED BY THE COMPANY TO REPORT TO SHAREHOLDERS ON THE TRANSACTIONS FOR WHICH APPROVALS ARE SOUGHT IN THIS NOTICE HAS CONCLUDED THAT THE ACQUISITION OF JDC IS NOT FAIR BUT REASONABLE

Solicitors for Altera Resources Limited Jeremy Shervington Barrister & Solicitor 52 Ord Street WEST PERTH WA 6005 Tel: (08) 9481 8760 Fax: (08) 9481 5142

ALTERA RESOURCES LIMITED ACN 082 541 437

PROXY FORM
The Secretary
Altera Resources Limited
52 Ord Street West Perth WA 6005

Fax Number: +61 8 9481 5142
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being a shareholder/(s) of Altera Resources Limited hereby appoint __
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or failing him/her entertainment of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contra
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or failing him/her the Chairman as my/our proxy to vote for me/us and on my/our behalf at the General Meeting of the Company to be held at 52 Ord Street, West Perth, Western Australia at 8 am (WST) on 30^th day of November 2010, and at any adjournment thereof in respect of [ ]% of my/our shares or, failing any number being specified. ALL of my/our shares in the Company. If two proxies are appointed, the proportion of voting rights this proxy is authorised to exercise is [ ]%. (An additional proxy form will be supplied by the Company on request.)

If you wish to indicate how your proxy is to vote, please tick the appropriate places below. If no indication is given on a Resolution, the proxy may abstain or vote at his or her discretion.

I/we direct my/our proxy to vote as indicated below:

	AGAINST	ABSTAIN
Resolution 1 Approval of JDC Transaction
Resolution 2 Issue of Shares and Options	п	n
Resolution 3 Issue of Executive Options		П
Resolution 4 Potential Cancellation of Shares

Proxies given by a natural person must be signed by each appointing shareholder or the shareholder's attorney duly authorised in writing. Proxies given by companies must be executed in accordance with section 127 of the Corporations Act or signed by the appointor's attorney duly authorised in writing. The Chairman intends to vote all undirected proxies in favour of each Resolution.

If the Chair of the Meeting is your nominated proxy, or may be appointed by default, $\Box$ and you do not wish to direct your proxy how to vote in respect of a Resolution, please place a mark in the box.

By marking this box, you acknowledge that the Chair of the Meeting may exercise your proxy even if he has an interest in the outcome of the Resolution and votes cast by him, other than as proxy holder, will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chair of the Meeting will not cast your votes on the Resolution and your votes will not be counted in computing the required majority if a poll is called on the Resolution. The Chair of the Meeting intends to vote all undirected proxies in favour of the Resolution.

As witness my/our hand/s this day of 2010

If a natural person:

SIGNED by:

Signature

Signature (if joint holder)

If a company: Executed in accordance with section 127 of the Corporations Act

Signature of Director

Signature of Director / Secretary

ALTERA RESOURCES LIMITED ACN 082 541 437

NOTICE OF GENERAL MEETING

Notice is hereby given that a Meeting of the Shareholders of Altera Resources Limited will be held at 52 Ord Street, West Perth, Western Australia at 8 am (WST) on 30 November 2010 to conduct the following business and to consider, and if thought fit, to pass the following Resolutions.

RESOLUTION 1 - APPROVAL OF JDC TRANSACTION

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

"That for the purpose of Listing Rule 11.1.2 approval be and is hereby given to the Company completing the JDC Transaction on the terms and conditions set out in the Explanatory Memorandum."

RESOLUTION 2 - ISSUE OF SHARES AND OPTIONS

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

"That for the purpose of Listing Rule 7.1, subject to the due passage of Resolution1 and subject to Completion occurring approval be and is hereby given to the allotment and issue by the Company of:

$(a)$ 210 million Vendor Shares and 21 million Vendor Options exercisable at \$0.30 each on or before 30 September 2012; and
66,666,667 Capital Raising Shares at a price of 30 cents each $(b)$

to the entities and on the terms and conditions set out in the Explanatory Memorandum."

RESOLUTION 3 - ISSUE OF OPTIONS

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

"That for the purpose of Listing Rule 7.1, approval be and is hereby given to the allotment and issue by the Company of:

$(a)$ 5 million 50 cent Options to Mr James Middleton, the proposed Managing Director of the Company; and
5 million 75 cent Options to Mr James Middleton, the proposed Managing Director (b) of the Company; and
1 million 50 cent Options to Mr Chris Turvey, the proposed Exploration Manager $\left( c\right)$ of the Company; and

$(d)$ 1 million 75 cent Options to Mr Chris Turvey, the proposed Exploration Manager of the Company;

on the terms and conditions set out in the Explanatory Memorandum."

RESOLUTION 4 - POTENTIAL CANCELLATION OF SHARES

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

"That subject to Completion occurring and conditional upon the Vendors' Approval being obtained and as is provided for in the Share Sale Agreement, approval be and is hereby given to the reduction of the capital of the Company pursuant to Subsection 256(2) of the Corporations Act by the cancellation;

of the 210 million Vendor Shares to be issued pursuant to paragraph (a) of $(a)$ Resolution 2, thereby reducing paid up capital by \$63 million, with effect from the time immediately after the Fall-Back Condition is not fulfilled; or
$(b)$ Such number of the 210 million Vendor Shares to be issued pursuant to paragraph (a) of Resolution 2 as will result in the then net cash backing per Share of Altera after such cancellation being 6.3 cents per Share, thereby reducing the paid up capital by an amount equal to the number of Shares so cancelled multiplied by 30 cents;

and otherwise on the terms and conditions contained and described in the Explanatory Memorandum."

DATED THIS 26th DAY OF OCTOBER 2010

BY ORDER OF THE BOARD

J SHERVINGTON DIRECTOR

Notes:

Definitions

Terms which are used in this Notice and which are defined in Section 5 of the Explanatory Memorandum have the meanings ascribed to them therein.

Note

If you have recently changed your address or if there is any error in the name and address used for this notice please notify the Company Secretary. In the case of a corporation, notification is to be signed by a director or company secretary.

Proxies

A Shareholder who is entitled to vote at this Meeting has a right to appoint a proxy and should use the proxy form enclosed with this notice. The proxy need not be a Shareholder of the Company and can be an individual or a body corporate.

A body corporate appointed as a Shareholder's proxy may appoint a representative to exercise any of the powers the body may exercise as a proxy at the Meeting. The representative should bring to the Meeting evidence of this appointment, including any authority under which the appointment is signed, unless it has previously been given to the Company.

A Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints 2 proxies and the appointment does not specify the proportion or number of the Shareholder's votes each proxy may exercise, section 249X of the Corporations Act will take effect so that each proxy may exercise half of the votes (ignoring fractions).

A proxy's authority to speak and vote for a Shareholder at the meeting is suspended if the Shareholder is present at the meeting.

The proxy form must be signed and dated by the Shareholder or the Shareholder's attorney. Joint Shareholders must each sign.

Proxy forms and the original or a certified copy of the power of attorney (if the proxy form is signed by an attorney) must be received:

at 52 Ord Street, West Perth Western Australia, 6000; or
on facsimile number +61 8 9481 5142,

not later than 8 am (WST) on 28 November 2010.

Pursuant to regulation 7.11.37 of the Corporations Regulations, the Board has determined that the shareholding of each Shareholder for the purposes of ascertaining the voting entitlements for the Meeting will be as it appears in the share register at 7.00 pm (Sydney time) on 28 November 2010.

Bodies Corporate

A body corporate may appoint an individual as its representative to exercise any of the powers the body may exercise at meetings of a company's shareholders. The appointment may be a standing one.

Unless the appointment states otherwise, the representative may exercise all of the powers that the appointing body could exercise at a meeting or in voting on a resolution.

The representative should bring to the Meeting evidence of his or her appointment, including any authority under which the appointment is signed, unless it has previously been given to the Company.

Voting Exclusion Statement

In accordance with Listing Rules 11.1 and 14.11 the Company will disregard any votes cast on Resolution 1 by:
a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities in the Company if the Resolution is passed; and
any associate of the abovementioned person.

However this prohibition does not apply if:

A vote is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed Resolution; or
A vote is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.
1. In accordance with Listing Rules 7.3.8 and 14.11 the Company will disregard any votes cast on Resolution 2 by:
any of the Vendors:
any person who may participate in the proposed issue of Shares or Options the subject of Resolution 2:
a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities in the Company if Resolution 2 is passed; and
any associate of the abovementioned person.

However this prohibition does not apply if:

A vote is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed Resolution; or
A vote is cast by the person chairing the Meeting as proxy for a person who is entitled to $\bullet$ vote, in accordance with a direction on the proxy form to vote as the proxy decides.
1. In accordance with Section 224 of the Corporations Act, the Company will disregard any votes cast on Resolution 2 by:
Mr Peter Lynch; $\bullet$
Mr Patrick Hanna:
Mr Domenic Martino;
Mr James Middleton: or
any associate of the abovementioned persons

provided however that this prohibition will not prevent the casting of a vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on Resolution 2 and the vote is not cast on behalf of a related party or an associated of a kind referred to in subsection 224(1) of the Corporations Act.

1. In accordance with Listing Rules 7.3.8 and 14.11 the Company will disregard any votes cast on Resolution 3 by:
Mr James Middleton;
Mr Chris Turvey;
a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities in the Company if Resolution 3 is passed; and
any associate of the abovementioned person.

However this prohibition does not apply if:

A vote is cast by a person as a proxy appointed by writing that specifies how the proxy is $\bullet$ to vote on the proposed Resolution; or
A vote is cast by the person chairing the Meeting as proxy for a person who is entitled to $\bullet$ vote, in accordance with a direction on the proxy form to vote as the proxy decides.
1. In accordance with Section 224 of the Corporations Act, the Company will disregard any votes cast on Resolution 3 by:
Mr James Middleton; or $\bullet$
any associate of Mr James Middleton $\blacksquare$

provided however that this prohibition will not prevent the casting of a vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on Resolution 3 and the vote is not cast on behalf of a related party or an associated of a kind referred to in subsection 224(1) of the Corporations Act.

ALTERA RESOURCES LIMITED ACN 082 541 437

EXPLANATORY MEMORANDUM

This Explanatory Memorandum forms part of a Notice convening a General Meeting of Shareholders of Altera Resources Limited to be held at 52 Ord Street, West Perth, Western Australia at 8 am (Perth time) on 30 November 2010. This Explanatory Memorandum is to assist Shareholders in understanding the background to and the legal and other implications of the Notice and the reasons for the Resolutions proposed. Certain terms used in this Explanatory Memorandum are defined in Section 5.

$\mathbf{1}$ RESOLUTION 1

$1.1$ Background - JDC Transaction

Share Sale Agreement

As announced to ASX the Company has entered into the Share Sale Agreement pursuant to which it will acquire all of the securities on issue in JDC. The consideration payable for the acquisition of JDC comprises:

the issue of 210 million Vendor Shares to the Vendors; $(a)$
$(b)$ the issue of 21 million Vendor Options to the Vendors;
the assumption of the obligation to pay up to US\$13.3 million to the Kalimantan $(c)$ Vendors; and
$(d)$ the assumption of the obligations in respect of the Conditional Payments.

No Vendor or Incoming Director or any associates of the foregoing are entitled to participate in any of the cash payments that are being made to the Kalimantan Vendors either pursuant to the Initial Payments or the Conditional Payments.

It is a condition of the Share Sale Agreement that the Capital Raising is completed prior to Completion. The Company has entered into the Placement Agreement with the Broker in relation to the issue of the Capital Raising Shares.

The issue of the Shares and Options referred to in paragraphs (a) and (b) above and the 66,666,667 Shares the subject of the Capital Raising are subject to the passage of Resolution 2.

As noted in Section 1.2 the impact of the JDC Transaction on the Company's capital structure will be:

	Fully Paid Shares	Options
Existing	42,730,134	13,860,289 (Quoted)
Existing		4 million
Existing		1,575,000
Sub Total	42,730,134	19,435,289

Acquisition	210,000,000	21 million
Cash Placement (Maximum)	66,666,667
Executive Options		12 million
Total	319,396,801	$*$ 52,435,289

Each of the Directors recommends that Shareholders vote in favour of the Resolutions. This recommendation is made notwithstanding that the Independent Expert has concluded that the Transaction is not fair to Shareholders but is reasonable.

The reasons why the Directors make this recommendation are that if Completion occurs the Company will have raised \$20 million in new capital at a price of 30 cents per Share and will have paid US\$6.3 million to the Kalimantan Vendors - effectively by way of an "option fee" given that very limited technical due diligence on the Projects will, by that time, have been carried out. Thereafter a comprehensive technical due diligence programme in respect of the Projects will be conducted by the new Board. As a result of that due diligence the new Board will either determine that the Projects (or at least part of them) are of sufficient geological merit to warrant retention by the Company and the Company will then pay up to US\$7 million to the Kalimantan Vendors and carry out exploration of those retained Projects or JDC may procure the assignment to the Company of a suitable replacement project on terms such that an independent expert can confirm it is of sufficient quality and value that it is fair and reasonable to the Altera Shareholders other than the Vendors for that replacement asset to be acquired and for the Vendor Shares and Vendor Options to be retained by the Vendors.

In either case there will be some likelihood that the exploration thereafter carried out will be sufficiently successful as to lead to an increase in value per Share.

If as a result of the post Completion due diligence referred to above, the new Board chooses not to proceed with the acquisition of any of the Projects and JDC does not procure the assignment of a replacement project that satisfies the above test, then the US\$7 million Final Instalment will not be paid and such number of Vendor Shares will be cancelled as brings the net cash backing per Share to 6.3 cents (its approximately level at the date hereof). In those circumstances the Company will have sufficient cash (the majority of which will have been raised at 30 cents per Share) to enable the new Board to look for new exploration projects for the Company with a capital structure that the Directors consider will provide an opportunity for value per Share to be able thereafter to be added by the acquisition and exploration of further assets by the new Board.

JDC Contracts

JDC has entered into the JDC Contracts.

The JDC Contracts comprise the AAK Contract, the AAM Contract, the BBM Contract and the BBP Contract.

Pursuant to the JDC Contracts, JDC has the right to acquire interests in the entities that own the Projects as described hereunder.

BBM Contract and BBP Contract

Both these agreements are in essentially identical terms except that under the BBM Contract it is acknowledged that a third party has extended a loan to BBM/HGO of up to US\$5 million in respect of the BBM Project and provides for the repayment of that loan. The BBM Contract requires that a settlement agreement be entered into as soon as reasonably practicable after execution of the BBM Contract between HGO, BBM and the third party under which the third party gives up all claims and rights in return for the repayment of the US\$5,000,000 loan and any other amounts due to the third party by HGO or BBM.

The repayment of this loan will be made out of the Initial Payments.

Altera is informed by JDC's legal advisers that as at the date of this Notice the abovementioned "settlement agreement" has not been executed. The execution thereof will be a requirement for Altera's due diligence clearance.

The material terms of the BBM Contract and the BBP Contract are otherwise as follows:

JDC is to acquire a 50% interest in each of the BBM Project and the BBP Project $\bullet$ by acquiring 50% of the currently issued shares of BBM and BBP respectively.
BBM warrants under the BBM Contract that it has certain rights with regard to the $\bullet$ BBM Project in the form of an Exploration Mining Authorization No. 122/2005 which has been issued to BBM in respect of 1 (one) mining concession which is owned by the State and comprises an area of 24,980 hectares in Murung Raya Regency, Kalimantan Tengah Province, Indonesia.
BBP warrants under the BBP Contract that it has certain rights with regard to the BBP Project in the form of an Exploration Mining Authorization No. 188.45/270/2007 which has been issued to BBP in respect of 1 (one) mining concession which is owned by the State and comprises an area of 19,920 hectares in Murung Raya Regency, Kalimantan Tengah Province, Indonesia.
Both agreements contain copies of the licences and a map of the mining concessions copies of which are attached to the Independent Geologist's Report.
Both the BBM and BBP Contracts are subject to the following conditions precedent which are to be fulfilled by the day which is 120 days after the date of execution of the agreement or such other date as agreed between the parties:
legal due diligence to be completed by JDC to its satisfaction; $(a)$
$(b)$ technical due diligence to be completed by JDC to its satisfaction;
$(c)$ JDC entering into an agreement under which an ASX listed company will acquire JDC:
$(d)$ All necessary approvals; and
In the case of the BBM Contract, the terms of the settlement agreement with $(e)$ the third party as described above are to be acceptable to JDC.
Altera is informed by JDC that JDC and the parties to the BBM and BBP Contracts have agreed that the definitive transaction documentation that will be executed by JDC and the parties to the BBM and BBP Contracts prior to the date of the Meeting and in replacement of the BBM and BBP Contracts will extend the date for the satisfaction of the condition in paragraph (a) above until the date of the Meeting and the other conditions for up to 120 days after that date.
Both the BBM and BBP Contracts provide for the following implementation steps:
HGO/BBM/BBP are to procure the conversion of each of BBM and BBP into $(a)$ Indonesian limited liability foreign investment companies and are to immediately do everything necessary to achieve this in a timely manner.
$(b)$ JDC and or its appointees are to acquire 50% of the shares in BBM and BBP (these companies having been converted to Indonesian limited liability foreign investment companies under step (a). Following this acquisition, each project will be initially owned as to 50% by JDC and or its appointees, and as to 50% by HGO and the other existing shareholders (these are not specified).
$(c)$ JDC in respect of both Projects is to provide HGO/BBM with sufficient funds to cover the anticipated costs and expenses involved in HGO/BBM carrying out their obligations under steps (a) and (b).
JDC is to be exclusively responsible for financing each of the Projects up to $(d)$ completion of the Initial Work Program, As from completion of the Initial Work Program, all subsequent financing is to be jointly provided by JDC and/or its appointees, and by HGO and/or his appointees in the same proportions as their equity interest in BBP and BBM respectively. If for any reason HGO is unable to unwilling to provide his proportionate share, JDC is entitled to be repaid that amount together with interest at the rate of SIBOR plus 3% per annum from the entitlement of HGO to any dividends that BBM may declare. The Initial Work Programme is defined for this purpose as BBM carrying out. with JDC's assistance, "the initial mapping of Coal outcrops on the Mining Concession".
Both agreements provide for the parties to negotiate and execute "definitive transaction documents required to give effect to the acquisition of the Subject Shares by JDC". These transaction documents are to include:
a conditional sale and purchase of shares agreement;
new article of association for BBM/BBP
a shareholders agreement
Each of the agreements provides that, subject as provided below, the agreements will expire and terminate on the later of:
the date the definitive agreements have been executed: and
30 June 2011 if by then the definitive agreements have not been $\overline{a}$ executed.

The above provisions are subject to such termination not preventing a party from seeking damages for any pre-existing breach.

In the case of the BBM Project, JDC shall make the following payments to HGO, comprising a total consideration for the 50% interest of US\$25,000,000:
$(i)$ US\$5,000,000 no later than 14 days after JDC notifies HGO it is satisfied with its legal due diligence;
$(ii)$ US\$5,000,000 no later than 14 days after JDC notifies HGO it is satisfied with its technical due diligence;
$(iii)$ US\$5,000,000 not later than 14 days after the later of the acquisition of a 50% interest in BBM by JDC and the date on which JDC establishes the existence on the Concession of not less than 20,000,000 metric tones of inferred Coal (in accordance with the JORC Code) and with a maximum strip ratio of 20 to 1; and
(iv) US\$10,000,000, if at all, not later than 30 days after the date on which the Production Operation IUP, if any, is issued to BBM.
In the case of the BBP Project, JDC shall make the following payments to HGO. comprising a total consideration for the 50% interest of US\$10,000,000:
$(i)$ US\$1,000,000 no later than 14 days after JDC notifies HGO it is satisfied with its legal due diligence:
$(ii)$ US\$1,000,000 no later than 14 days after JDC notifies HGO it is satisfied with its technical due diligence;
$(iii)$ US\$3,000,000 not later than 14 days after the later of the acquisition of a 50% interest in BBP by JDC and the date on which JDC establishes the existence on the Concession of not less than 10,000,000 metric tones of inferred Coal (in accordance with the JORC Code) and with a maximum strip ratio of 12 to 1; and
US\$5,000,000, if at all, not later than 30 days after the date on which the $(iv)$ Production Operation IUP, if any, is issued to BBP.

In the even that the acquisition of the number of shares as equates to 50% of each of BBM and BBP cannot take place due to the fault of HGO/BBM/BBP. HGO shall refund each of the above payments to JDC to the extent that it has already been received by HGO (without interest) and not later than 7 days after JDC gives written notice to HGO that the acquisition cannot take place due to the fault of HGO/BBM/BBP.

HGO indemnifies JDC and its appointees against any and all liabilities to BBM and BBP respectively, howsoever described and howsoever arising in existence as at the date JDC acquires its 50% interest in BBM and BBP respectively, or which subsequently come into existence as a result of things done or not done by BBM and BBP respectively prior to the date JDC acquires its 50% interest, and regardless of whether these liabilities are actual, disclosed, contingent, prospective or undisclosed.
As security for the performance of HGO/BBM/BBP's obligations under the agreement, HGO shall deliver to JDC:
A personal guarantee in favour of JDC not later than 7 days after (a) execution; and
$(b)$ Pledges in favour of BBM and BBP not later than 7 days after the date on which JDC issues a notice it is satisfied with its legal due diligence.
As noted above once the conditions precedent have been satisfied, during the $\bullet$ period of 30 days after such satisfaction, the parties are to negotiate in good faith and enter into definitive transaction documents required to give effect to the acquisition of the shares in BBM and BBP respectively by JDC or its appointees and which will include a new articles of association for BBM and BBP respectively, shareholders agreements and interim powers of attorney. Altera is informed by JDC that the negotiation of this definitive documentation has commenced and is running contemporaneously with the due diligence processes - see further reference under the heading "JDC Conditions" below.
As noted above each agreement will automatically terminate on the later of the entry into of the definitive documentation outlined above and 30 June 2011 if by then the definitive documentation has not been entered into.
Each agreement provides that if a party commits a material breach of the agreement and, in the event that the breach is capable of being cured, the party fails to cure that breach within 7 days of receiving notice in writing, the party not in breach may immediately terminate the agreement.
HGO warrants that the existing licences are valid, that BBM and BBP respectively have fully complied with their obligations under the licences, and that no party other than HGO, BBP and BBM has an interest, direct or indirect, in

the Projects.

HGO also warrants that the following statements are true and correct:
HGO, directly or indirectly, owns and/or controls each of BBM and BBP; (a)
it has certain rights with regard to the BBM Project in the form of an $(b)$ Exploration Mining Authorization No. 122/2005 which has been issued to BBM in respect of 1 (one) mining concession which is owned by the State and comprises an area of 24,980 hectares in Murung Raya Regency, Kalimantan Tengah Province, Indonesia;
it has certain rights with regard to the BBP Project in the form of an $(c)$ Exploration Mining Authorization No. 188.45/270/2007 which has been issued to BBP in respect of 1 (one) mining concession which is owned by the State and comprises an area of 19,920 hectares in Murung Raya Regency, Kalimantan Tengah Province, Indonesia;
each concession is believed to contain commercially recoverable $(d)$ quantities of export quality coking coal;
$(e)$ each concession requires the existing licence and, possibly, a Production IUP:
the existing licence and the Production IUP will be sufficient to carry on $(f)$ the Projects.

AAK Contract and AAP Contract

The material terms of the AAK Contract and the AAP Contract, both of which are in almost identical terms, are outlined below.

THT/AAK/AAM have agreed:
not to take any proactive steps to find alternative financiers, investors or $(a)$ purchasers for the projects;
$(b)$ to inform any and all third parties which contact them about the possibility of acquiring, financing or investing in the projects that they have entered into legally binding agreements with JDC and is prevented from engaging in discussions under those agreements during the lock-up period; and
$(c)$ to refrain from engaging in any discussions or negotiations with such third parties concerning new financing or investment for and/or the acquisition of the projects,

during the period commencing on the date of the agreements and ending on the date that is 90 days after the date on which THT/AAK/AAM provides JDC with a copy of the existing licences in the form of Exploration IUP's (Lock Up Period).

The Lock-up Period will automatically expire if JDC issues a negative condition precedent notice and will be extended if JDC issues a positive condition precedent notice until the date on which definitive transaction documents are executed and delivered.
JDC is to acquire a 75% interest in each of the AAK Project and the AAM Project by acquiring 75% of the currently issued shares of AAK and AAM respectively.
AAK warrants that "it has certain rights with regard to the AAK Concession Project in the form of a mining license which has been issued to AAK in respect of 1 (one) mining concession which is owned by the State and comprises an area of 10,000 hectares in Gunung Mas Regency, Kalimantan Tengah Province, Indonesia".
AAM warrants that "it has certain rights with regard to the AAM Concession Project in the form of a mining license which has been issued to AAM in respect of 1 (one) mining concession which is owned by the State and comprises an area of 10,000 hectares in

Gunung Mas Regency, Kalimantan Tengah Province, Indonesia".

Both agreements contain a map of the mining concessions copies of which are contained in $\bullet$ the Independent Geologist's Report.
The agreements are subject to the following conditions precedent which are to be fulfilled by the day which is 90 days after the date of execution of the agreement or such other date as agreed between the parties:
legal due diligence to be completed by JDC to its satisfaction; $(a)$
$(b)$ technical due diligence to be completed by JDC to its satisfaction; and
$(c)$ all necessary approvals.
Altera is informed by JDC that JDC and the parties to the AAK and AAM Contracts have agreed that the definitive transaction documentation that will be executed by JDC and the parties to the AAK and AAM Contracts prior to the date of the Meeting and in replacement of the AAK and AAM Contracts will extend the date for the satisfaction of the condition in paragraph (a) above until the date of the Meeting and the other conditions for up to 120 days after that date.
Both agreements provide that the parties are to use their best efforts to ensure the conditions precedent are fulfilled by no later than 5 pm on the last day of the initial Lock-up Period.
$(a)$ THT/AAK/AAM is to procure the conversion of each of AAK and AAM into Indonesian limited liability foreign investment companies and are to immediately do everything necessary to achieve this in a timely manner.
JDC or its appointees is to acquire 75% of the shares in AAK and AAM (these $(b)$ companies having been converted to Indonesian limited liability foreign investment companies under step (a). Following this acquisition, each project will be initially owned as to 75% by JDDC and or its appointees, and as to 25% by THT and the other existing shareholders (these are not specified).
$(c)$ JDC in respect of both Projects is to provide THT/AAK with sufficient funds to cover the anticipated costs and expenses involved in THT/AAK carrying out their obligations under steps (a) and (b).
JDC is to be exclusively responsible for financing each of the projects up to completion of the Initial Work Program, As from completion of the Initial Work Program, all subsequent financing to be jointly provided by JDC and/or its appointees, and by THT and/or his appointees in the same proportions as there equity interest in AAM and AAK respectively. If for any reason THT is unable to unwilling to provide their proportionate share, JDC is entitled to be repaid that amount together with interest at the rate of SIBOR plus 3% per annum from the entitlement of THT to any dividends that AAK may declare. The Initial Work Programme is defined for this purpose as AAK/AAM carrying out with JDC's assistance "a drilling work programme which is sufficient to establish the existence or otherwise on the Mining Concession of the Minimum Resource Requirement"..
In the case of both Projects, JDC shall make the following payments to THT, comprising a total consideration for each 75% interest of US\$2,000,000:
(i) US\$150,000 no later than 7 days after JDC notifies THT it is satisfied with its legal due diligence;
(ii) US\$500,000 no later than 7 days after JDC notifies THT it is satisfied with its technical due diligence; and
(iii) US\$1,350,000 not later than 30 days after the date on which JDC establishes the existence on each Concession of not less than 10,000,000 metric tones of inferred Coal (in accordance with the JORC Code) and with a maximum strip ratio of 12 to 1

("Minimum Resource Requirement").

In the event that the acquisition of the number of shares as equates to 75% of each of AAM and AAK cannot take place due to the fault of THT/AAM/AAK, HGO shall refund each of the above payments to JDC to the extent that it has already been received by HGO (without interest) and not later than 7 days after JDC gives written notice to THT that the acquisition cannot take place due to the fault of THT/AAM/AAK.
THT indemnifies JDC and its appointees against any and all liabilities to AAK and AAM respectively, howsoever described and howsoever arising in existence as at the date JDC acquires its 50% interest in AAK and AAM respectively, or which subsequently come into existence as a result of things done or not done by AAK and AAM respectively prior to the date JDC acquires its 50% interest, and regardless of whether these liabilities are actual. disclosed, contingent, prospective or undisclosed.
As security for the performance of THT/AAK/AAM's obligations under the agreement, THT shall deliver to JDC:
(a) a personal guarantee in favour of JDC not later than 7 days after the execution; and
(b) pledges in favour of AAK and AAM not later than 7 days after the date on which JDC issues a notice that the conditions precedent have been satisfied which must be by no later than 90 days after the date on which THT/AAK/AAM provides JDC with a copy of the existing licenses in the form of Exploration IUP's.
Once the conditions precedent have been satisfied, during the period of 30 days after such satisfaction, the parties are to negotiate in good faith and enter into definitive transaction documents required to give effect to the acquisition of the shares in AAK and AAM respectively by JDC or its appointees and which will include a new articles of association for AAK and AAM respectively, shareholders agreements and interim powers of attorney. Altera is informed by JDC that the negotiation of this definitive documentation has commenced and is running contemporaneously with the due diligence process - see further reference under the heading "JDC Conditions" below.
Each agreement will automatically terminate on the later of the entry into of the definitive $\ddot{\bullet}$ documentation outlined above and 13 July 2011 if by then the definitive documentation has not been entered into.
If a party commits a material breach of the agreement and, in the event that the breach is capable of being cured, the party fails to cure that breach within 7 days of receiving notice in writing, the party not in breach may immediately terminate the agreement.
THT warrants that the existing licences are valid, that AAK and AAM respectively have fully complied with their obligations under the licences, and that no party other than THT, AAM and AAK has an interest, direct or indirect, in the Projects.
THT also warrants that the following statements are true and correct:
$(a)$ THT, directly or indirectly, owns and/or controls each of AAK and AAM;
it has certain rights with regard to the AAK Concession Project in the form of an $(b)$ Exploration Mining Authorization No. 122/2005 which has been issued to AAK in respect of 1 (one) mining concession which is owned by the State and comprises an area of 24,980 hectares in Murung Raya Regency, Kalimantan Tengah Province, Indonesia:
it has certain rights with regard to the AAM Concession Project in the form of an $(c)$ Exploration Mining Authorization No. 188.45/270/2007 which has been issued to AAM in respect of 1 (one) mining concession which is owned by the State and comprises an

area of 19,920 hectares in Murung Raya Regency, Kalimantan Tengah Province. Indonesia:

each concession is believed to contain commercially recoverable quantities of export $(d)$ quality coking coal;
$(e)$ each concession requires the existing licence and, possibly, a Production IUP:
the existing licence and the Production IUP will be sufficient to carry on the Projects. $(f)$

JDC Conditions - Share Sale Agreement Conditions and Warranties

It is a condition of the Share Sale Agreement that acquisition of the interests in AAM, AAK, BMM and BBP under the JDC Contracts (the "Shareholding Interests") occurs on or before the Completion Date, necessitating the fulfillment of the following "JDC Conditions":

the fulfillment of the conditions precedent in each of the JDC Contracts relating $(a)$ to JDC completing legal due diligence to its satisfaction;
$(b)$ the status of the Tenements being converted from KPs to IUPs:
the conversion of each of BBM, BBP, AAK and AAM into Indonesian limited $(c)$ liability foreign investment companies;
$(d)$ the execution by all requisite parties of all of the "definitive transaction documents" (as described in the JDC Contracts) required under the JDC Contracts to give effect to the acquisition by JDC of the Shareholding Interests pursuant to the terms of the JDC Contracts:
the obtaining of all approvals and the fulfillment of all other conditions in the $(e)$ JDC Contracts required to be obtained or fulfilled in order for JDC to own the Shareholding Interests thereunder:

Notwithstanding the above, Completion will proceed under the Share Sale Agreement if, prior to the Completion Date, JDC provides to Altera a written opinion directed to Altera from Indonesian Attorneys, Christian Teo & Associates, certifying either that:

$(a)$ the only steps required to vest full ownership of the Shareholding Interests in JDC in the terms described in paragraphs (b) to (e) (inclusive) of the JDC Conditions were procedural steps that were in train and were likely to be fulfilled within a reasonable time thereafter; or
$(b)$ although not all of the steps described in paragraphs (b) to (e) (inclusive) of the JDC Conditions had been fulfilled by that time there was no impediment to those steps occurring and there was no reason why they would not be fulfilled within a reasonable time thereafter.

In the event Completion has occurred pursuant to the provision by JDC of the abovementioned certificate from Christian Teo & Associates then within 4 months thereafter either:

(a) paragraphs (b) to (e) (inclusive) of the JDC Conditions and completion of the acquisition by JDC of the Shareholding Interests must have been finalised; or
(b) paragraphs (b) to (e) (inclusive of the JDC Conditions must have been fulfilled and completion by JDC of the acquisition of the Shareholding Interests finalised insofar as

the Shareholding Interests in BBM and BBP are concerned, and if not so fulfilled and finalised insofar as the Shareholding Interests in AAK and AAM are concerned, the Vendors must have procured and completed the assignment to JDC of a Replacement Project in lieu of the AAK and AAM Shareholding Interests,

otherwise the 210 million Vendor Shares and 21 million Vendor Options issued to the Vendors at Completion will be cancelled.

"Replacement Project" for this purpose means a coal exploration project which is certified by an independent expert (based on reports from a reputable independent geological consultant) engaged by Altera as being of equal or greater value to Altera as the AAK and AAM Projects taking account of all relevant factors including, without limitation, any amounts that may have already been outlayed by Altera in respect of the AAM and AAK Projects, the location of the Replacement Project and the terms on which the Replacement Project is to be assigned to JDC and any liabilities thereby assumed by JDC/Altera.

The Share Sale Agreement is also conditional upon each of JDC and Altera notifying each other that they are satisfied with their own due diligence enquiries by no later than 17 November 2010, satisfaction of the ASX Requirements on or before Completion, the Tenements being in good standing at Completion, and there being no breach of any of the warranties given by the Principal Vendors or any of the warranties given by Altera under the Share Sale Agreement prior to Completion.

As part of Altera's abovementioned due diligence enquiries, Altera will satisfy itself prior to Completion regarding title to the Tenements.

As at the date of this Notice the above due diligence condition has not yet been fulfilled. However, if the Resolutions are put to the Meeting, Shareholders will be able to assume that these requirements have been met.

The warranties given under the Share Sale Agreement are as follows:

"Vendors' Warranties

The Principal Vendors jointly and severally warrant to Altera as follows:

the Vendors own and will at Completion own and transfer and assign to Altera all right, $(a)$ title and interest in the JDC Securities both legal and beneficial;
$(b)$ the JDC Securities are and will at Completion be the only securities on issue in JDC;
the JDC Securities will be assigned and transferred to and acquired by Altera at $(c)$ Completion free of all Encumbrances;
$(d)$ the financial position of JDC as at 25 August 2010 is as set out in the balance sheet contained in Annexure "C" (a copy of which is annexure "A" to this Explanatory Memorandum):
$(e)$ the material assets of JDC at Completion will comprise the JDC Contracts and cash at bank of no less than \$38,260 (based on JDC receiving all current outstanding receivables, paying all current liabilities and paying further estimated expenses of \$80,000 between 25 August 2010 and Completion (principally on the Projects));
$(f)$ the Liabilities of JDC at Completion will be Nil (based on the assumptions in clause $10(e)$ :
$(g)$ JDC has, and will at Completion have pursuant to the JDC Contracts, the right to acquire the Shareholding Interests in entities which own each of the Projects in the terms of the JDC Contracts;
$(h)$ Other than as stated in the JDC Contracts or as imposed by Indonesian national or provincial legislation or regulation and subject to clause 4.2 the Shareholding Interests will be acquired by JDC pursuant to the JDC Contracts and the respective interests held by AAK, AAM, BBM and BBP in the Projects will be owned by those entities at Completion free of all Encumbrances or third party interests of any kind;
To the best of JDC's knowledge, information and belief no party to any of the JDC $(i)$ Contracts is in breach thereof. Unless Altera is notified in writing otherwise this warranty will be deemed to be repeated immediately prior to Completion;
$(i)$ JDC and the Principal Vendors have provided to Altera prior to the execution hereof all information in relation to JDC, the JDC Securities, the Projects, the Tenements, the Shareholding Interests, the Commitments and the JDC Contracts as would be reasonable for a prudent purchaser of the JDC Securities to be expected to be provided with;
$(k)$ All information of the nature described in clause 10(j) is to the best of the knowledge, information and belief of JDC accurate and not misleading or deceptive;
$(1)$ To the best of the knowledge, information and belief of JDC the Tenements are in good standing and will be in good standing at Completion;
$(m)$ At Completion the only Liabilities that will be assumed by JDC by reason of the completion of the acquisition by JDC of the Shareholding Interests pursuant to the JDC Contracts will be the Commitments and the Conditional Payments.

Altera Warranties

Altera warrants to JDC and the Vendors that the capital structure of Altera is currently as follows:

42,730,134 Shares 13,860,289 listed 20 cent 1 February 2012 Options 4 million 20 cent 31 December 2012 unlisted Options 1,575,000 unlisted 10 cent 8 August 2011 Options

The Company's current cash net of Liabilities is approximately \$2.7 million.

The Company's cash net of Liabilities (other than Liabilities incurred in connection with this Agreement) will at Completion be no less than \$2.6 million."

The other conditions of the Share Sale Agreement are:

$(a)$ All necessary approvals of the Shareholders of Altera as are required in order for the transactions contemplated by the Share Sale Agreement to be implemented, for the issue of the Executive Options and for the Capital Reduction being obtained on or before the Completion Date.

$(b)$ JDC negotiating and concluding contracts in relation to the appointments of Messrs Lynch. Hanna and Middleton prior to the Completion Date in terms that are to the reasonable satisfaction of Altera.
Completion occurring by the Completion Date. $(c)$

Other Terms of the Share Sale Agreement

It is also a provision of the Share Sale Agreement that by no later than three months after Completion, Altera must conduct a comprehensive due diligence (involving mapping, sampling and analysis which may necessitate limited drilling) such as will enable a determination to be made as to whether the Projects contain PCI and/or metallurgical coal which may have potential of a commercial quantity and quality, on one or more of the Projects and sufficient to enable the Board to make a properly informed assessment for the purposes of the decisions it is required to make within that 3 month period as provided therein.

If by not later that three months after Completion, the Board, having regard to the results of the abovementioned due diligence carried out by Altera, has determined that and the Principal Vendors have jointly and severally warranted to Altera that one or more of the Projects is/are of a sufficient quality and value that it is in the interests of Altera and Altera's Shareholders other than the Vendors to retain any such Project(s), and the Board, acting in good faith and in satisfaction of its legal, statutory (including sections 191 and 195 of the Corporations Act) and fiduciary obligations, has determined that:

$(a)$ the retention of any Project or Projects; and
$(b)$ the retention by the Vendors of the Vendor Shares and the Vendor Options; and
$(c)$ the payment of the Final Instalment,

is fair and reasonable to Altera's Shareholders other than the Vendors, and is in the best interests of all Shareholders, then Altera will procure the payment of the Final Instalment totalling up to a maximum of US\$7,000,000, to the relevant parties to the JDC Contracts as directed in writing by JDC.

If this does not occur is not able to occur by no later than three months after Completion, then:

Altera is under no obligation to procure the payment of the Final Instalment; $(a)$
$(b)$ by no later than four months after the expiry of three months after Completion (ie seven months after Completion), JDC may procure and complete the assignment to Altera or JDC of a replacement asset in lieu of the abandoned Project/s on such terms as will enable a suitably qualified Australian based independent expert (who must be any one of Runge Limited, SRK Consulting, Golder Associates Pty Ltd, JB Mining Services or Xenith Consulting) to certify in a written report prepared for the benefit of the Shareholders of Altera and released to ASX by Altera that the replacement asset is of a sufficient quality and value that the retention by the Vendors of the 210 million Vendor Shares and 21 million Vendor Options is "fair and reasonable" to the other Altera Shareholders; and
$(c)$ unless paragraph (b) above applies, such number of the 210 million Vendor Shares issued to the Vendors at Completion that would result in the then net cash backing per Share of Altera, after such cancellation, being 6.3 cents, will be cancelled.

Proposed Board & Management

It is a provision of the Share Sale Agreement that at Completion:

$(i)$ Mr Peter Lynch is appointed as executive chairman of the Company as from Completion:
$(ii)$ Mr Patrick Hanna is appointed as an executive, technical director of the Company as from Completion;
Mr James Middleton is appointed as managing director/CEO of the Company as from $(iii)$ Completion:
$(iv)$ Mr Domenic Martino is appointed as a non-executive director of the Company as from Completion.
$(v)$ each of the then existing Directors of Altera resigns with effect from Completion.
$(vi)$ a nominee of JDC is appointed as chief financial officer and company secretary of the Company as from Completion.

It is also a provision of the Share Sale Agreement that at Completion, the Executive Options will be issued, comprising 5,000,000 50 cent Options and 5,000,000 75 cent Options to be issued to Mr James Middleton, and 1,000,000 50 cent Options and 1,000,000 75 cent Options to be issued to Mr Chris Turvey. The Executive Options are the subject of Resolution 3 and further information in respect of the Executive Options is set out below in Section 3.

Below are summaries of the qualifications and experience of the proposed appointees to the Board and management of the Company who will assume office if Completion occurs:

Mr Peter Lynch B.Eng (Mining) University of New South Wales - Proposed Chairman

Since graduating with a Mining Engineering degree in 1988, Mr Lynch has held various positions within the coal industry in Australia including as mining engineer, project manager, mine manager, general manager and managing director culminating most recently in the role, from January 2006 until January 2010, as the President, CEO and Director of Waratah Coal Inc., a TSX listed company which was taken over by the Mineralogy Group in December 2008, having reached a peak market capitalisation of \$ C 300 million.

Mr Patrick Hanna B. Applied Science (Applied Geology) University of New South Wales. C P Geo., FAusIMM - Proposed Executive Director

Mr Hanna has 30 years experience as a coal geologist in the areas of exploration and evaluation including planning, budgeting and managing drilling programmes in Australia and Indonesia. gained since graduating from the University of New South Wales in 1976.

Mr Hanna has authored and co-authored numerous coal industry publications.

Mr James Middleton BE (Mining - Hons) University of New South Wales - Proposed Managing Director/CEO

Mr Middleton has since 1981 held various positions, technical, operational, exploration and corporate in the coal industry in Australia including time with Coal Allied, Exxon, Glencore, Xstrata culminating most recently as Vice President - Mining Operations, Illawara Coal owned by BHP Billiton.

Mr Domenic Martino B. Bus (Curtin University) CPA – Proposed Non Executive Director

Mr Martino is a Chartered Accountant and an experienced director of ASX listed companies. Previously CEO of Deloitte Touch Tohmatsu in Australia, he has significant experience in the development of "micro-cap" companies.

Mr Christopher Turvey B.Sc (Hons) University of Newcastle, NSW. Member AusIMM -Proposed Exploration Manager

Since graduating in 1984 Mr Turvey has worked as a coal geologist in exploration, resource estimation and geological modelling both in Australia and internationally.

Mr Duncan Cornish B.Bus (Accountancy) - Proposed CFO/Company Secretary

Mr Cornish is a Chartered Accountant with many years experience in management roles for companies listed on ASX, TSX and the AIM Market of the LSE.

Financial Position of JDC

It is a term of the Share Sale Agreement that as at the time immediately prior to Completion the financial position of JDC will be as provided in the warranties given by the Principal Vendors described in paragraphs $(e)$ and $(f)$ under the heading "Vendors' Warranties" above.

Kalimantan/The Projects

For information regarding Kalimantan and the Projects Shareholders are referred to the Independent Geologist's Report annexed to this Explanatory Memorandum.

Kalimantan Mining Code

Indonesian Mining Rights

Indonesia introduced a new mining law in January 2009 (the Mining Law 2009). The mining rights in which JDC is investing were originally issued under Law No 11/1967 (the Former Mining Law) and are being converted to mining rights under the Mining Law 2009.

The Former Mining Law had 2 main types of mining rights;

$(i)$ Contracts of Work (including coal contracts of work), which could be granted to foreign or local mining companies; and
$(ii)$ Kuasa Pertambangan (KPs), which could only be issued to Indonesian companies or citizens.

A KP was limited to a particular activity. As work in an area progresses, the KP holder applied for the next level of KP. The available activities for KPs are for general survey, exploration, exploitation, processing and refining, transportation and sale.

The Mining Law 2009 essentially replaces the dual system of Contracts of Work (contract based system for foreign investment) and KPs (a license based system exclusively for Indonesian investment) with a single license based regime generally described as Izin Usaha Pertambangan or IUP.

Implementing regulations issued under the Mining Law 2009 provide that KPs which were validly in existence prior to 12 January 2009 remain valid until the expiry of the term of the relevant KPs. The implementing regulations also provided that existing KPs may be converted to IUPs under the Mining Law 2009.

Subject to the holder of the KP having;

complied with the terms of the KP; and $(a)$
$(b)$ made the application to convert within the permitted time frame,

the holder of the KP is entitled to have the KP converted to an IUP.

The mining rights in which JDC is proposing to invest are either KPs in the process of conversion to IUP or are already IUP (following conversion).

The main features of an IUP are as follows:

Types	Exploration
	General survey, exploration and feasibility studies
	Production Operations
	Construction, mining, processing and refining, hauling and selling
	Progression from Exploration IUP to Production Operations IUP is said to be "guaranteed"
Granted by:	Exploration IUP
	Minister - if crosses 2 provinces
	Governor - if crosses 2 regencies
	Regent - if within a regency

	Production Operation IUP
	Minister – if mining, processing/refining and port are within different provinces
	Governor – if mining, processing/refining and port are within different regencies
	Regent – if mining, processing and port are within same regency
For	1 type of metal or non-metal mineral or coal
Entitlement to hold	Individual, cooperative, Indonesian-owned company, foreign-owned company (PMA)
Term	Exploration
	Metals - 8 year maximum
	Non-metals - 3 or 7 year maximum
	Coal - 7 year maximum
	Production Operations

	Metals $-20$ year maximum with $2 \times 10$ year maximum extensions
	Coal $-20$ year maximum with 2 x 10 year maximum extensions
Mandatory divestment	After 5 years of production, foreign-owned license holder must divest at least 20% to government, provincial or regional governments, state-owned enterprise, provincial or regional enterprise or Indonesian-owned company
Area	Exploration
	Metals - 5,000 to 1000,000 ha
	Non Metals - 500 to 25,000 ha
	Coal - 5,000 to 50,000 ha
	Production Operations
	Metals $-$ up to 25,000 ha
	Non Metals - up to 5,000 ha
	Coal - up to 15,000 ha
Production Royalties	Production royalties are payable at rates which vary depending on the quality of coal (KKal/kg) and the mining methods (eg open pit mining or underground mining).
Fees and	Exploration
payments	State and regional taxes in accordance with prevailing laws, dead-rent and exploration fee
	Production Operations
	State and regional taxes in accordance with prevailing laws, dead-rent and production fee
Assignment	No entitlement to assign IUP. Assignment of shares in IUP holder permitted subject to approval.
Domestic	Production Operations
processing	Must value-add by processing and refining minerals domestically (alone or in joint venture/cooperation with another/other IUP or IUPK holders).
	A Special Production Operations License may be granted to an entity performing processing and refining solely.
Environmental	Must submit reclamation plan and post-mining activity plan when applying for Production Operations IUP.
	Environmental impact analysis required.
	Surety fees are payable.
	The holder must guarantee the implementation of all applicable environmental

	quality standards.
Surface Land Exploration
	Requires prior approval of landowner.

	Production Operations
	Requires acquisition of land from landowner.
Dispute Resolution	Indonesian courts or Indonesian arbitration.

The Mining Law 2009 permits the Minister to determine the minimum percentage of mineral or coal sales which an IUP holder must sell in the Indonesian domestic market.

The Minister may set an annual domestic market obligation based on estimated production and domestic demand.

It appears from the regulations that the annual domestic market obligation will be fixed for individual producers, however, from the notices issued to date by the Minister and Director General, it seems unlikely that the domestic market obligations will be imposed on small coal producers.

The Mining Law 2009 permits the Minister to determine "benchmark" prices for coal and minerals. The regulations to implement benchmark pricing are yet to be issued but the outline of the scheme appears to be:

$(i)$ The Minister will set benchmark prices for coal and other minerals:
$(ii)$ The benchmarks price will be based on international index prices;
$(iii)$ All producers will be required to provide monthly reports to the Minister setting out the previous month's sales and prices;
to optimize state revenues, tax and non tax revenue for mineral and coal producers will $(iv)$ be based on the relevant benchmark prices (meaning that if the producers sell minerals or coal for less than the relevant benchmark price, the producers will be required to pay royalty and income tax as if they sold their minerals or coal at the benchmark prices).

Foreign Investment in Indonesian Mining

Foreign investment in Indonesia is governed principally by the Investment Law 2007, as supplemented by a host of implementing regulations. The Investment Law 2007 generally requires that a foreign company can only invest and operate in Indonesia through an Indonesianincorporated limited liability company (PMA company). The foreign investor must obtain approval for its investment from the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal - BKPM).

Under regulations known as the "Negative List" the Government proscribe which business activities are closed to direct foreign investment or direct foreign investment is restricted (for example, only a minority shareholding permitted or approval from relevant technical authorities required).

The Mining Law 2009 permits 100% foreign direct investment in IUP holding companies (including companies holding IUPs which were formerly KPs) up to the stage 5 years after commencement of commercial production at which stage 20% of the shareholding must be

divested to Indonesian interests (with foreign shareholders being permitted to retain 80% of the shares for the balance of the project life).

Surface Rights

The holders of mining rights have the right to enter and remain in the area covered by the mining rights subject to their either acquiring the surface rights or compensating the owners of the surface rights.

Holders of mining rights must negotiate and pay to the owner of the surface rights, compensation as mutually agreed. This will generally take into consideration the value of crops, trees, buildings, access ways etc upon the surface. There are no compulsory acquisition laws or administrative tribunals with power to determine compensation. In practice, most compensation is negotiated between the holder of the mining rights and the holder of the surface rights with the assistance of local government officials acting as mediators.

Most holders of mining rights do not acquire registered land titles to the land on which they conduct mining. For production operations, however, acquisition of the land from the owner of the surface rights is required.

Forestry issues

The Forestry Law 1999 restricts mining activities within declared forest areas and prohibits open pit mining within protected forests.

There are procedures for obtaining permission to conduct certain mining activities within forest areas and procedures to change the status of existing forest areas - these procedures involve various approvals and take lengthy periods of time to be granted.

It is illegal to conduct exploration or mining activities within declared forest areas without first obtaining the relevant approval.

1.2 Impact on capital structure

The table below sets out the impact of the JDC Transaction on the Company's capital structure.

	Fully Paid Shares	Options
Existing	42,730,134	13,860,289 (Quoted)
Existing		4 million
Existing		1,575,000
Sub Total	42,730,134	19,435,289
Acquisition	210,000,000	21 million
Cash Placement (Maximum)	66,666,667
Executive Options		12 million
Total	319,396,801	$*52,435,289$

There will also be an appropriate employee option plan for key employees of the Company established by the new Board following Completion. It is not expected that this will necessitate Shareholder approval.

$1.3$ Pro Forma Consolidated Balance Sheet

Below is a pro-forma consolidated balance sheet prepared on the basis of the Company's consolidated audited 30 June 2010 accounts and the assumptions set out below.

	Audited, as at 30 June 2010	Pro Forma Unaudited as at 30 June 2010
	\$	\$
ASSETS Current Assets
Cash and cash equivalents	2,651,054	7,873.277
Trade and other receivables	21,048	21,048
Total Current Assets	2,672,102	7,894,325
Non-current Assets
Property, plant & equipment Exploration and Evaluation Expenditure	14,832	77,792,609
Total Non-current Assets	14,832	77,792,609
TOTAL ASSETS	2,686,934	85,686,934
LIABILITIES Current Liabilities Trade and other payables	47,295	1,397,295

Total Current Liabilities	47,295	1,397,295
TOTAL LIABILITIES	47,295	1,397,295
NET ASSETS	2,639,639	84,289,639

The pro forma consolidated balance sheet assumes:

$(a)$ the issue and allotment by the Company of 66,666,667 Capital Raising Shares for cash to raise a total of \$20 million before costs;
the payment of all Transaction costs (brokerage fees, ASX fees and other expenses) $(b)$ estimated at \$1,350,000 remain unpaid:
$(c)$ USD/AUD exchange rate \$0.90 and, therefore the payment of AU\$14,777,777 in cash as Initial Payments under the Share Sale Agreement;
$(e)$ The acquisition of JDC is accounted for at a cost of \$77,777,777 (210 million Shares at 30 cents each plus AU\$14,777,777 in cash);
$(f)$ No provision is made for the Conditional Payments.

Use of Funds $1.4$

It is currently proposed that the \$20 million to be raised pursuant to the Capital Raising together with the existing cash reserves of the Company of approximately \$2.7 million will be allocated as follows:

Capital Raising/Transaction Costs	\$1,350,000
Initial Payments	\$14,777,777
Corporate, Finance, Administration - Year 1	\$2,810,000
Tenements & Exploration - Year 1	\$3,762,223

$1.5$ Requiatory Requirements - Resolution 1

Listing Rule 11.1.2

To the extent that the acquisition of the JDC Shares constitutes the Company undergoing a significant change to the nature or scale of its activities. Chapter 11 of the Listing Rules requires that certain steps are required to be taken. The acquisition of the JDC Shares is being submitted for approval, therefore, also for the purposes of Listing Rule 11.1.2 which provides that: "If ASX requires the entity must get the approval of holders of its ordinary securities and must comply with any requirements of ASX in relation to the notice of meeting. The notice of meeting must include a voting exclusion statement.". These requirements have been complied with in this Notice of Meeting and Explanatory Memorandum.

$2.$ RESOLUTION 2 - ISSUE OF SHARES AND OPTIONS

$2.1$ Background to Resolution 2

For further background and details on the JDC Transaction refer to Section 1.

The 276,666,667 Shares referred to in Resolution 2 comprise:

210 million Vendor Shares to be issued to the Vendors as part of the $(a)$ consideration under the Share Sale Agreement:
$(b)$ 66,666,667 Shares comprising the Capital Raising Shares to be issued at Completion at a price of 30 cents per Share in fulfilment of one of the conditions in the Share Sale Agreement.

The 21 million Vendor Options referred to in Resolution 2 comprise part of the consideration to be issued to the Vendors pursuant to the Share Sale Agreement.

$2.2$ Requlatory Requirements - Resolution 2

Listing Rules Chapter 7 $(a)$

Listing Rule 7.1 limits the capacity of the Company to issue securities without the approval of its Shareholders. In broad terms, that rule provides that a Company may not, within a 12 month period, issue securities equal to more than 15% of the total number of ordinary securities on issue at the beginning of the 12 month period unless the issue is approved by

Shareholders or the issue otherwise comes within one of the exceptions to Listing Rule $7.1.$

The Shares and Options the subject of Resolution 2 would exceed the 15% Rule.

Resolution 2 therefore is designed to fulfil the requirements of Listing Rule 7.1. Also if the issue of Options the subject of Resolution 2 is approved by Shareholders the Shares. when issued on exercise of those Options, will not be included within the 15% limitation contained in Listing Rule 7.1.

Listing Rule 7.3 contains requirements as to the contents of a Notice sent to Shareholders for the purposes of Listing Rule 7.1 and the following information is included in the Explanatory Memorandum for that purpose:

$(i)$ The maximum number of securities to be issued (if known) or the formula for calculating the number of securities to be issued to the person: the maximum number of securities the subject of Resolution 2 is 276,666,667 Shares and 21 million Vendor Options.
$(ii)$ The date by which the entity will issue the securities: the Shares and Options the subject of Resolution 2 will be issued and allotted no later than three months after the date of the Meeting or such later date as permitted by any waiver granted by ASX and will be issued on the one date.
The issue price of the securities: 210 million of the Shares will be issued at a non $(iii)$ cash consideration price of 30 cents per Share (the actual consideration being the transfer of the JDC Securities) and the Options the subject of Resolution 2 will be issued for nil monetary consideration. 66,666,667 of the Shares referred to in paragraph (b) of Resolution 2 (the Capital Raising Shares) will be issued for cash at a price of 30 cents per Share.
$(iv)$ The names of the allottees:
210 million of the Shares and the 21 million Options will be allotted to the $(i)$ Vendors (being the entities identified in Section 5 together with a number of unassociated holders of less material parcels of JDC Securities) including 125 million Shares and 12.5 million Options to the Incoming Directors as set out in Section 2.2(b) below;
$(11)$ the 66,666,667 Capital Raising Shares will be issued to nominees of the Broker all of whom will be "Exempt Offerees".
$(v)$ The terms of the securities: the Shares will rank equally with all the existing Shares on issue: the terms and conditions of the Options the subject of Resolution 2 are set out in Section 2.3.
The intended use of the funds raised: no funds will be raised from the issue of the $(vi)$ 210 million Vendor Shares and the 21 million Vendor Options the subject of Resolution 2. The funds raised from the issues of 66,666,667 Shares for cash will be used as set out in Section 1.4.
$(vii)$ A voting exclusion statement: a voting exclusion statement is set out in the Notice of Meeting.

$(b)$ Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party.

Directors and entities controlled by Directors are "related parties" for this purpose.

Similarly individuals who are likely to become Directors are defined to be "related parties" under the Corporations Act. Section 228(6).

If Resolutions 2 and 3 are passed and Completion occurs the Incoming Directors' interests in the Company will be as follows:

Incoming Director	No. of	%age of	No. of	%age
	Shares	Shares	Options	Options
P Lynch	55 million	17.2%	5.5 million	10.5%
P Hanna	25 million	7.8%	2.5 million	4.7%
D Martino	36,513,334	11.4%	4,246,667	8.1%
J Middleton	10 million	3.1%	11 million	2.1%

If all of the Options that will be on issue immediately after Completion were exercised the Incoming Directors would have the following interests in the Company:

Incoming Director	No. of Shares	%age of Shares
P Lynch	60.5 million	16.2%
P Hanna	27.5 million	7.4%
D Martino	40.760.001	10.9%
J Middleton	21 million	5.6%

The definition of what constitutes giving a financial benefit pursuant to Section 229 of the Corporations Act is broad and does not necessarily involve paying money. It includes buying or selling assets, issuing securities and granting options. It includes giving a financial benefit indirectly, for example, through one or more interposed entities.

Paragraph 229(1)(c) of the Corporations Act provides that in deciding whether a financial benefit is given any consideration that is given for the benefit is to be disregarded, even if it is adequate.

Because Messrs P Lynch, P Hanna, D Martino and J Middleton will be appointed as Directors as from Completion they are "related parties" of the Company pursuant to Section 228(6) of the Corporations Act.

It is anticipated that under the Share Sale Agreement the Incoming Directors will participate in the issue of 125 million of the Vendor Shares and 12.5 million of the Vendor Options as follows:

Mr P Lynch (or nominee) 55million Vendor Shares and 5.5 million Vendor Options Mr P Hanna (or nominee) 25 million Vendor Shares and 2.5 million Vendor Options Mr D Martino (or nominee) 35 million Vendor Shares and 3.5 million Vendor Options Mr J Middleton (or nominee) 10 million Vendor Shares and 1 million Vendor Options

As noted in Section 1.1 none of the Incoming Directors or any of their associates will participate in any of the cash payments that are to be made to the Kalimantan Vendors either pursuant to the Initial Payments or the Conditional Payments.

The issue of 125 million of the Vendor Shares and the granting of 12.5 million of the Vendor Options to the Incoming Directors as set out above and as contemplated by Resolution 2, therefore, constitutes giving financial benefits to related parties.

The Incoming Directors will not be participating in the Capital Raising.

Section 208 of the Corporations Act provides an exception from the prohibition contained in Chapter 2E and provides that a public company may give a financial benefit to a related party if a resolution of the shareholders of the public company permit the benefit to be given, and the resolution was passed at a general meeting of the public company held within 15 months before the public company gives the benefit and if the conditions prescribed by Division 3 of Part 2E.1 of the Corporations Act have been satisfied in relation to the resolution.

Resolution 2 therefore, is intended to satisfy the requirements of Section 208 in relation to the issuing of the 125 million Vendor Shares and 12.5 million Vendor Options of the Incoming Directors as outlined above.

The requirements of Section 219 of the Corporations Act with regards to the Explanatory Memorandum to accompany the Notice of Meeting for the purposes of Resolution 2 are as follows. The Explanatory Memorandum must set out:

the related parties to whom the proposed resolution would permit financial benefits to be $(i)$ given: The related parties are Messrs P Lynch, P Hanna, D Martino and J Middleton.
the nature of the financial benefits: The financial benefits are the 125 million Vendor $(ii)$ Shares and 12.5 million Vendor Options to be issued/granted to the Incoming Directors (or their nominees) and any advantages thereby conferred which can only be gauged by reference to the consideration being provided (being nil cash consideration - the actual consideration being the number of JDC Securities being transferred to Altera by each of the Incoming Directors, namely: a total of 125 million ordinary shares and 12.5 million options in JDC, the underlying assets of the Company, the price of the Shares from time to time and the number of Shares and other securities on issue in the Company from time to time. At the date of this Explanatory Memorandum, the material assets of the Company comprise cash and receivables of approximately \$2.7 million and interests in coal exploration tenements located in Queensland.

	Fully Paid Shares	Options.
Existing	42,730,154	13,860,289 (Quoted)
Existing		4 million
Existing		1.575.000
Sub Total	42.730.154	19.435.289

The Company's issued capital at the date of this Notice is as follows:

in relation to each Director of the Company: $(iii)$

if the Director wanted to make a recommendation to shareholders about the $(1)$ proposed resolution - the recommendation and his or her reasons for it: or
$(2)$ if not why not? or
if the Director was not available to consider the proposed resolution why not? $(3)$

Each of the Directors recommends that Shareholders vote in favour of Resolution 2. This recommendation is made notwithstanding that the Independent Expert has concluded that the Transaction is not fair to Shareholders but is reasonable.

In either case there will be some likelihood that the exploration thereafter carried out will be sufficiently successful as to lead to an increase in value per Share.

$(iv)$ In relation to each such director whether the director had an interest in the outcome of the proposed resolution:

No Director has an interest in the outcome of Resolution 2 other than as the holder of securities in the Company and except as follows:

A legal firm operated by Mr Shervington will receive professional fees for work performed in the preparation of the Notice of Meeting and this Explanatory Memorandum and the JDC Transaction generally.
All other information that is reasonably required by members in order to decide whether $(v)$ or not it is in the Company's interest to pass the proposed Resolution 2 and is known to the Company or any of its directors:
Shareholders are referred to the attached report of the Independent Expert, BDO Corporate Finance (WA) Pty Ltd, which concludes that the Transaction is not fair but reasonable.
The issue of the Shares and Options pursuant to Resolution 2 will cause dilution $\bullet$ of the holdings of the existing Shareholders and existing Optionholders.
If Shareholders approve Resolution 2, 276,666,667 Shares and 21 million Options will be issued thereby affecting the issued capital outlined in paragraph (ii) above.
As at the date of this Explanatory Memorandum each of the existing Directors has a relevant interest in the following securities of the Company:

	Relevant Interest in Shares	Relevant Interest in Options
J D Shervington	3.951.807	2,486,746
H Kehal	365,686	1,525,000
B Abbott	2,000.686	1,900,000

As at the date of this Explanatory Memorandum each of the Incoming Directors has no relevant interest in any securities of Altera other than Mr Martino who. through controlled entities has interests in 1,513,334 Shares and 746,667 Options.

If all of the Options the subject of Resolution 2 are issued and exercised, the A issued capital of the Company would increase from 319,396,821 Shares to 340,396,821 Shares.

In that event the 12.5 million Shares issued upon exercise of the Vendor Options to be issued to the Incoming Directors would represent approximately 3.67% of the then issued capital and the total Shares in which the Incoming Directors would have a Relevant Interest would represent approximately 40.84% of the then issued Shares (139,013,334 Shares out of 340,396,821 Shares).

These calculations assume that no other Shares have been issued and that the Incoming Directors had not acquired any other Shares.

On the same assumptions as those immediately above but on the basis that all of the other Options now on issue plus the 12 million Executive Options were also exercised those 12.5 million Shares would represent approximately 3.36% of the then issued Shares (12.5 million Shares out of 371,832,110 Shares). In this event, the total Shares in which the Incoming Directors would have a Relevant Interest would represent approximately 40.28% of the then issued Shares (149,760,001 Shares out of 371,832,110 Shares).
To the extent that the exercise price of the Options the subject of Resolution 2 $\bullet$ may be below the market price of the Company's Shares at the time(s) those Options are exercised, the Company will have foregone the opportunity of issuing the relevant Shares at a price higher than the exercise price for the Options and closer to the relevant market price at that time.
The value attributable to each Option to be granted to the Incoming Directors pursuant to Resolutions 2 is calculated to be \$0.1438 (please refer to the Option pricing methodology which is set out below in this Section 2.2). In accordance with a policy requirement of ASIC, the Company having taken appropriate advice, in light of that policy notes the Company attributes a total value of \$1,797,500 in respect of the 12.5 million Options to be issued to the Incoming Directors pursuant to Resolution 2 based on the last sale price of Shares of \$0.30 on 1 September 2010. In the event that Resolution 2 is approved each Incoming Director concerned, pursuant to his direct or indirect interest in the Options, will

receive a financial benefit pursuant to the issue of the Options the subject of Resolution 2 of approximately \$0.1438 per Option.

In the 12 months preceding 25 October 2010 the Shares traded in a range of 4.8 cents to 48 cents. The sale price of the Company's Shares was 45.5 cents on 25 October 2010, the last trading day on ASX before the date of this Notice.
The Options to be issued pursuant to Resolution 2 will be issued on the terms described in Section 2.3.
It is proposed that the annual remuneration of the Incoming Directors for the period from their appointment will be as follows:

Mr P Lynch	\$210,000
Mr P Hanna	\$240,000
Mr D Martino	\$50,000
Mr J Middleton	\$400,000

It is also proposed that Mr J Middleton will be granted 5 million 50 cent Options and 5 million 75 cent Options as described in Section 3.
Altera is informed by JDC's legal advisers that they have provided legal advice to JDC that the Shareholdings of the Vendors in Altera do not require aggregation for the purposes of calculating their respective voting power levels under Section 610 of the Corporations Act.

For example, the "voting power" of the Incoming Directors for the purposes of Section 610 of the Corporations Act at Completion will, on this basis, be as follows:

Mr P Lynch	$17.22\%$
Mr D Martino	11.43%
Mr P Hanna	7.83%
Mr J Middleton	3.13%

Valuation of the Options

In accordance with a policy requirement of ASIC, the Company having taken appropriate independent advice, in light of that policy notes the Company attributes a total value of \$1,797,500 in respect of the 12.5 million Options to be issued to Incoming Directors pursuant to Resolution 2 based on the last sale price of Shares of \$0.30 on 1 September 2010.

This value of the Options has been derived using the "Black and Scholes" valuation method and is based upon the following inputs and assumptions:

the hypothetical price of the Company's shares is \$0.30 (being the last trading price $(a)$ per Share on 1 September 2010);
$(b)$ an exercise price of \$0.30 for the Options;
a risk free rate of 5.1% per annum (being the risk free rate on government bonds with $(c)$ a similar maturity as the Options);
$(d)$ a volatility factor of 85% (based on the standard deviation measurement for a number of selected exploration companies of a similar size and nature to the Company);
$(e)$ an expected life of 2 years for the Options:
$(f)$ dividend yield of nil; and
$(g)$ all the other terms and conditions of the Options as outlined in Section 2.3.

Other than as set out in this Explanatory Memorandum, there is no further information considered by the Directors to be relevant.

$(c)$ Listing Rules Chapter 10

Under Listing Rule 10.1 an entity must not, without Shareholder approval, acquire a "substantial asset" from a "related party". As noted above the Incoming Directors are "related parties". However, Listing Rule 10.3 exempts from the prohibition in Rule 10.1 a transaction between an entity and a person who is a related party by reason only of the transaction and the application to it of subsection 228(6) of the Corporations act.

Approval is, therefore, not required for the JDC Transaction for the purposes of Listing Rule $10.1.$

Under Listing Rule 10.11, subject to the exceptions in Rule 10.12, a company must not issue "equity securities" to "related parties" of the company without the approval of the holders of ordinary securities. One of the exceptions in Listing Rule 10.12 (Exception 6) is where the person is a related party by reason only of the transaction which is the reason for the issue of the securities and the application to it of Section 228(6) of the Corporations Act.

Approval is, therefore, not required for the JDC Transaction for the purposes of Listing Rule $10.11.$

$2.3$ Terms of the Options

The terms and conditions of the Options to be issued pursuant to Resolution 2 are as follows:

Each Option, when exercised, entitles the holder to subscribe for and be allotted $(a)$ one Share in the Capital of the Company;
$(b)$ Each Option is exercisable on or before 5.00 pm Perth time on 30 September $2012:$
$(c)$ The Options can be exercised in whole or in part, and if exercised in part multiples of 2,000 must be exercised on each occasion;
$(d)$ The exercise price of each Option is \$0.30;
The Options may be transferred by the Optionholder. $(e)$
The Optionholder will be permitted to participate in any new pro-rata issue of $(f)$ securities of the Company if it has exercised the Options prior to the relevant record date for any such issue and the Optionholder will be notified of any such issue in the manner required by the Listing Rules;
The Options do not confer on the holder any rights to participate in dividends until $(g)$ Shares are allocated pursuant to the exercise of the Options;
$(h)$ In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules (if applicable) and in any case in a manner which will not result in any benefits being conferred on the Optionholder which are not conferred on Shareholders:
$(i)$ The number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to the exercise of the Options so that, upon exercise of the Options the number of Shares received by the Optionholder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issue;
$(i)$ Application will not be made for the Options to be granted quotation by ASX;
$(k)$ Subject to paragraph (i) above the Options do not confer on the holder any right to a change in the exercise price of the Options or a change to the number of underlying securities over which the Options can be exercised; and
Each Option will automatically be cancelled in the circumstances provided for in $($ l $)$ clause 4.2 of the Share Sale Agreement.

RESOLUTION 3 - ISSUE OF EXECUTIVE OPTIONS $\overline{3}$ .

$(a)$ Background

It is a condition of the Share Sale Agreement that the 50 cent Options and the 75 cent Options are issued at Completion to Messrs J Middleton and C Turvey in the manner described in this Section 3.

Regulatory Requirements - Resolution 3 (b)

Listing Rules Chapter 7

As noted above, Listing Rule 7.1 limits the capacity of the Company to issue securities without the approval of its Shareholders. In broad terms, that rule provides that a Company may not, within a 12 month period, issue securities equal to more than 15% of the total number of ordinary securities on issue at the beginning of the 12 month period unless the issue is approved by Shareholders or the issue otherwise comes within one of the exceptions to Listing Rule 7.1.

The Options the subject of Resolution 3 would, in conjunction with the issue of Shares and Options pursuant to Resolution 2 exceed the 15% Rule.

Resolution 3 therefore is designed to fulfil the requirements of Listing Rule 7.1. Also if the issue of Options the subject of Resolution 3 is approved by Shareholders the Shares, when issued on exercise of those Options, will not be included within the 15% limitation contained in Listing Rule 7.1.

The maximum number of securities to be issued (if known) or the formula for $(i)$ calculating the number of securities to be issued to the person: the maximum number of securities the subject of Resolution 3 is 12 million Options.
$(ii)$ The date by which the entity will issue the securities: the Options the subject of Resolution 3 will be issued and allotted no later than three months after the date of the Meeting or such later date as permitted by any waiver granted by ASX and will be issued on the one date.
The issue price of the securities: the Options the subject of Resolution 3 will be $(iii)$ issued for nil monetary consideration. The Options are exercisable for cash at prices of 50 cents and 75 cents each as described hereunder.
The names of the allottees: $(iv)$
10 million of the Options will be allotted to Mr James Middleton, the $(1)$ proposed Managing Director of the Company;
$(2)$ 2 million of the Options will be issued to Mr Chris Turvey, the proposed Exploration Manager of the Company.
$(v)$ The terms of the securities: the terms and conditions of the Options the subject of Resolution 3 are set out below:
$(1)$ 5,000,000 50 cent Options to be issued to Mr James Middleton on the following essential terms:
- The Options will each be exercisable at 50 cents; $(A)$
- The Options will expire 4 years from date of issue; $(B)$
- $(C)$ The Options will vest upon Mr Middleton completing 12 months of employment with the Company; and
- $(D)$ $(i)$ Each Option, when exercised, entitles the holder to subscribe for and be allotted one Share in the Capital of the Company;
- $(ii)$ The Options can be exercised in whole or in part, and if exercised in part multiples of 2,000 must be exercised on each occasion;
- The Options may be transferred by the Optionholder. $(iii)$
- The Optionholder will be permitted to participate in any $(iv)$ new pro-rata issue of securities of the Company if it has exercised the Options prior to the relevant record date for any such issue and the Optionholder will be notified

of any such issue in the manner required by the Listing Rules:

$(v)$ The Options do not confer on the holder any rights to participate in dividends until Shares are allocated pursuant to the exercise of the Options:
$(vi)$ In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules (if applicable) and in any case in a manner which will not result in any benefits being conferred on the Optionholder which are not conferred on Shareholders:
$(vii)$ The number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to the exercise of the Options so that, upon exercise of the Options the number of Shares received by the Optionholder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issue;
$(viii)$ Application will not be made for the Options to be granted quotation by ASX:
$(ix)$ Subject to paragraph (vii) above the Options do not confer on the holder any right to a change in the exercise price of the Options or a change to the number of underlying securities over which the Options can be exercised.
$(2)$ 5,000,000 75 cent Options to be issued to Mr James Middleton on the following essential terms:
$(A)$ The Options will each be exercisable at 75 cents;
$(B)$ The Options will expire 4 years from date of issue;
$(C)$ The Options will vest upon Mr Middleton completing 24 months of employment with the Company; and
$(D)$ Each Option, when exercised, entitles the holder to $(i)$ subscribe for and be allotted one Share in the Capital of the Company;
- $(ii)$ The Options can be exercised in whole or in part, and if exercised in part multiples of 2,000 must be exercised on each occasion:
- $(iii)$ The Options may be transferred by the Optionholder.
$(iv)$ The Optionholder will be permitted to participate in any new pro-rata issue of securities of the Company if it has exercised the Options prior to the relevant record date for any such issue and the Optionholder will be notified of any such issue in the manner required by the Listing Rules:
$(v)$ The Options do not confer on the holder any rights to participate in dividends until Shares are allocated pursuant to the exercise of the Options;
$(vi)$ In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules (if applicable) and in any case in a manner which will not result in any benefits being conferred on the Optionholder which are not conferred on Shareholders:
$(vii)$ The number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to the exercise of the Options so that, upon exercise of the Options the number of Shares received by the Optionholder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issue;
$(viii)$ Application will not be made for the Options to be granted quotation by ASX;
$(ix)$ Subject to paragraph (vii) above the Options do not confer on the holder any right to a change in the exercise price of the Options or a change to the number of underlying securities over which the Options can be exercised.
$(3)$ 1,000,000 50 cent Options to be issued to Mr Chris Turvey on the following essential terms:
$(A)$ The Options will each be exercisable at 50 cents:
$(B)$ The Options will expire 4 years from date of issue;
$(C)$ The Options will vest upon Mr Turvey completing 12 months of employment with the Company; and
$(D)$ $(i)$ Each Option, when exercised, entitles the holder to subscribe for and be allotted one Share in the Capital of the Company;
The Options can be exercised in whole or in part, and if $(i)$ exercised in part multiples of 2,000 must be exercised on each occasion:
$(iii)$ The Options may be transferred by the Optionholder.
$(iv)$ The Optionholder will be permitted to participate in any new pro-rata issue of securities of the Company if it has exercised the Options prior to the relevant record date for any such issue and the Optionholder will be notified of any such issue in the manner required by the Listing Rules;
$(v)$ The Options do not confer on the holder any rights to participate in dividends until Shares are allocated pursuant to the exercise of the Options;
In the event of a reorganisation of the issued capital of $(v_i)$ the Company, the Options will be reorganised in accordance with the Listing Rules (if applicable) and in any case in a manner which will not result in any benefits being conferred on the Optionholder which are not conferred on Shareholders:
$(vii)$ The number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to the exercise of the Options so that, upon exercise of the Options the number of Shares received by the Optionholder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issue:
$(viii)$ Application will not be made for the Options to be granted quotation by ASX;
$(ix)$ Subject to paragraph (vii) above the Options do not confer on the holder any right to a change in the exercise price of the Options or a change to the number of underlying securities over which the Options can be exercised.
$(4)$ 1,000,000 75 cent Options to be issued to Mr Chris Turvey on the following essential terms:
$(A)$ The Options will each be exercisable at 75 cents:
$(B)$ The Options will expire 4 years from date of issue;
$(C)$ The Options will vest upon Mr Turvey completing 24 months of employment with the Company; and
$(D)$ Each Option, when exercised, entitles the holder to $(i)$ subscribe for and be allotted one Share in the Capital of the Company:
$(ii)$ The Options can be exercised in whole or in part, and if exercised in part multiples of 2,000 must be exercised on each occasion:
$(iii)$ The Options may be transferred by the Optionholder.
The Optionholder will be permitted to participate in any $(iv)$ new pro-rata issue of securities of the Company if it has exercised the Options prior to the relevant record date for any such issue and the Optionholder will be notified of any such issue in the manner required by the Listing Rules;
$(v)$ The Options do not confer on the holder any rights to participate in dividends until Shares are allocated pursuant to the exercise of the Options:
$(vi)$ In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules (if applicable) and in any case in a manner which will not result in any benefits being conferred on the Optionholder which are not conferred on Shareholders:
$(vii)$ The number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to the exercise of the Options so that, upon exercise of the Options the number of Shares received by the Optionholder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issue;
$(viii)$ Application will not be made for the Options to be granted quotation by ASX;
Subject to paragraph (vii) above the Options do not $(ix)$ confer on the holder any right to a change in the exercise price of the Options or a change to the number of underlying securities over which the Options can be exercised.
$(v_i)$ The intended use of the funds raised: no funds will be raised from the issue of the Options the subject of Resolution 3. The funds raised from the exercise of the Options, if that occurs, will be used as working capital.

$(vii)$ A voting exclusion statement: a voting exclusion statement is set out in the Notice of Meeting.

$(c)$ Chapter 2E of the Corporations Act

As noted above, Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party.

Directors and entities controlled by Directors are "related parties" for this purpose.

Similarly individuals who are likely to become Directors are defined to be "related parties" under the Corporations Act.

If Resolutions 2 and 3 are passed and Completion occurs Mr Middleton's interests in the Company will be as follows:

Incoming Director	No. of	%age of	No. of	%age
	Shares	Shares	Options	Options
J Middleton	10 million	$3.1\%$	11 million	$2.1\%$

If all of the Options that will be issued immediately after Completion were exercised Mr Middleton would have the following interests in the Company:

Incoming Director	No. of Shares	%age of Shares
J Middleton	21 million	5.6%

Because Mr J Middleton will be appointed as a Director as from Completion he is a "related party" of the Company pursuant to Section 228(6) of the Corporations Act.

As noted in Sections 1.1 and 2.2(b) neither Mr Middleton nor any of his associates will participate in any of the cash payments that are to be made to the Kalimantan Vendors either pursuant to the Initial Payments or the Conditional Payments.

The issue of 10 million Options to Mr Middleton as contemplated by Resolution 3, therefore, constitutes giving financial benefits to a related party.

Resolution 3 therefore, is intended to satisfy the requirements of Section 208 in relation to the issuing of 10 million Options to Mr Middleton.

The requirements of Section 219 of the Corporations Act with regards to the Explanatory Memorandum to accompany the Notice of Meeting for the purposes of Resolution 3 are as follows. The Explanatory Memorandum must set out:

the related party to whom the proposed resolution would permit financial benefits to be $(i)$ given: The related party is Mr J Middleton.
$(ii)$ the nature of the financial benefits: The financial benefits are the 10 million Options to be granted to Mr Middleton and any advantages thereby conferred which can only be gauged by reference to the consideration being provided (being nil cash consideration) the underlying assets of the Company, the price of the Shares from time to time and the number of Shares and other securities on issue in the Company from time to time. At the date of this Explanatory Memorandum, the material assets of the Company comprise cash and receivables of approximately \$2.7 million and interests in coal exploration tenements located in Queensland.

	Fully Paid Shares	Options
Existing	42,730,134	13,860,289 (Quoted)
Existing		4 million
Existing		1.575.000
Sub Total	42,730,134	19,435,289

The Company's issued capital at the date of this Notice is as follows:

$(iii)$ in relation to each Director of the Company:
if the Director wanted to make a recommendation to shareholders about the $(A)$ proposed resolution - the recommendation and his or her reasons for it: or
if not why not? or $(B)$
$(C)$ if the Director was not available to consider the proposed resolution - why not?

Each of the Directors recommends that Shareholders vote in favour of Resolution 3 because the approval of the issue of the Options thereunder is a condition of the Share Sale Agreement.

This recommendation is made notwithstanding that the Independent Expert has concluded that the Transaction is not fair to Shareholders but is reasonable.

In either case there will be some likelihood that the exploration thereafter carried out will be sufficiently successful as to lead to an increase in value per Share.

$(iv)$ In relation to each such director whether the director had an interest in the outcome of the proposed resolution:

No Director has an interest in the outcome of Resolution 3 other than as the holder of securities in the Company and except as follows:

A legal firm operated by Mr Shervington will receive professional fees for work performed in the preparation of the Notice of Meeting and this Explanatory Memorandum and the JDC Transaction generally.
All other information that is reasonably required by members in order to decide whether $(v)$ or not it is in the Company's interest to pass the proposed Resolution 3 and is known to the Company or any of its directors:
Shareholders are referred to the attached report of the Independent Expert, BDO Corporate Finance (WA) Pty Ltd, which concludes that the Transaction is not fair but reasonable.
The issue of the Executive Options pursuant to Resolution 3 will cause dilution of the holdings of the existing Shareholders and existing Optionholders.
If Shareholders approve Resolution 3, 12 million Executive Options will be issued thereby affecting the issued capital outlined in paragraph (ii) above.
As at the date of this Explanatory Memorandum each of the existing Directors has a Relevant Interest in the following securities of the Company:

	Relevant Interest in Shares	Relevant Interest in Options
J D Shervington	3,951,807	2,486,746
H Kehal	365,686	1,525,000
B Abbott	2,000,686	1,900,000

If all of the Executive Options the subject of Resolution 3 are issued and exercised, the issued capital of the Company would increase from 319,396,821 Shares to 331,396,821 Shares.

In that event the 10 million Shares issued upon exercise of the Executive Options to be issued to Mr Middleton would represent approximately 3.01% of the then issued capital and the total Shares in which Mr Middleton would have a Relevant Interest would represent approximately 6.03% of the then issued Shares (20 million Shares out of 331,396,821 Shares).

These calculations assume that no other Shares have been issued and that Mr Middleton had not acquired any other Shares.

On the same assumptions as those immediately above but on the basis that all of the other Options now on issue together with the 12 million Executive Options were also exercised those 10 million Shares would represent approximately 2.68% of the then issued Shares (10 million Shares out of 371,832,110 Shares). In this event, the total Shares in which Mr Middleton would have a Relevant Interest would represent approximately 5.64% of the then issued Shares (21 million Shares out of 371,832,110 Shares).
To the extent that the exercise price of the Options the subject of Resolution 3 $\bullet$ may be below the market price of the Company's Shares at the time(s) those Options are exercised, the Company will have foregone the opportunity of issuing the relevant Shares at a price higher than the exercise price for the Options and closer to the relevant market price at that time.
The value attributable to each of the Options to be granted to Mr Middleton pursuant to Resolutions 3 is calculated to be 16.29 cents for the 50 cent Options and 13.72 cents for the 75 cent Options (please refer to the Option pricing methodology which is set out below in this Section 3). In accordance with a policy requirement of ASIC, the Company having taking appropriate advice, in light of that policy notes the Company attributes a total value of \$1,500,500 in respect of the 10 million Options to be issued to Mr Middleton pursuant to Resolution 3 based on the last sale price of Shares of \$0.30 on 31 August 2010. In the event that Resolution 3 is approved Mr Middleton, pursuant to his direct or indirect interest in the Options, will receive a financial benefit pursuant to the issue of the Options the subject of Resolution 3 of approximately \$0.15005 per Option on average.
In the 12 months preceding 25 October 2010 the Shares traded in a range of 4.8 cent to 48 cents. The sale price of the Company's Shares was 45.5 cents on 25 October 2010, the last trading day on ASX before the date of this Notice.
It is proposed that the annual remuneration of Mr Middleton for the period from his appointment will be as follows:

\$400,000 plus statutory superannuation.

It is proposed that the annual remuneration of the other Incoming Directors for $\bullet$ the period from their appointment will be as follows:

Mr P Lynch \$210,000: Mr P Hanna \$240,000; Mr D Martino \$51,000.

Valuation of the Options

In accordance with a policy requirement of ASIC, the Company having taken appropriate independent advice, in light of that policy notes the Company attributes a total value of \$1,800,600 in respect of the 12 million Options to be issued pursuant to Resolution 3 based on the last sale price of Shares of \$0.30 on 31 August 2010.

This value of the Options has been derived using the "Black and Scholes" valuation method and is based upon the following inputs and assumptions:

the hypothetical price of the Company's shares is \$0.30 (being the last trading price $(i)$ per Share on 31 August 2010);
$(ii)$ an exercise price of \$0.50 and \$0.75 for the Options;
$(iii)$ a risk free rate of 5.10% per annum (being the risk free rate on government bonds with a similar maturity as the Options);
a volatility factor of 85% (based on the standard deviation measurement for a number $(iv)$ of selected exploration companies of a similar size and nature to the Company);
an expected life of 4 years for the Options; $(v)$
$(vi)$ dividend yield of nil;
$(vii)$ all the other terms and conditions of the Options as outlined above in this Section 3; and
$(viii)$ no discount factor applied for vesting conditions.

Other than as set out in this Explanatory Memorandum, there is no further information considered by the Directors to be relevant.

$(c)$ Listing Rules Chapter 10

Under Listing Rule 10.11, subject to the exceptions in Rule 10.12, a company must not issue "equity securities" to "related parties" of the company without the approval of the holders of ordinary securities. As noted above, Mr Middleton is a "related party" of the Company. One of the exceptions in Listing Rule 10.12 (Exception 6) is where the person is a related party by reason only of the transaction which is the reason for the issue of the securities and the application to it of Section 228(6) of the Corporations Act.

Approval is, therefore, not required for the issue of Options to Mr Middleton pursuant to Resolution 3 for the purposes of Listing Rule 10.11.

4. RESOLUTION 4 - POTENTIAL CANCELLATION OF SHARES

$4.1$ Background

Paragraph (a) of Resolution 4 seeks Shareholder approval for the potential reduction of capital of the Company by the cancellation of the 210 million Vendor Shares to be issued to the Vendors under paragraph (a) of Resolution 2 with effect from the time immediately after the Fall-Back Condition is not fulfilled.

It is a term of the Share Sale Agreement that if the acquisition of the Shareholding Interests has not been finalised by the Completion Date, the date for finalisation of that acquisition can, in certain circumstances, be extended and Completion of the acquisition of the JDC Securities and the Capital Raising will proceed on the Completion Date.

However, it is also a term of the Share Sale Agreement that in those circumstances the 210 million Vendor Shares and the 21 million Vendor Options will be automatically cancelled for nil consideration unless within 4 months after the Completion Date either the acquisition of the Shareholding Interests is finalised or the acquisition of the BBM and BBP Shareholding Interests is finalised and the assignment of a Replacement Project to JDC in lieu of the AAK and AAM Shareholding Interests is finalised.

Paragraph (b) of Resolution 4 seeks Shareholder approval for the potential reduction of capital of the Company by the cancellation of some of the 210 million Vendor Shares to be issued to the Vendors under paragraph (a) of Resolution 2.

It is a term of the Share Sale Agreement that if, post Completion, the new Board, having conducted a comprehensive technical due diligence appraisal of the Projects, elects not to proceed with the acquisition of any of the Projects (and, therefore, Altera pays no part of the Final Instalment) and if JDC, in those circumstances, does not procure that a suitable replacement asset is assigned to Altera within 7 months of Completion as described in Section 1.1, then such number of the Vendor Shares as is required to be cancelled in order to result in the then net cash backing per Share post such cancellation being 6.3 cents, will be cancelled. Such a cancellation will occur pro-rata amongst the Vendors' holdings of Vendor Shares.

$4.2$ Regulatory Requirements - Resolution 4

Chapter 2J of the Corporations Act

Chapter 2J of the Corporations Act provides authority for a company to reduce its share capital.

The Corporations Act distinguishes between an "equal reduction" and a "selective reduction". The relevant definitions are:

"The reduction is either an equal reduction or a selective reduction. The reduction is an equal reduction if:

$(a)$ it relates only to ordinary shares; and
it applies to each holder of ordinary shares in proportion to the number of ordinary $(b)$ shares they hold; and
$(c)$ the terms of the reduction are the same for each holder of ordinary shares.

Otherwise, the reduction is a "selective reduction"."

The Corporations Act provides in subsection 256B(1) that:

"A company may reduce its share capital in a way that is not otherwise authorized by law if the reduction:

$(a)$ is fair and reasonable to the company's shareholders as a whole; and
$(b)$ does not materially prejudice the company's ability to pay its creditors; and
$(c)$ is approved by shareholders under section 256C."

Subsection 256C(2) of the Corporations Act is as follows:

"Special shareholder approval for selective reduction

If the reduction is a selective reduction, it must be approved by either:

$(a)$ a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or
$(b)$ a resolution agreed to, at a general meeting, by all ordinary shareholders.

If the reduction involves the cancellation of shares, the reduction must also be approved by a special resolution passed at a meeting of the shareholders whose shares are to be cancelled."

Resolution 4 is designed to fulfill the requirements of Subsection 256C(2) of the Corporations Act.

As noted above, it is a provision of the Share Sale Agreement that the issue of the 210 million Vendor Shares will be cancelled in the event that the Fall-Back Condition is not fulfilled or in the circumstances where the new Board does not proceed with the acquisition of any of the Projects in the circumstances described in Section 1.1, a proportion of the 210 million Vendor Shares will be cancelled. A further meeting of the Vendors, as holders of the Vendors' Shares, will, therefore, be held immediately after the issue of the 210 million Vendor Shares under Resolution 2 and as part of Completion at which the Vendors will be required to approve the potential cancellation of the 210 million Vendor Shares as contemplated by the Share Sale Agreement and that meeting will fulfill the requirements of Subsection 256C(2) of the Corporations Act insofar as that Subsection requires that the reduction must also be approved by a special resolution passed at a meeting of those shareholders whose shares are to be cancelled.

In essence, the reason why the Capital Reduction is proposed is that it gives effect to a contractual right that the Company has under the terms of the Share Sale Agreement.

Subsection 256C(4) of the Corporations Act requires that a notice of meeting in respect of a "selective reduction" must also contain all known information that is material to the decision on how to vote.

All such information is considered to be contained in the Notice and the Explanatory Memorandum.

ASIC Policy

The Australian Securities Commission issued a Practice Note (Practice Note 29) in relation to "selective capital reductions" in which it sets out its views on what information should be provided to shareholders by a company which is proposing a selective capital reduction. It is assumed that the ASIC (the successor to the Australian Securities Commission) adopts the views expressed in that Practice Note. The information set out hereunder and elsewhere in this Explanatory Memorandum is intended to comply with the relevant views expressed by the Australian Securities Commission in Practice Note 29:

This Explanatory Memorandum contains all information known to the Company $1_n$ and to the Directors to be material to the making of the decision by the Shareholders who are entitled to vote on Resolution 4.
$2.$ Set out hereunder are the interests of Directors in terms of:
the securities affected by the Capital Reduction; $(a)$
$(b)$ the securities of the Company generally; and
any general interest in the broad proposal to be effected. $(c)$

The Directors have resolved to forward this Notice and Explanatory Memorandum to Shareholders for approval.

The Directors have no interests in the Shares which are the securities affected by the Capital Reduction.

Set out in Section 3(c) are details of each of the Directors' relevant interests in the securities of the Company as at the date of this Explanatory Memorandum.

None of the Directors has a personal interest in the transactions under the Share Sale Agreement other than as a security holder of the Company.

$3.$ The Directors each recommend that Shareholders vote for Resolution 4 because passage thereof will facilitate the fulfilment of a contractual right of the Company.
$4₁$ There are no benefits "in relation to the Capital Reduction" that are being offered or will be offered to any person which are not being offered to all Shareholders.
There are currently no Shares held in the Company by the Vendors other than as $5.5$ set out in Section 2.2(b). No person will receive consideration as part of the Capital Reduction and no person will have any liability to pay amounts unpaid on Shares reduced as part of the Capital Reduction. Accordingly it is not proposed that any Shareholder will be precluded from voting on Resolution 4.
None of the Shareholders whose Shares are not being cancelled will be entitled to $6.$ vote in respect of the Vendors' Approval.
$7₁$ The Capital Reduction will not of itself have any effect on the capacity of the Company to pay its existing liabilities. The only effects on the financial or capital structure of the Company will be to:
cancel up to 210 million Vendor Shares to be issued to the Vendors; and $(a)$
$(b)$ reducing the Company's paid up capital at the time of the cancellation by up to \$63 million.

At the time the Capital Reduction occurs, the paid up capital of the Company may have changed from that described in Section 1.2. The Capital Reduction will have no impact, however, on the Company's ability to pay its creditors as the Capital Reduction will have no effect on the assets and liabilities of the Company at the time of the Capital Reduction.

DEFINITIONS $5.$

In this Explanatory Memorandum:

"AAK" means PT Anugerah Alam Katingan an Indonesian based company;

"AAK Contract" means a memorandum of agreement dated 14 July 2010 in respect of the Anugerah Alam Katingan coal mining concession and project between JDC, Mr Tito Hiandarho Tjahyana and AAK;

"AAM" means PT Anugerah Alam Manuhing an Indonesian based company;

"AAM Contract" means a memorandum of agreement dated 14 July 2010 in respect of the Anugerah Alam Manuhing coal mining concession and project between JDC, Mr Tito Hiandarho Tjahyana and AAM;

"Agreement" or "Share Sale Agreement" means a sale and purchase agreement dated on or about 14 September 2010 between Altera and the Vendors for the purchase by Altera of the JDC Securities as varied by a Deed of Variation dated 13 October 2010;

"ASX" means ASX Limited ACN 008 624 691;

"ASX Requirements" means such requirements as may be imposed by ASX in order for the transactions contemplated by the Share Sale Agreement to be implemented;

"BBM" means PT Bumi Barito Mineral an Indonesian based company;

"BBM Contract" means a memorandum of agreement dated 3 August 2010 in respect of the Bumi Barito Mineral coal mining concession and project between JDC, Mr Drs Hery Gianto and BBM;

"BBP" means PT Borneo Bara Prima an Indonesian based company;

"BBP Contract" means a memorandum of agreement dated 3 August 2010 in respect of the Borneo Bara Prima coal mining concession and project between JDC, Mr Drs Hery Gianto and BBP;

"Board" means at any time the board of Directors of Altera as constituted at that time;

"Broker" means Soaring Securities Pty Ltd ACN 143 924 538;

"Capital Raising" means an issue of no more than 66,666,667 Shares to raise \$20 million before costs and "Capital Raising Shares" has a corresponding meaning;

"Capital Reduction" means the reduction of capital that may occur if the 210 million Vendor Shares are cancelled because the Fall-Back condition is not fulfilled as described in Section 4 or if some of the 210 million Vendor Shares are cancelled as described in Section 4:

"Company", "Altera Resources" and "AEA" means Altera Resources Limited ACN 082 541 437:

"Completion" means completion of the purchase of the JDC Shares pursuant to the Share Sale Agreement.

"Completion Date" means the date that Completion occurs currently proposed to be on or before 1 December 2010:

"Conditional Payment" means the obligations contained in the JDC Contracts, subject to the performance of the hurdles contained in the JDC Contracts, to pay further sums equating in total to US\$25.7 million:

"Corporations Act" means the Corporations Act 2001 (Cth);

"Director" means a director of the Company;

"Director Vendors" and "Incoming Directors" means Messrs P Lynch, P Hanna, J Middleton and D Martino:

"Executive Options" means the 12 million Options the subject of Resolution 3;

"Exempt Offerees" means persons to whom securities can be issued under one or more of the exemptions in subsection 708(8)(10)(11), or (12) of the Corporations Act;

"Existing Options" means the issued Options described in Section 1.1;

"Explanatory Memorandum" means this Explanatory Memorandum;

"Fall-Back Condition" means the condition of the Share Sale Agreement described in Section 4 whereby in order to avoid the cancellation of the Vendor Shares JDC/the Vendors must ensure that within 4 months of the Completion Date either:

Completion of the Shareholding Interests has been finalised; or $(a)$

Completion of the acquisition of the BBM and BBP Shareholding Interests has $(b)$ been finalised AND the assignment of a Replacement Project to JDC in lieu of the AAK and AAM Shareholding Interests has been finalised;

"50 cent Options" means the Options described in Section $3(b)(v)(1)$ and Section $3(b)(v)(3)$ ;

"Final Instalment" means the amount of up to US\$7,000,000 or such lesser amount as may be payable as a result of the Board acting in accordance with the terms of the Share Sale Agreement;

"First Instalment" means the amount of US\$6,300,000;

"GST" means Goods and Services Tax;

"HGO" means Dr. Hery Gianto, M.Sc;

"Independent Expert" means BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 $045:$

"Independent Geologist's Report" means the report by SRK Consulting (Australasia) Pty Ltd which is annexed to this Explanatory Memorandum;

"Initial Payments" means:

The sum of US\$10,000,000 payable under clauses 7.2(a) and 7.2(b) of the BBM $(a)$ Contract:
$(b)$ The sum of US\$2,000,000 payable under clauses 72.(a) and 7.2(b) of the BBP Contract:
The sum of US\$650,000 payable under clauses 7.2(a) and 7.2(b) of the AAK $(c)$ Contract:
$(d)$ The sum of US\$650,000 payable under clauses 7.2(a) and 7.2(b) of the AAM Contract,

to be paid by Altera in two instalments comprising the First Instalment and the Final Instalment;

"IUP" means an Izin Usaha Pertembangan issued under the Mineral and Coal Mining (New Mining Law) passed by the Indonesian Parliament on 16 December 2008 to be granted in substitution for the Tenements existing at the date of the execution of the Share Sale Agreement and which may, when granted, vary in size and or shape from the existing Tenements:

"JDC" means Jack Doolan Capital Pty Ltd ACN 125 524 450 of Level 5, 10 Market Street, Brisbane, Queensland;

"JDC Conditions" has the meaning given to that term in Section 1.1.

"JDC Contracts" means the following contracts pursuant to which JDC has the right to acquire interests in AAK, AAM, BBM and BBP as outlined below:

Memorandum of Agreement dated 14 July 2010 in respect of the Anugerah Alam $(a)$ Manuhing Coal Mining Concession and Project between JDC, Mr Tito Hiandarho Tjahyana and PT Anugerah Alam Manuhing ("AAM Contract");
Memorandum of Agreement dated 14 July 2010 in respect of the Anugerah Alam $(b)$ Katingan Coal Mining Concession and Project between JDC, Mr Tito Hiandarho Tjahyana and PT Anugerah Alam Katingan ("AAP Contract");
Memorandum of Agreement dated 3 August 2010 in respect of the Bumi Barito $(c)$ Mineral Coal Mining Concession and Project between JDC, Mr Drs Hery Gianto and PT Bumi Barito Mineral ("BBM Contract"); and
Memorandum of Agreement dated 3 August 2010 in respect of the Borneo Bara $(d)$ Prima Coal Mining Concession and Project between JDC, Mr Drs Hery Gianto and PT Borneo Bara Prima ("BBP Contract").

"JDC Securities" means all of the securities on issue in JDC, namely 210,000,000 ordinary shares and 21,000,000 options and includes all right, title and interests therein whatsoever. legal and beneficial;

"JDC Transaction" and "Transaction" means the proposed acquisition of the JDC Securities by Altera pursuant to and in accordance with the terms of the Share Sale Agreement;

"Kalimantan Vendors" means HGO, THT and any other owners of shares in AAK, AAM, BBM or BBP:

"KP" means a Kuasa Pertembangan licence issued by the Indonesian Government;

"Listing Rules" means the official listing rules of the ASX;

"Meeting" means the meeting of Shareholders convened by this Notice;

"Notice" and "Notice of Meeting" means the notice of meeting to which this Explanatory Memorandum is attached:

"Official List" means the official list of ASX;

"Option" means an option to subscribe for and be issued one Share and "Optionholder" has a corresponding meaning;

"Placement Agreement" means an agreement dated 6 September 2010 between the Company and the Broker pursuant to which the Broker agrees, subject to the conditions thereof, to procure subscribers for the Capital Raising for a fee of \$1,200,000;

"Principal Vendors" means Messrs Peter Lynch and Domenic Martino;

"Projects" means the 4 projects listed below and includes, where the context requires or allows, all of the rights, titles and interests, legal and beneficial, therein and all of the contracts, Tenements and instruments pursuant to which such rights, titles and interests are created or acquired:

the PT Bumi Barito Mineral Project ("BBM Project"); $(a)$
the PT Borneo Bara Prima Project ("BBP Project"); $(b)$
the Anugerah Alam Manuhing Project ("AAM Project"); and $(c)$
the PT Anugerah Alam Katingan Project ("AAK Project"). $(d)$

"Replacement Project" means a coal exploration project which is certified by an independent expert (based on reports from a reputable independent geological consultant) engaged by Altera as being of equal or greater value to Altera as the AAK and AAM Projects taking account of all relevant factors including, without limitation, any amounts that may have already been outlayed by Altera in respect of the AAM and AAK Projects, the location of the Replacement Project and the terms on which the Replacement Project is to be assigned to JDC and any liabilities thereby assumed by JDC/Altera.

"Resolution" means a resolution set out in this Notice:

"Section" means a section of this Explanatory Memorandum;

"75 cent Options" means the Options described in Section $3(b)(v)(2)$ and Section $3(b)(v)(4);$

"Share" means an ordinary fully paid ordinary share in the capital of the Company and "Shareholder" has a corresponding meaning; and

"Shareholding Interests" has the meaning given to that term in Section 1.1;

"Tenements" means all mineral tenure issued in respect of the Projects which as at the date of this Agreement comprise the 4 KPs true copies of which are contained in Appendix 1 of the Independent Geologist's Report;

"THT" means Mr Tito Hiandarko Tjahyana;

"Vendor Options" means the 21 million Options referred to in Resolution 2 which are, pursuant to the Share Sale Agreement, to be issued to the Vendors at Completion;

"Vendor Shares" means 210 million of the Shares in Resolution 2 which are, pursuant to the Share Sale Agreement, to be issued at Completion to the Vendors;

"Vendors" means the owners of the JDC Securities who include the Incoming Directors, the material holders being as follows:

	% of JDC Securities
Real Gold Pty Ltd	0.95%
Domenal Enterprises Pty Ltd	14.29%
Minimum Risk Pty Ltd	7.14%
Fanucci Pty Ltd	2.38%
Harun Abidin	11.90%
Anson Century Limited	2.38%
Caldwell Management AG	10.48%
Albiano Holdings Pty Ltd	1.43%
Nambia Pty Ltd	0.74%
Nambia Pty Ltd	0.69%
Peter Anthony Lynch & Laura Anne Lynch	16.67%
Peter Anthony Lynch & Laura Anne Lynch	9.52%
Patrick Joseph Hanna	11.90%
TJ Smock & Co Pty Ltd	4.76%

	% of JDC Securities
Total	95.23%

"Vendor's Approval" means the approval of the Vendors to the cancellation of the Vendors' Shares as described in Section 4.2.

References herein to Sections are to Sections of this Explanatory Memorandum.

To the extent that any agreements or legal arrangements are summarised or paraphrased in this Explanatory Memorandum the purpose is solely to assist Shareholders in gaining a succinct summary of the terms thereof and nothing will affect the full legal terms of the agreements or arrangements.

ANNEXURE "A"

JDC BALANCE SHEET AS AT 25 AUGUST 2010

ASSETS
Current Assets
Cash
Macquarie Cheque Account	\$194,897.59
Total Cash	\$194,879.59

RECEIVABLES
Pelta	\$176.00
Placement Funds	\$29,550.00
Total Receivables	\$28,726.00

Total Current Assets	\$223,605.59

Non Current Assets
Exploration Expenditure
BBM Project	\$2,542.26
Total Exploration Expenditure	\$2,542.26
Total Non Current Assets	\$2,542.26
Total Assets	\$226,147.85

LIABILITIES
Current Liabilities
Payables
Trade Creditors	\$20,369.36
Loan - Lynch	\$15,000.00
Total Payables	\$35,369.36

Accruals
Business Develop Exp	\$70,074.90
Total Accruals	\$70,074.90

GST Liabilities
GST Paid	$-$ \$98.09
Total GST Liabilities	$-$ \$98.98
Total Current Liabilities	\$105,345.28
Total Liabilities	\$105,345.28
Net Assets	\$120,802.57

Equity
Share Capital
Incorporation	\$1,000.00
Share Placement - Aug 10	\$209,992.00
Total Share Capital	\$210,992.00
Retained Earnings	$-$ \$824.00
Current Year Earnings	$-$ \$89,365.43
Total Equity	\$120,802.57

ALTERA RESOURCES LTD Independent Expert"s Report

26 October 2010

Financial Services Guide

26 October 2010

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 ("BDO" or "we" or "us" or "ours" as appropriate) has been engaged by Altera Resources Ltd ("Altera" or "the Client") to provide an independent expert"s report on whether the Transaction to purchase the securities in Jack Doolan Capital Pty Ltd is fair and reasonable to shareholders of Altera. You will be provided with a copy of our report as a retail client because you are a shareholder of Altera.

Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide ("FSG"). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

Who we are and how we can be contacted;
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Information about us

BDO Corporate Finance (WA) Pty Ltd is a member firm of the BDO network in Australia, a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International). The financial product advice in our report is provided by BDO Corporate Finance (WA) Pty Ltd and not by BDO or its related entities. BDO and its related entities provide services primarily in the areas of audit, tax, consulting and financial advisory services.

We do not have any formal associations or relationships with any entities that are issuers of financial products. However, you should note that we and BDO (and its related entities) might from time to time provide professional services to financial product issuers in the ordinary course of business.

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When we provide the authorised financial services we are engaged to provide expert reports in connection with the financial product of another person. Our reports indicate who has engaged us and the nature of the report we have been engaged to provide. When we provide the authorised services we are not acting for you.

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We only provide general financial product advice, not personal financial product advice. Our report does not take into account your personal objectives, financial situation or needs.

You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice

Financial Services Guide

Page 2

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We charge fees for providing reports, including this report. These fees are negotiated and agreed with the person who engages us to provide the report. Fees are agreed on an hourly basis or as a fixed amount depending on the terms of the agreement. The fee for this engagement is approximately \$20,000 - \$25,000.

Except for the fees referred to above, neither BDO, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report. We have received a fee from Altera for our professional services in providing this report. That fee is not linked in any way with our opinion as expressed in this report.

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Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing addressed to The Complaints Officer, BDO Corporate Finance (WA) Pty Ltd, PO Box 700 Subiaco WA 6872.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

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A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service ("FOS"). FOS is an independent organisation that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial service industry. FOS will be able to advise you as to whether or not they can be of assistance in this matter. Our FOS Membership Number is 12561.

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Contact details

You may contact us using the details set out at the top of our letterhead on page 1 of this FSG.

	Independent Expert's Report	1
1.	Introduction	1
2.	Summary and Opinion	1
3.	Scope of the Report	4
4.	Outline of the Transaction	5
5.	Profile of Altera Resources Ltd	8
6.	Profile of Jack Doolan Capital Pty Ltd	11
7.	Economic Analysis	13
8.	Industry Analysis	14
9.	Valuation Approach Adopted	16
10.	Valuation of Altera Resources Limited Prior	to
	Transaction	17
11.	Valuation of Altera Resources Limited Following	the
	Transaction	22
12.	Is the Transaction Fair?	24
13.	Is the Transaction Reasonable?	25
14.	Conclusion	27

15.	Sources of Information	28
16.	Independence	28
17.	Qualifications	28
18.	Disclaimers and Consents	29

Appendix 1 – Glossary

Appendix 2 – Valuation Methodologies

Appendix 3 – Independent Expert's Valuation on JDC's Exploration Assets

26 October 2010

The Directors Altera Resources Ltd 813 Wellington Street West Perth WA 6005

Dear Sirs

INDEPENDENT EXPERT'S REPORT

1. Introduction

On 14 September 2010, Altera Resources Ltd ("Altera" or "the Company") announced it had entered into an Agreement to acquire all of the issued securities in Jack Doolan Capital Pty Ltd ("JDC") for consideration comprising of 210 million vendor shares and 21 million vendor options, exercisable at \$0.30 each, expiring on 30 September 2012, to the Shareholders of JDC ("the Vendors"). In addition, Altera will also assume JDC"s obligations to pay an initial \$US13.3 million in connection with the acquisition of the four coal exploration projects and contingent obligations to pay up to a further US\$25.7 million upon achievement of certain milestones in relation to the coal projects. It is a condition of the Transaction that Altera concludes a capital raising of \$20 million by the issue of 66,666,667 ordinary fully paid shares at a price of \$0.30 per share ("the Capital Raising Shares"). This Independent Expert"s Report has been prepared to consider whether the Transaction is fair and reasonable to shareholders of Altera.

2. Summary and Opinion

2.1 Purpose of the report

The directors of Altera have requested that BDO Corporate Finance (WA) Pty Ltd ("BDO") prepare a report ("our Report") to express an opinion as to whether or not the proposed transaction to purchase the securities in Jack Doolan Capital Pty Ltd ("the Transaction") is fair and reasonable to the non associated shareholders of Altera ("Shareholders").

Our Report is prepared in order to assist the Shareholders in their decision whether to approve the Transaction

2.2 Approach

Our Report has been prepared having regard to Australian Securities and Investments Commission ("ASIC") Regulatory Guide 111 ("RG 111"), "Content of Expert"s Reports" and Regulatory Guide 112 ("RG 112") "Independence of Experts".

In arriving at our opinion, we have assessed the terms of the Transaction as outlined in the body of this report. We have considered:

How the value of an Altera share prior to the Transaction compares to the value of an Altera share following the Transaction;
Other factors which we consider to be relevant to the Shareholders in their assessment of the Transaction; and
The position of Shareholders should the Transaction not proceed.

2.3 Opinion

We have considered the terms of the Transaction as outlined in the body of this report and have concluded that the Transaction is not fair but reasonable to Shareholders.

2.4 Fairness

In Section 12 we determined how the value of an Altera share prior to the Transaction compares to the value of an Altera share following the Transaction, as detailed hereunder.

	Ref	Low \$	Preferred \$	High \$
Value of an Altera Share Pre Transaction	10.3	0.0617	0.0617	0.0617
Value of an Altera Share Post Transaction (excluding deferred consideration)	11.1	0.0351	0.0459	0.0621

The above valuation ranges are graphically presented below:

2.5 Reasonableness

We have considered the analysis in Section 13 of this report, in terms of both

advantages and disadvantages of the Transaction; and
alternatives, including the position of Shareholders if the Transaction does not proceed.

In our opinion, the position of Shareholders if the Transaction is approved is more advantageous than the position if the Transaction is not approved. In particular the extent of the level of dilution, whereby current shareholders would hold only 13.4% of Altera following the Transaction and in addition to this the level of upfront payments required, US\$6.3 million initially and then a further US\$7 million following technical due diligence are significant given the level of work that has been undertaken on the coal projects to date and the valuation of the Project. However given the capital raising to be completed as part of the Transaction, current shareholders may be able to add value if the projects are successful, with the protection of the cancellation of the vendor shares should milestones not be met. Accordingly, in the absence of any other relevant information we believe that the Transaction is reasonable for Shareholders.

The respective advantages and disadvantages considered are summarised below:

	ADVANTAGES AND DISADVANTAGES
Section	Advantages	Section	Disadvantages
13.4	Potential Share Price decline if the Transaction is not approved	13.5	Current Shareholders interests will be diluted from 100% to 13.4% of the share capital of the Company
13.4	Cash injection from proceeds of capital raising	13.5	Agreement requires significant upfront payments prior to any drilling
13.4	Incoming Executive Directors with experience in the coal industry	13.5	Early stage of Project exploration
13.4	Cancellation of the Vendor shares should milestones not be met

3. Scope of the Report

3.1 Purpose of the Report

There is no requirement under the ASX Listing Rules or the Corporations Act or Regulations for Altera to engage an independent expert in relation to the Transaction.

Notwithstanding the above Altera engaged BDO to prepare this report for to provide to Shareholders to assist them in deciding whether to accept or reject the Transaction.

3.2 Regulatory guidance

The Act does not define the meaning of "fair and reasonable". In determining whether the Transaction is fair and reasonable, we have had regard to the views expressed by ASIC in RG 111. This regulatory guide provides guidance as to what matters an independent expert should consider to assist security holders to make informed decisions about transactions.

This regulatory guide suggests that where the transaction is a control transaction the expert should focus on the substance of the control transaction rather than the legal mechanism to affect it. RG 111 suggests that where a transaction is a control transaction it should be analysed on a basis consistent with a takeover bid.

In our opinion the Transaction is not a control transaction as defined by RG 111, however we consider the most appropriate method to assess the Transaction is to consider whether in our opinion it is fair and reasonable to Shareholders.

3.3 Adopted basis of evaluation

RG 111 states that a transaction is fair if the value of the offer price or consideration is greater than the value of the securities subject of the offer. When considering the value of the securities subject of the offer in a control transaction the expert should consider this value inclusive of a control premium. However as we consider that this is not a control transaction we have not applied a control premium in our assessment. Further to this, RG 111 states that a transaction is reasonable if it is fair. It might also be reasonable if despite being "not fair" the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of any higher bid.

Having regard to the above, BDO has completed this comparison in two parts:

A comparison between the value of an Altera share prior to the Transaction and the value of an Altera share following the Transaction (fairness – see Section 12 "Is the Transaction Fair?"); and
An investigation into other significant factors to which Shareholders might give consideration, prior to approving the resolution, after reference to the value derived above (reasonableness – see Section 13 "Is the Transaction Reasonable?").

This assignment is a Valuation Engagement as defined by APES 225 Valuation Services. A Valuation Engagement means an engagement or assignment to perform a valuation and provide a valuation report where we determine an estimate of value of the Company by performing appropriate valuation procedures and where we apply the valuation approaches and methods that we consider to be appropriate in the circumstances

4. Outline of the Transaction

The Company seeks to obtain Shareholder approval for the purchase of all of the issued securities and options of Jack Doolan Capital Pty Ltd ("JDC").

Jack Doolan security holders will receive the following consideration:

210 million ordinary shares in Altera;
21 million 30 cent options to purchase shares in Altera, expiring 30 September 2012;

In addition, Altera will also assume:

JDC"s obligations to pay an initial \$US13.3 million in connection with the acquisition of four coal exploration projects ("Initial Obligations"); and
Contingent obligations of JDC to pay further sums totalling \$US25.7m based on the following key milestones being achieved ("Contingent Obligations"):
(i) \$US5 million on the reporting of a 20 million metric tonne Inferred Coal Resources in accordance with the JORC Code with a maximum strip ratio of 20 to 1 on the BBM Project;
(ii) \$US10 million when a production permit is issued in respect of the BBM Project;
(iii) \$US3 million on the reporting of a 10 million metric tonne Inferred Coal Resource in accordance with the JORC Code with a maximum strip ratio of 12 to 1 on the BBP Project;
(iv) \$US5 million when a production permit is issued in respect of the BBP Project;
(v) \$US1.35 million in respect of each of the AAK and AAM Projects on the reporting on each of those Projects of a \$10 million metric tonne Inferred Coal Resources in accordance with tthe JORC Code with a maximum strip ratio of 12 to 1.

Executives of Jack Doolan will also receive the following options over unissued shares in Altera ("the executive options"):

Mr Jim Middleton will be issued 5,000,000 50 cent options to be issued on the following terms
The options will each be exercisable at 50 cents;
The options will expire 4 years from the date of issue and;
The options will vest on Mr Middleton completing 12 months of employment with the company.
Mr Jim Middleton will be issued 5,000,000 75 cent options to be issued on the following terms:
The options will each be exercisable at 75 cents;
The options will expire 4 years from the date of issue and;
The options will vest on Mr Middleton completing 24 months of employment with the company.
Mr Chris Turvey will be issued 1,000,000 50 cent options to be issued on the following terms:
The options will each be exercisable at 50 cents;
The options will expire 4 years from the date of issue and;
The options will vest on Mr Turvey completing 12 months of employment with the company.

Mr Chris Turvey will be issued 1,000,000 75 cent options to be issued on the following terms:
The options will each be exercisable at 75 cents;
The options will expire 4 years from the date of issue and;
The options will vest on Mr Turvey completing 24 months of employment with the company;

Also upon completion:

Mr Peter Lynch will be appointed executive chairman of Altera;
Mr Patrick Hanna be appointed executive technical chairman of Altera;
Mr Jim Middleton be appointed Managing Director/ CEO of Altera;
Mr Domenic Martino will be appointed non executive director of Altera;
All existing directors of Altera will resign;
JDC will appoint a new CFO of Altera;
JDC to purchase its respective interests in the four projects.

	Pre-Transaction		Post-Transaction
	No. of Shares	%	No. of Shares	%
Current Shareholders	42,730,134	100%	42,730,134	13.4%
JDC Shareholders	-	-	210,000,000	65.7%
Capital Raising	-	-	66,666,667	20.9%
Total Shares on an undiluted basis	42,730,134	100%	319,396,801	100%

The table below shows the share structure of Altera before and after the Transaction.

The table below shows the share structure of Altera before and after the Transaction on a fully diluted basis

Current Shareholders	42,730,134	68.7%	42,730,134	11.5%
Capital Raising	-	-	66,666,667	17.9%
Current Optionholders	19,435,289	31.3%	19,435,289	5.2%
JDC Shareholders	-	-	210,000,000	56.5%
JDC Optionholders	-	-	21,000,000	5.7%
JDC Executive Options	-	-	12,000,000	3.2%
Total Shares on a diluted basis	62,165,423	100%	371,832,090	100%

On a fully diluted basis current Shareholders" interest in Altera will reduce to 11.5%.

5. Profile of Altera Resources Ltd

5.1 History

Altera Resources Ltd is a mineral exploration company located in Perth, Western Australia. The company have two main areas of focus:

Inglewood Coal Joint Venture: The Company has signed an agreement to enter into a Joint Venture ("Inglewood Coal JV") with Dragon Energy Ltd (Dragon) on its Queensland Coal Project and the commencement date of the JV is 1st July 2010. The terms of the "Inglewood Coal JV" involve an expenditure of at least \$3.5 million over 3 years to earn an 85% interest. The first year"s commitment by Dragon will be \$0.5 million in exploration expenditure plus rents and environmental bonds, with second and third year expenditure commitments of \$1.5million each. Once Dragon has earned an 85% interest, Altera has the option to sell the remaining 15% interest in the Project to Dragon for an amount as agreed between Dragon and Altera and failing an agreement an amount determined by an independent expert. Subject to the above option, Altera will retain a 15% free carried interest until decision to mine.

Gascoyne Base Metals Project: The Gascoyne Base Metals Project ("GBMP") is located 250km to the east of Carnavon in the Gascoyne region of Western Australia. GBMP was set up as a joint venture between Altera and ABM Resources NL, whereby Altera was earning a 65% interest. In September 2010 Altera acquired 100% of the Project before selling the project on to a 3rd Party. Altera no longer has any interest in the Project.

The Company is also reviewing new coal opportunities to complement its Queensland Coal assets.

5.2 Historical Balance Sheet

	As at	As at
Altera	30 June 2010	30 June 2009
Balance Sheet	\$	\$
CURRENT ASSETS
Cash and cash equivalents	2,651,054	1,027,543
Trade and other receivables	21,048	10,378
TOTAL CURRENT ASSETS	2,672,102	1,037,921
NON-CURRENT ASSETS
Property, plant & equipment	14,832	22,211
Exploration and Evaluation Expenditure	-	50,000
TOTAL NON-CURRENT ASSETS	14,832	72,211
TOTAL ASSETS	2,686,934	1,110,132
CURRENT LIABILITIES
Trade and other payables	47,295	55,882
Provisions	-	1,974
TOTAL CURRENT LIABILITIES	47,295	57,856
TOTAL LIABILITIES	47,295	57,856
NET ASSETS	2,639,639	1,052,276
EQUITY
Contributed Equity	6,210,843	3,845,025
Reserves	19,019	24,098
Accumulated Losses	(3,590,223)	(2,816,847)
TOTAL EQUITY	2,639,639	1,052,276

Source: Audited financial statements for the year ended 30 June 2010.

During the year ended 30 June 2010 the company announced it had raised \$2,589,669 less capital raising costs. The funds raised are expected to cover working capital purposes and, in particular, to fund the ongoing efforts by the company to acquire supplementary assets to its existing coal and base metal interests.

5.3 Historical Income Statements

	Year ended	Year ended
Altera	30 June 2010	30 June 2009
Income Statement	\$	\$
Other Revenue – Interest revenue	63,470	65,312
	63,470	65,312
Expenses
Exploration expenses	(206,674)	(174,350)
Occupancy expenses – Rent and outgoings	(33,228)	(37,280)
Finance costs	-	-
Depreciation expense	(7,379)	(4,896)
Employee benefits expense	(280,293)	(299,442)
Professional fees	(119,136)	(84,536)
Other expenses	(190,136)	(128,584)
Loss before income tax expense	(773,376)	(663,776)
Income tax expense	-	-
Total comprehensive loss for the period	(773,376)	(663,776)

Source: Audited financial statements for the year ended 30 June 2010.

5.4 Capital Structure

The share structure of Altera as at 5 August 2010 is outlined below:

	Number
Total Ordinary Shares on Issue	42,730,134
Top 20 Shareholders	21,071,583
Top 20 Shareholders - % of shares on issue	49.3%

Source: Financial Report for the year ended 30 June 2010.

The range of shares held in Altera as at 5 August 2010 is as follows:

Range of Shares Held	No. of Ordinary Shareholders	No. of Ordinary Shares	% Issued Capital
1-1,000	319	309,602	0.72%
1,001-5,000	33	74,110	0.17%
5,001-10,000	170	1,689,126	3.95%
10,001-100,000	146	5,934,666	13.89%
100,001 – and over	79	34,722,630	81.26%
TOTAL	747	42,730,134	100.0%

Source: Financial Report for the year ended 30 June 2010.

The ordinary shares held by the most significant shareholders as at Altera as at are detailed below:

Name	No of Ordinary Shares Held	Percentage of Issued Shares (%)
Panga Pty Ltd	3,339,994	7.8
B.G.J Abbott & E.A.Abbot	1,550,685	3.6
Ekstein & Ekstein Investments Pty Ltd	1,483,505	3.5
Citcorp Nominees Pty Ltd	1,365,981	3.2
Total Top 4	7,740,165	18.1
Others	34,989,969	81.9
Total Ordinary Shares on Issue	42,730,134	100

Source: Financial Report for the year ended 30 June 2010.

6. Profile of Jack Doolan Capital Pty Ltd

6.1 History

Jack Doolan Pty Ltd has the right to acquire shareholding interests in four Indonesian Coal Projects.

6.2 Historical Balance Sheet

		Unaudited as at

	Ref	25 August 2010
		\$
CURRENT ASSETS
Cash and cash equivalents		194,898
Receivables		28,726
TOTAL CURRENT ASSETS		223,606

NON-CURRENT ASSETS
Exploration Expenditure		2,542
TOTAL ASSETS		226,148

CURRENT LIABILITIES
Payables		35,369
Accruals		70,075
GST paid		99
TOTAL LIABILITIES		105,345
NET ASSETS		120,803

EQUITY
Share Capital		210,992
Retained Earnings		(824)
Current Year Earnings		(89,365)
TOTAL EQUITY		120,803

The company raised \$209,992 in a Share Placement in August 2010, and has incurred minimal exploration expenditure to date.

6.3 Coal Exploration Projects

The four projects, to which JDC has the right to acquire shareholding interests, are located in the Central Kalimantan area in the North Barito Basin area, and are held by four separate companies:

PT Bumi Barito Mineral (BBM)
PT Borneo Bara Prima (BBP)
PT Anugerah Alam Manuhing (AAM)
PT Anugerah Alan Katingan (AAK)

JDC has indicated that the BBM and BBP tenements were held previsouly by BHP, who according to JDC, relinquished the tenements. It is reasonable to assume that BHP carried out some work on these tenements prior to relinquishing them.

The only exploration programmes and budgets provided to IMC was a proposal which indicated JDC intended to carry out due diligence within a 3 month period expending A\$600,000, and a one-line item under "Use of Funds" in the Altera Notice of Meeting where it is proposed to expend A\$3,762,223 on tenements and exploration in Year One.

IMC understands that no due diligence has been carried out except for Mr Turvey"s initial ground review and no exploration programme for the assessment of the areas has been presented by Altera. Not a single drill hole, trench or any other exploration technique, apart from minor mapping at the surface outcrop areas and some limited quality test work, has been completed. The independent geologist report competed by SRK concluded "SRK is of the opinion that all of the coal projects are prospective and worthy of further exploration, including drilling and further sample analysis." IMC concur with this view.

Source: IMC Specialists Report (Appendix 3)

7. Economic Analysis

7.1 Current Economic Conditions

The global economy grew faster than trend over the year to mid 2010, but will probably ease back to about trend pace over the coming year. Recent information is consistent with a more sustainable, but still strong, pace of growth in China and most of the Asian region. In Europe and the United States, growth prospects appear to be modest in the near term, a legacy of the financial crisis and its impact on private and public finances. Financial markets are still characterised by a degree of uncertainty, and are responding both to differences in growth outlooks between regions and evident strains on public finances and banking systems in several smaller countries in Europe. Most commodity prices have changed little over recent months, and those most important to Australia remain very high.

Information on the Australian economy shows growth around trend over the past year. Public spending was prominent in driving aggregate demand for several quarters but this impact is now lessening, while the prospects for private demand, and in particular business investment, have been improving. This is to be expected given the large rise in Australia"s terms of trade, which is now boosting national income very substantially.

Asset values are not moving notably in either direction, and overall credit growth is quite subdued at this stage, notwithstanding evidence of some greater willingness to lend. Inflation has moderated from the excessive pace of 2008. The effects of the rise in tobacco taxes aside, CPI inflation has been running at around 2¾ per cent over the past year. That looks likely to continue in the near term.

The current stance of monetary policy is delivering interest rates to borrowers close to their average of the past decade. The Board regards this as appropriate for the time being. If economic conditions evolve as the Board currently expects, it is likely that higher interest rates will be required, at some point, to ensure that inflation remains consistent with the medium-term target.

Source: www.rba.gov.au Statement by Glenn Stevens, Governor: Monetary Policy Decision 5 Oct 2010

8. Industry Analysis

8.1 Background

Coal deposits are found below the earth"s surface with the quality of a coal deposit determined by the length of time in formation, commonly known as its "organic maturity", temperature and pressure. The rank of coal refers to the physical and chemical properties that coals of different maturities possess. Lower rank coals such as lignite generally possess a much lower organic maturity, have a soft texture, a dull earthy appearance and are characterized by high moisture levels and low energy (carbon) content. Higher ranked coals such as Anthracite, which is the highest ranking coal, are harder, stronger, contain less moisture, and produce more energy.

To date coal has been mined by two broad methods, opencast mining and underground mining, the choice of extraction method determined by the geology of the coal deposit.

8.2 Reserves

Globally, it is estimated that there is enough coal to last 119 years. However the discovery of new reserves through ongoing and improved exploration activities and advances in mining techniques may allow previously inaccessible reserves to be reached.

Coal reserves are available in almost every country worldwide, with recoverable reserves in around 70 countries. At current production levels, proven coal reserves are estimated to last 119 years. In contrast, proven oil and gas reserves are equivalent to around 46 and 63 years at current production levels respectively (Coal Facts 2008, World Coal Institute). As shown below, 33 per cent (272,246 Mt) of the world"s proven reserves are located in Europe and Eurasia, 30 per cent (246,097 Mt) are found in North America and 31 per cent (259,253 Mt) in Asia Pacific. While coal reserves are important for long term energy sustainability, the timely satisfaction of the world"s energy requirements is dependent on the rate at which the reserves can be brought into production.

Source: BP Statistical Review of World Energy June 2010

8.3 Market

Due to the significant expense involved in the transportation of coal, world trade is effectively divided into two regional markets; the Atlantic market and the Pacific market. The Pacific market is the larger of these, comprising around 57% of world seaborne steam coal trade and boasting the world"s two largest exporters. In 2009 Australia was the top exporter of coal with 125 Mt, while Indonesia led steam coal, exporting 200 Mt. The top coal importers include Japan, China, and South Korea.

8.4 Price trends

Coal is a global commodity and, as such, prices are determined by global supply and demand factors. With both the international community and the world"s dependency on energy growing, fuel products are the single most important input affecting global economic growth. As a result coal is a highly marketable commodity, and with world consumption estimated to increase 60% by 2030, the long term price outlook is strong.

During 2007-2008, elevated demand for coal as the cheapest source of power caused prices to increase by around 200%. This diverged from historical trends where coal has generally traded at a lower, more stable price than more volatile commodities such as oil and gas. Coking coal currently trades at an average price of around US\$100/t, down from a peak of over US\$200/t mid 2008. Speculation about sustainability of prices in light of the economic slowdown and a slackening steel market caused the correction from the highs experienced, however in comparison to an average between US\$20/t to US\$40/t throughout the 1990"s, the current price is still well above historical levels.

Source: Bloomberg

Coal prices have retracted substantially since the commodity boom from 2005 to 2008. A gradual appreciation in market prices is expected. This is primarily due to expectations of a recovery in the world economy over the coming years with the continued expansion of India and China in particular driving demand for both energy and iron and steel production.

8.5 Outlook

World coal consumption currently exceeds 5924 Mt per annum and this figure is estimated to increase 60% by 2030. In response to this, global production is set to exceed 7 billion tones in 2030 with China accounting for around half the increase over this period (The Coal Resource: A Comprehensive Overview of Coal, World Coal Institute).

As the major source of electricity generation (currently 41% of the world"s electricity) and a vital input for the production of iron and steel, coal will continue to play a major role in industry in the 21st Century. In 2013 the global coal market is forecast to have a value of \$473.8 billion, an increase of 16% since 2008, while the compound annual growth rate over this period is predicted to be 3% (Global-Coal and Consumable Fuels, Datamonitor 2009). Longer term, consumption of steam coal is projected to grow by 1.5 per cent per year until 2030 and demand for coking coal is expected to increase by 0.9 per cent per year over this period.

Growth will be the strongest in developing Asian countries, especially in the steam and coking coal markets, stemming from electricity demand, car production, and demand for household appliances. Demand and supply are set to remain fairly tight into the future, substantiating a positive outlook for the industry.

9. Valuation Approach Adopted

There are a number of methodologies which can be used to value a business or the shares in a company. The principal methodologies which can be used are as follows:

Net Tangible Assets on a going concern basis ("NTA")
Quoted Market Price Basis ("QMP")
Capitalisation of future maintainable earnings ("FME")
Discounted Cash Flow ("DCF")
Multiple of Exploration Expenditure ("MEE")

A summary of each of these methodologies is outlined in Appendix 2.

Different methodologies are appropriate in valuing particular companies, based on the individual circumstances of that company and available information. In our assessment of the value of Altera shares we have chosen to employ the following methodologies:

Net Tangible Assets on a going concern basis ("NTA")
Quoted Market Price Basis ("QMP")

We have chosen these methodologies for the following reasons:

Future Maintainable Earnings are not appropriate for exploration assets and sufficient information is not available for a Discounted Cash Flow valuation approach to be undertaken.

10. Valuation of Altera Resources Limited Prior to Transaction

10.1 Net Tangible Asset Valuation of Altera Resources Limited

The value of Altera"s assets on a going concern basis is reflected in our valuation below:

	Audited as at	Valuation
	30 June 2010	2010
	\$	\$
Assets
Cash and cash equivalents	2,651,054	2,651,054
Trade and other receivables	21,048	21,048
Property, plant & equipment	14,832	14,832
Total Assets	2,686,934	2,686,934

Liabilities
Trade and other payables	47,295	47,295
Total Liabilities	47,295	47,295

Net Assets	2,639,639	2,639,639

Shares on issue	42,730,134	42,730,134

Value of an Altera share	\$0.0617	\$0.0617

We have been advised that there has not been a significant change in the net assets of Altera since 30 June 2010. The table above indicates the net asset value of an Altera share is approximately \$0.0617.

10.2 Quoted Market Prices for Altera Resources Limited Securities

To provide a comparison to the valuation of Altera in Section 10.1, we have also assessed the quoted market price for an Altera share.

The quoted market value of a company"s shares is reflective of a minority interest. A minority interest is an interest in a company that is not significant enough for the holder to have an individual influence in the operations and value of that company.

Minority interest value

Our analysis of the quoted market price of an Altera share is based on the pricing prior to the announcement of the Transaction. This is because the value of an Altera share after the announcement may include the effects of any change in value as a result of the Transaction. However, we have considered the value of an Altera share following the announcement when we have considered reasonableness in Section 13.

The Transaction has was announced to the market on 14 September 2010, therefore, the following chart provides a summary of the share price movement over the year to 13 September 2010 being the last trading day prior to the announcement.

Source: Bloomberg

The daily price of Altera shares from 14 September 2009 to 13 September 2010 has ranged from a high of \$0.36 on 30 April 2010 to a low of \$0.0483 on 19 November 2009.

As evident in the above graph the share price of Altera has increased significantly over the period.

During this period a number of announcements were made to the market. The key announcements are set out below:

Date	Announcement	Closing Share Price Following Announcement \$ (movement)	Closing Share Price Three Days After Announcement \$ (movement)
14/09/2010	Acquisition of JDC	0.32 (13%)	0.305 (9%)
13/08/2010	Quarterly Cashflow Report Amended	0.27 (Nil)	0.3 (11%)
30/07/2010	Quarterly Activities and Cashflow Report	0.27 (Nil)	0.31 (15%)
29/04/2010	Quarterly Activity and Cashflow Report	0.33 (Nil)	0.3 (9%)
29/01/2010	Second Quarter Activities Report	0.13 (Nil)	0.115 (12%)
25/11/2009	Queensland Coal Project - Three EPC`s Granted	0.1062 (Nil)	0.1062 (Nill)
20/11/2009	Underwritten Pro Rata Entitlement Offer	0.1159 (140%)	0.1062 (120%)

From the table above it is evident that the share price has been influenced by company announcements. Most notably, the announcement of an underwritten pro rata entitlement offer on 20 November 2009(140%). The quarterly cash flow reports conveyed some volatility in price movements. The quarterly activities and cash flow report released 30 July 2010 provided investors with strong confidence. The Acquisition of Jack Doolan Capital Pty Ltd was met by a favourable reaction by investors pushing up the price of Altera from \$0.28 to \$0.32.

To provide further analysis of the market prices for an Altera share, we have also considered the weighted average market price for 10, 30, 60 and 90 day periods to the day of this report.

	13 Sep 2010	10 Days	30 Days	60 Days	90 Days
Closing Price	\$0.28
Weighted Average		\$0.2904	\$0.2962	\$0.2656	\$0.2674

The above weighted average prices are prior to any announcement of the Transaction.

An analysis of the volume of trading in Altera shares for the twelve months to 13 September 2010 is set out below:

	Share price low	Share price high	Cumulative Volume traded	As a % of Issued capital
1 day	\$0.28	\$0.30	56,000	0.13%
10 days	\$0.27	\$0.30	509,148	1.19%
30 days	\$0.27	\$0.32	1,740,691	4.07%
60 days	\$0.195	\$0.32	2,820,220	6.60%
90 days	\$0.195	\$0.32	4,147,012	9.71%
180 days	\$0.11	\$0.36	10,848,446	25.39%
1 year	\$0.0483	\$0.36	12,887,547	30.16%

This table indicates that Altera"s shares display a moderate level of liquidity, with 30.16% of the Company"s current issued capital being traded in a twelve month period. For the quoted market price methodology to be reliable there needs to be a "deep" market in the shares. RG 111.53 indicates that a "deep" market should reflect a liquid and active market. We consider the following characteristics to be representative of a deep market:

Regular trading in a company"s securities;
Approximately 1% of a company"s securities are traded on a weekly basis;
The spread of a company"s shares must not be so great that a single minority trade can significantly affect the market capitalisation of a company; and
There are no significant but unexplained movements in share price.

A company"s shares should meet all of the above criteria to be considered "deep", however, failure of a company"s securities to exhibit all of the above characteristics does not necessarily mean that the value of its shares cannot be considered relevant.

Our assessment is that a range of values for Altera shares based on market pricing, after disregarding post announcement pricing, is between \$0.267 and \$0.296.

Control Premium

As this is not a control transaction as defined by RG111 no premium for control has been applied.

Quoted market price

Altera"s quoted market share price results in the following value:

	Low	High
	\$	\$
Quoted market price value	0.267	0.296

Therefore, our valuation of an Altera share based on the quoted market price method is between \$0.267 and \$0.296.

10.3 Assessment of Altera Resources Limited Value

The results of the valuations performed are summarised in the table below:

	Low \$	High \$
Net tangible assets (Section 10.1)	0.0617	0.0617
ASX market prices (Section 10.2)	0.267	0.296

Based on the results above we consider the value of an Atera share to be approximately \$0.0617. We have chosen to base our assessment on the NTA due to the nature of the assets in the Company and the low level of liquidity in the trading of the Company"s shares.

11. Valuation of Altera Resources Limited Following the Transaction

11.1 Net Tangible Asset Valuation of Altera Resources Limited – excluding deferred consideration

The value of Altera"s assets on a going concern basis following the transaction and excluding deferred consideration payments is reflected in our valuation below:

		Audited as at	Low	Preferred	High
		30 June 2010	Valuation	Valuation	Valuation
	Ref	\$	\$	\$	\$
Assets
Cash and cash equivalents	1	2,651,054	9,351,054	9,351,054	9,351,054
Trade and other receivables		21,048	21,048	21,048	21,048
Property, plant & equipment		14,832	14,832	14,832	14,832
Mineral Asset	2	-	1,875,000	5,315,000	10,500,000
Total Assets		2,686,934	11,261,934	14,701,934	19,886,934

Liabilities
Trade and other payables		47,295	47,295	47,295	47,295
Total Liabilities		47,295	47,295	47,295	47,295

Net Assets		2,639,639	11,214,639	14,654,639	19,839,639

Shares on issue		42,730,134	319,396,801	319,396,801	319,396,801

Value of an Altera share		0.0618	0.0351	0.0459	0.0621

We have been advised that there has not been a significant change in the net assets of Altera since 30 June 2010. The table above indicates the net asset value of an Altera share following the transaction is in the range of \$0.0351 to \$0.0621, with a preferred value of \$0.0459.

1. Cash and Cash Equivalents

	\$
Balance at 30 June 2010	2,651,054
Proceeds from Capital Raising	20,000,000
Initial Consideration - upfront payments	(13,300,000)
Pro-forma Balance	9,351,054

Fx based on \$1AUD to \$1USD

2. Mineral Asset

Deferred exploration, evaluation and development costs

We instructed IMC to provide an independent market valuation of the exploration assets held by JDC. IMC considered a number of different valuation methods when valuing the exploration assets of JDC. IMC applied the comparable transaction method. The comparable transaction method involves calculating a value per common attribute in a comparable transaction and applying that value to the subject asset. A common attribute could be the amount of resource or the size of a tenement. We consider these methods to be appropriate given the pre feasibility stage of development for JDC"s exploration assets.

We have included in the initial consideration US\$7 million that is payable upon the completion of successful technical due diligence. IMC"s report shows that this is based on a programme of \$600,000 of expenditure including geological mapping, sampling, 200m of core drilling (4x50m holes), down hole geophysics and analytical testing. As little work has been done on the project to date we consider that an increase in the value of the Project would be equivalent to the level of expenditure and would adjust the preferred value by the value of the exploration expenditure. Under the MEE method it is possible that geologists attribute up to 3 times the level of the expenditure to the valuation, however this is in situations where there is a significant level of geological confidence.

Mineral Asset	Low Value US\$m	Preferred Value US\$m	High Value US\$m
PT Bumi Barito Mineral (BBM)	\$1.0	\$2.5	\$5.0
PT Borneo Bara Prima (BBP)	\$0.5	\$1.5	\$3.0
PT Anugerah Alam Manuhing (AAM)	\$0	\$0.375	\$0.5
PT Anugerah Alan Katingan (AAK)	\$0.375	\$0.94	\$2.0
	\$1.875	\$5.315	\$10.5

The range of values for JDC"s interest in each of the exploration assets as calculated by IMC is set out below:

The table above indicates a range of values between \$1.875 million and \$10.5 million, with a preferred value of \$5.315 million, the preferred value may increase to \$5.915 million based on the technical due diligence expenditure.

11.2 Deferred consideration

As part of the Transaction Altera will also assume contingent obligations of JDC to pay further sums totalling \$US25.7m based on the following key milestones being achieved ("Contingent Obligations"):

(vi) \$US 5 million on the reporting of a 20 million metric tonne Inferred Coal Resources in accordance with the JORC Code with a maximum strip ratio of 20 to 1 on the BBM Project;
(vii) \$US 10 million when a production permit is issued in respect of the BBM Project;
(viii) \$US 3 million on the reporting of a 10 million metric tonne Inferred Coal Resource in accordance with the JORC Code with a maximum strip ratio of 12 to 1 on the BBP Project;
(ix) \$US 5 million when a production permit is issued in respect of the BBP Project:
(x) \$US 1.35 million in respect of each of the AAK and AAM Projects on the reporting on each of those Projects of a \$10 million metric tonne Inferred Coal Resources in accordance with tthe JORC Code with a maximum strip ratio of 12 to 1.

This is summarised in the table below:

Mineral Asset	Possible Deferred Consideration US\$
PT Bumi Barito Mineral (BBM)	15,000,000
PT Borneo Bara Prima (BBP)	8,000,000
PT Anugerah Alam Manuhing (AAM)	1,350,000
PT Anugerah Alan Katingan (AAK)	1,350,000
Total	25,700,000

At the time that the deferred consideration is payable the value of the Projects will have changed from that ascribed by IMC per the report in appendix 3. As this change in value can not currently be quantified we are unable to incorporate this assessment as part of our consideration of fairness.

12. Is the Transaction Fair?

The value of an Altera Share Pre Transaction is compared with the value of an Altera Share Post Transaction below:

	Ref	Low \$	Preferred \$	High \$
Value of Altera Share Pre Transaction	10.3	0.0617	0.0617	0.0617
Value of Altera Share Post Transaction (excluding deferred consideration)	11.1	0.0351	0.0459	0.0621

We note from the table above that the value of an Altera Share Pre Transaction is higher than the value of an Altera Share Post Transaction on a Net Tangible Assets on a going concern basis. Therefore, we consider that the Transaction is not fair.

13. Is the Transaction Reasonable?

13.1 Alternative Proposal

We are unaware of any alternative proposal that might offer the Shareholders of Altera a premium over the value ascribed to that resulting from the Transaction.

13.2 Dilution of current shareholders

If the Transaction is approved then JDC shareholders will hold an interest of approximately 65% in Altera. In addition to this, it is a provision of the share sale agreement that at Completion JDC will nominate four additional directors and all four existing Directors of Altera resign. This means that JDC nominated directors will make up 100% of the Board. The four Directors nominated are substantial holders of the securities in JDC.

When shareholders are required to approve an issue that relates to a company there are two types of approval levels. These are general resolutions and special resolutions. A general resolution requires 50% of shares that are voted to be voted in favour to approve a matter and a special resolution requires 75% of shares that are voted to be voted in favour to approve a matter. If the Transaction is approved then the shareholders of JDC will be able to pass general resolutions.

The four incoming directors shareholding of Altera following the Transaction will be significant when compared to all other shareholders. JDC shareholders will hold 65.7% of the ordinary shares on issue following the transaction, with the rest of the share capital widely held. Therefore, in our opinion, the four directors, who are the majority shareholders of JDC, will be able to significantly influence the activities of Altera.

As noted in the Outline of the Transaction (Section 4), if the Transaction is approved the Current Shareholders percentage shareholding in the ordinary share capital of Altera will significantly decrease from 100% to 13.4%.

13.3 Consequences of not Approving the Transaction

Consequences

The Company will remain in its current position and will need to evaluate further opportunities.

Potential decline in share price

We have analysed movements in Altera"s share price since the Transaction was announced. A graph of Altera"s share price since the announcement is set out below.

Source: Bloomberg

The share price of Altera has improved since the announcement was made to the market on 14 September 2010. As there have been no other significant announcements made by the Company following the announcement, the transaction appears to have been well received by the market.

Given the above analysis it is possible that if the Transaction is not approved then Altera"s share price may decline back to pre announcement levels.

13.4 Advantages of Approving the Transaction

We have considered the following advantages when assessing whether the Transaction is reasonable.

Advantage	Description
Potential Share Price decline if the transaction is not approved	The share price of Altera has improved since the announcement, as the Transaction appears to have been well received by the market. It is possible that if the Transaction is not approved Altera"s share price may decline back to pre announcement levels.
Cash injection from proceeds of capital raising	Altera will have additional cash of approximately \$6.7million available from the proceeds of \$20m capital raising, after initial payments of US\$13.3 million are made in assuming the initial obligations of JDC in relation to the acquisition of interests in the four coal projects. However Altera will be obligated to fund future exploration expenditure and deferred consideration payments of U\$\$25 million. This would require further fund raising and potentially further dilution for shareholders in the future.

Advantage

Description

Potential Share Price decline if the
transaction is not approved

The share price of Altera has improved since the
announcement, as the Transaction appears to have
been well received by the market. It is possible that if
the Transaction is not approved Altera"s share price
may decline back to pre announcement levels.

Cash injection from proceeds of
capital raising

Altera will have additional cash of approximately
\$6.7million available from the proceeds of \$20m
capital raising, after initial payments of US\$13.3
million are made in assuming the initial obligations of
JDC in relation to the acquisition of interests in the
four coal projects. However Altera will be obligated
to fund future exploration expenditure and deferred
consideration payments of U\$\$25 million. This would
require further fund raising and potentially further
dilution for shareholders in the future.

Advantage	Description

Incoming Executive Directors with experience in the coal industry	The incoming executive director and management team have experience in the coal industry that should benefit the shareholders of Altera.
Cancellation of Vendor Shares should milestones not be met	Should the milestones required for the Vendor Shares not be met, these would be cancelled which would result in current shareholders being diluted only by those who participate in the capital raising at 30 cents as this is above the current NTA this would be advantageous to current shareholders.

13.5 Disadvantages of Approving the Transaction

If the Transaction is approved, in our opinion, the potential disadvantages to Shareholders include those listed in the table below:

Disadvantage	Description
Diluted shareholding in the Company	If the Transaction is approved, Current Shareholders" percentage shareholding in the ordinary share capital of Altera will decrease from 100% to 13.4%.
Agreement requires significant upfront payments prior to any drilling	As noted by IMC "the agreement requires JDC to pay significant funds upfront for each project (total US\$6m), prior to any resource drilling being undertaken on the projects. It would be more reasonable to have a small upfront payment, with further payments being contingent upon certain exploration targets being met".
Early stage of Project exploration	IMC notes in its specialist report that only minor mapping at the surface outcrop areas and some limited quality test work has been completed. Further due diligence may reduce the risk that the Projects are not prospective.

14. Conclusion

We have considered the terms of the Transaction as outlined in the body of this report and have concluded that the Transaction is not fair but reasonable to the Shareholders of Altera.

15. Sources of Information

This report has been based on the following information:

Draft Notice of General Meeting and Explanatory Statement on or about the date of this report;
Audited financial statements of Altera Resources Limited for the years ended 30 June 2009 and 30 June 2010;
Unaudited management accounts of Altera for the period ended 30 September 2010;
Share registry information
Information in the public domain; and
Discussions with Directors and Management of Altera.
Independent Specialist report prepared by IMC

16. Independence

BDO Corporate Finance (WA) Pty Ltd is entitled to receive a fee of \$25,000 (excluding GST and reimbursement of out of pocket expenses). Except for this fee, BDO Corporate Finance (WA) Pty Ltd has not received and will not receive any pecuniary or other benefit whether direct or indirect in connection with the preparation of this report.

BDO Corporate Finance (WA) Pty Ltd has been indemnified by Altera in respect of any claim arising from BDO Corporate Finance (WA) Pty Ltd's reliance on information provided by the Altera, including the non provision of material information, in relation to the preparation of this report.

Prior to accepting this engagement BDO Corporate Finance (WA) Pty Ltd has considered its independence with respect to Altera Resources and Jack Doolan Capital Pty Ltd and any of their respective associates with reference to ASIC Regulatory Guide 112 "Independence of Experts". In BDO Corporate Finance (WA) Pty Ltd"s opinion it is independence of Altera Resources and Jack Doolan Capital Pty Ltd and their respective associates.

Neither the two signatories to this report nor BDO Corporate Finance (WA) Pty Ltd, have had within the past two years any professional relationship with Altera or their associates, other than in connection with the preparation of this report.

A draft of this report was provided to Altera Resources Limited and its advisors for confirmation of the factual accuracy of its contents. No significant changes were made to this report as a result of this review.

BDO is the brand name for the BDO International network and for each of the BDO Member firms.

BDO (Australia) Ltd, an Australian company limited by guarantee, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of Independent Member Firms. BDO in Australia, is a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International).

17. Qualifications

BDO Corporate Finance (WA) Pty Ltd has extensive experience in the provision of corporate finance advice, particularly in respect of takeovers, mergers and acquisitions.

BDO Corporate Finance (WA) Pty Ltd holds an Australian Financial Services Licence issued by the Australian Securities and Investment Commission for giving expert reports pursuant to the Listing rules of the ASX and the Corporations Act.

The persons specifically involved in preparing and reviewing this report were Sherif Andrawes and Adam Myers of BDO Corporate Finance (WA) Pty Ltd. They have significant experience in the preparation of independent expert reports, valuations and mergers and acquisitions advice across a wide range of industries in Australia and were supported by other BDO staff.

Sherif Andrawes is a Fellow of the Institute of Chartered Accountants in England & Wales and a Member of the Institute of Chartered Accountants in Australia. He has over twenty years experience working in the audit and corporate finance fields with BDO and its predecessor firms in London and Perth. He has been responsible for over 120 public company independent expert"s reports under the Corporations Act or ASX Listing Rules. These experts" reports cover a wide range of industries in Australia.

Adam Myers is a member of the Australian Institute of Chartered Accountants. Adam"s career spans 12 years in the Audit and Assurance and Corporate Finance areas.

18. Disclaimers and Consents

This report has been prepared at the request of Altera for inclusion in the Explanatory Memorandum which will be sent to all Altera Shareholders. Altera engaged BDO Corporate Finance (WA) Pty Ltd to prepare an independent expert's report to consider Altera"s acquisition of all the listed securities in Jack Doolan Capital Pty Ltd.

BDO Corporate Finance (WA) Pty Ltd hereby consents to this report accompanying the above Explanatory Memorandum. Apart from such use, neither the whole nor any part of this report, nor any reference thereto may be included in or with, or attached to any document, circular resolution, statement or letter without the prior written consent of BDO Corporate Finance (WA) Pty Ltd.

BDO Corporate Finance (WA) Pty Ltd takes no responsibility for the contents of the Explanatory Memorandum other than this report.

BDO Corporate Finance (WA) Pty Ltd has not independently verified the information and explanations supplied to us, nor has it conducted anything in the nature of an audit or review of Altera Resources or Jack Doolan Capital Pty Ltd in accordance with standards issued by the Auditing and Assurance Standards Board. However, we have no reason to believe that any of the information or explanations so supplied are false or that material information has been withheld. It is not the role of BDO Corporate Finance (WA) Pty Ltd acting as an independent expert to perform any due diligence procedures on behalf of the Company. The Directors of the Company are responsible for conducting appropriate due diligence in relation to Jack Doolan Capital Pty Ltd . BDO Corporate Finance (WA) Pty Ltd provides no warranty as to the adequacy, effectiveness or completeness of the due diligence process.

The opinion of BDO Corporate Finance (WA) Pty Ltd is based on the market, economic and other conditions prevailing at the date of this report. Such conditions can change significantly over short periods of time.

With respect to taxation implications it is recommended that individual Shareholders obtain their own taxation advice, in respect of the Transaction tailored to their own particular circumstances. Furthermore, the advice provided in this report does not constitute legal or taxation advice to the Shareholders of Altera, or any other party.

BDO Corporate Finance (WA) Pty Ltd has also considered and relied upon independent valuation for assets held by JDC.

The valuer engaged for the valuations possess the appropriate qualifications and experience in the minerals and resources industry to make such assessments. The approaches adopted and assumptions made in arriving at their valuation are appropriate for this report. We have received consents from the valuer for the use of their valuation reports in the preparation of this report.

The statements and opinions included in this report are given in good faith and in the belief that they are not false, misleading or incomplete.

The terms of this engagement are such that BDO Corporate Finance (WA) Pty Ltd has no obligation to update this report for events occurring subsequent to the date of this report.

Yours faithfully

BDO CORPORATE FINANCE (WA) PTY LTD

Sherif Andrawes Director

Adam Myers Associate Director Authorised Representative

Appendix 1 – Glossary of Terms

Reference	Definition
The Act	The Corporations Act
Altera	Altera Resources Limited
ASIC	Australian Securities and Investments Commission
ASX	Australian Securities Exchange
BDO	BDO Corporate Finance (WA) Pty Ltd
The Company	Altera Resources Limited
DCF	Discounted Future Cash Flows
EBIT	Earnings before interest and tax
EBITDA	Earnings before interest, tax, depreciation and amortisation
FMD	Future Maintainable Dividends
FME	Future Maintainable Earnings
JDC	Jack Doolan Capital Pty Ltd
ROC	Return of Capital
NTA	Net Tangible Assets
The Transaction	The Transaction to acquire 100% of Jack Doolan Capital Pty Ltd
Our Report	This Independent Expert"s Report prepared by BDO
VWAP	Volume Weighted Average Price
Shareholders	Shareholders of Altera not associated with Jack Doolan Capital Pty Ltd

Appendix 2 – Valuation Methodologies

Methodologies commonly used for valuing assets and businesses are as follows:

1 Net tangible asset value on a going concern basis ("NTA")

Asset based methods estimate the market value of an entity"s securities based on the realisable value of its identifiable net assets. Asset based methods include:

Orderly realisation of assets method
Liquidation of assets method
Net assets on a going concern method

The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to entity holders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the entity is wound up in an orderly manner.

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the entity may not be contemplated, these methods in their strictest form may not be appropriate. The net assets on a going concern method estimates the market values of the net assets of an entity but does not take into account any realisation costs.

Net assets on a going concern basis are usually appropriate where the majority of assets consist of cash, passive investments or projects with a limited life. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity"s valuation.

Often the FME and DCF methodologies are used in valuing assets forming part of the overall Net assets on a going concern basis. This is particularly so for exploration and mining companies where investments are in finite life producing assets or prospective exploration areas.

These asset based methods ignore the possibility that the entity"s value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. Asset based methods are appropriate when entities are not profitable, a significant proportion of the entity"s assets are liquid or for asset holding companies.

2 Quoted Market Price Basis

A valuation approach that can be used in conjunction with (or as a replacement for) other valuation methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a "deep" market in that security.

3 Capitalisation of future maintainable earnings ("FME")

This method places a value on the business by estimating the likely FME, capitalised at an appropriate rate which reflects business outlook, business risk, investor expectations, future growth prospects and other entity specific factors. This approach relies on the availability and analysis of comparable market data.

The FME approach is the most commonly applied valuation technique and is particularly applicable to profitable businesses with relatively steady growth histories and forecasts, regular capital expenditure requirements and non-finite lives.

The FME used in the valuation can be based on net profit after tax or alternatives to this such as earnings before interest and tax ("EBIT") or earnings before interest, tax, depreciation and amortisation ("EBITDA"). The capitalisation rate or "earnings multiple" is adjusted to reflect which base is being used for FME.

4 Discounted future cash flows ("DCF")

The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows, discounted to their present value at an appropriate discount rate (often called the weighted average cost of capital). This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks.

A terminal value for the asset or business is calculated at the end of the future cash flow period and this is also discounted to its present value using the appropriate discount rate.

DCF valuations are particularly applicable to businesses with limited lives, experiencing growth, that are in a start up phase, or experience irregular cash flows.

5 Multiple of Exploration Expenditure ("MEE")

The Past Expenditure method is a method of valuing exploration assets in the resources industry. It is applicable for areas which are at too early a stage of prospectivity to justify the use of alternative valuation methods such as DCF. The Past Expenditure method is often referred to as the Multiple of Exploration Expenditure method.

Past expenditure, or the amount spent on exploration of a tenement, is commonly used as a guide in determining value. The assumption is that well directed exploration adds value to a property. This is not always the case and exploration can also downgrade a property. The Prospectivity Enhancement Multiplier ("PEM") which is applied to the effective expenditure therefore commonly ranges from 0.5 to 3.0. The PEM generally falls within the following ranges:

0.5 to 1.0 where work to date or historic data justifies the next stage of exploration;
to 2.0 where strong indications of potential for economic mineralisation have been identified; and
to 3.0 where ore grade intersections or exposures indicative of economic resources are present.

Appendix 3 – Independent Expert"s Valuation on JDC"s Exploration Assets

The Directors The Directors P.O. Box 1123 38 Station Street West Perth WA 6005 Subiaco, WA 6008

Altera Resources Limited BDO Corporate Finance (WA) Pty Ltd

26 October 2010

Dear Sirs,

INDEPENENT TECHNCIAL VALUATION MINING AND EXPLORATION TARGETS OF JACK DOOLAN CAPITAL

1 INTRODUCTION

Altera Resources Ltd has engaged BDO Corporate Finance (WA) Pty Ltd (BDO) to prepare and independent experts report to assist the shareholders in Altera in their decision to approve a transaction to purchase securities in Jack Doolan Capital Pty Ltd.

As part of this independent expert report on the proposed transaction, BDO commissioned IMC Mining Group Pty Ltd (IMC) to conduct an independent assessment on the value of the projects in Indonesia that JDC presently have agreements in acquire a share.

The projects have been reviewed by IMC in accordance with the Valmin Code, an Australian code for the technical assessment and valuation of mineral and petroleum assets and securities for independent expert reports (Valmin 2005).

The sole purpose of this IMC report is for use by BDO and the Directors of Altera in connection with the proposed transaction and should not be used or relied upon for any other purpose.

2 VALUATION METHODOLOGY

2.1 Introduction

The intent of this report is to state the fair value of the projects in Indonesia in accordance with Valmin 2005.

In determining an appropriate methodology for the assessment of fair market value for the projects, IMC have based the approach on our consideration of the status of exploration and future potential value of the projects held by four Indonesian companies that JDC have the right to acquire.

2.2 Valuation - General Principles

The fair market value of a property as stated in the VALMIN Code (Definition 43) is the amount of money (or cash equivalent or some other consideration) for which an asset should change hands on the valuation date in an open and unrestricted market between a willing buyer and a willing seller in an arm's length transaction, with each party acting knowledgeably, prudently and without compulsion.

2.3 Valuation Methodologies

There is no single method of valuation which is appropriate for all situations. Rather, there are a variety of valuation methods, all of which have some merit and are more or less applicable depending on the circumstances.

Valuing projects, such as those that are the subject of this valuation, that are at an early stage of exploration, where ore reserves, mining and processing methods and capital and operating costs, are yet to be fully defined, involves the application of alternative methods to the quantitative methods such as discounted cash flow and NPV estimates.

The methods generally applied to exploration projects are the related transaction method, the value indicated by alternative offers or by joint venture terms, and the past expenditure method. Rules of thumb values based on certain industry ratios can also be used for both mining and exploration properties. Under appropriate circumstances values indicated by stock market valuation should be taken into account as should any previous independent valuations of the project or comparable transactions.

A degree of caution needs to be adopted when considering the valuation of exploration projects as the valuations are frequently time and circumstance specific and valuations can change over time.

Over-riding any mechanical or technical valuation method for exploration ground must be recognition of prospectivity and potential, this is very much a judgmental decision, however it is the fundamental value in relation to exploration properties.

On reviewing the various valuation methodologies appropriate for this valuation, IMC formed the following view:

The discounted cash flow and NPV valuation methodology cannot be used as there is no indication at this time as to the size of the resource, the nature of the coal nor the cost of mining the coal.
JDC securities are privately held, as are the securities in the companies in Indonesia to be acquired, therefore no quoted prices of securities can be analysed.
As there is no indication of what the potential size or quality of the resource is, it is not possible to apply a rule of thumb multiplier to the resource.
As there has been no past expenditure on exploration of which IMC are aware, nor has IMC been provided with a definitive plan for future exploration expenditure, it is not possible to use a Prospectivity Enhancement Multiplier approach to the valuation.

The only valuation methodology that IMC deemed appropriate is the Related or Comparable Transaction approach.
In addition to this methodology, the valuation has taken into consideration specific country issues and technical issues peculiar to these tenements that could affect the project's economics.

The Project Valuations thus derived provide a range of values, as follows:

A low value which assumes a lower prospectivity;
A medium or preferred value which takes into account the coal resource potential and the current market values for exploration properties; and
A high value which assumes a higher rating for coal prospectivity.

The four projects being considered are grass roots exploration projects (that is, exploration projects requiring work from the very start of surface exploration) with virtually no exploration information to form the basis of a valuation.

IMC has not conducted a site visit and have provided this valuation based on forecast exploration expenditure and the potential of the projects compared to other transactions. IMC have not carried out due diligence on the tenement status as legal due diligence is a condition precedent to finalisation of the transaction.

IMC's knowledge of coal property transactions in Australia, along with those in Indonesia and other developing countries such as Mongolia has been used. The difficulty in using this methodology is in determining to what extent the property or transaction is indeed comparable.

IMC have also taken into account potential environmental, cultural and social issues when assessing the value. As JDC have presented limited information in this regard, IMC have relied on our considerable experience in Indonesia to form an opinion.

The overall lack of information has resulted in a wide range of valuations between the low, medium and high valuations.

3 OVERVIEW OF THE INDONESIAN COAL SECTOR

IMC have been involved in the Indonesian mining sector for the past five or so years.

IMC have managed exploration programs on three Nickel deposits in Indonesia (one on Kalimantan and two on Sulawesi) and one coal project (on Sumatra).

IMC have completed feasibility studies and JORC reports on these three projects, and on two of the projects managed the establishment of mining operations through to shipping product.

In addition, IMC have carried out a number of due diligence studies on coal projects in Indonesia and are presently assisting a company as independent expert for a proposed major IPO of a company containing eight coal tenements on Kalimantan.

This experience has provided IMC with a good understanding of the key criteria for a project to have the best chance of being successful in Indonesia, which include, inter alia:

The Indonesian partner in the project should be of good standing, have the appropriate connections to the relevant authorities and must be incentivised to assist in the performance of the project;
The coal resource should be in a location that is close to either the coast or close to a river that is navigable by barges of at least 8000t capacity;
The resource should be of a size that allows for a mine life of at least 15 years;
The issues related to forestry permits, barging permits, road routing to the barge load out and land ownership should be well understood;
Any issues related to overlapping tenements or rights on a tenement should be well understood – particularly in relation to palm oil plantation rights and oil exploration rights, which may supersede the coal mining rights;
The resource should have been defined by a reputable western company to an international standard such as JORC or CIM.

These key points recognise that the majority of coal operations in Indonesia transport coal on either private or public roads from the mine to the nearest navigable river, where the coal is trans-shipped to barges of between 1500t – 8000t capacity, where it is then barged to an appropriate ship loading station (either at sea, using grabs, or at one of a number of coastal ports).

The highest cost item in most Indonesian coal operations, and what it often the deciding factor in the economic analysis, is the capital cost associated with acquiring the land and then building the road to the barge loading area, coupled with the operating cost of the trucks between the mine and the barge loading area.

The next most problematic aspect of the coal operations is that many of the rivers in Indonesia are not navigable all year round.

It is typical for a river to be too shallow to navigate through the dry months of the years, while in the wet months many rivers cannot be utilised by large barges due to a lack of clearance under bridges when the river is high.

The final major issue is being granted all the requisite permits to operate the mine – particularly the forestry permit.

3.1 JDC Tenement General Appraisal – Mine Economics

In the context of IMC's review of the tenements in the JDC Contracts, IMC note the following:

All four of the projects are a long way from the coast and will therefore rely on barge operations to transport the coal to the coast;
IMC understand that it is proposed the JDC coal will be transported down the Barito River in 1500t barges and then trans-shipped downstream to 6000t barges;
The Barito river runs through the BBM concession, however the other concessions will require the construction of a haul road of between 40km – 80km to get to the river;

To enable direct loading to larger barges and to allow year round shipping of coal down the Barito, a haul road of approximately 60kms will be required from BBM to a point further downstream on the Barito;
The construction of the required haul roads could cost in the range of \$50M \$100M , depending on the number of bridges, land acquisition costs, sharing of infrastructure etc;
IMC have no information relating to issues related to overlapping tenements, palm oil plantations or forestry constraints in relation to the development of the projects.

When these issues are taken into consideration, IMC formed the following view in relation to the mining economic issues related to the project:

The location of the projects with respect to appropriate transport routes will result in overall costs from mining through to ship loading (FOB costs) that would not be economically viable for thermal coal operations;
The operations can only be economically viable for high value coals (soft coking coal, PCI coal or coking coal);
The exploration focus on these tenements should appropriately only target these higher ranked coal resources.
Substantial work will be required in the initial years of the project to firm up permitting, capital cost estimates and land acquisition – these activities are likely to incur substantial costs and consume significant management time.
It is reasonable to assume that if sufficient quantities of coal can be defined of a quality that realises FOB prices of above \$100/t then an economic mine could be developed on at least one of the concessions.
Forecast coal prices suggest that soft coking coal prices may stay above \$100/t in the medium term.
The ultimate economic viability of each project will depend largely on the size of the Coal Resource that might be defined in each concession, the ability to produce a high rank coal and the capital required to build the transport infrastructure.
Given the likely constraints on the barging and road hauling aspects of the projects, IMC are of the view that it is unlikely combined production would ever exceed 4Mtpa.

In balance, IMC are of the view that if a resource can be defined in excess of 20Mt at a stripping ratio of less than 10:1, with at least 50% of the resource being hard coking coal, then it will be possible to develop a profitable mining operation, notwithstanding that JDC/Altera face many challenges prior to achieving this goal, including, inter alia:

a) Completing an initial technical review that shows the projects have the potential for the definition of a coking coal resource;
b) Raising the funds required to complete the exploration program required to define these resources;

c) Getting all permits, approvals and studies in place to enable the operation to move to a production phase;
d) Raising the funds required for the capital cost of project implementation; and
e) Raising the funds required to make final payments related to the acquisition.

4 OVERVIEW AND VALUATION OF TENEMENTS

4.1 Introduction

IMC have relied on the report by G McGaughan of SRK titled "Independent Geologist's Report on Coal Projects in Central Kalimantan, Indonesia" completed in Sep 2010 to provide the requisite data to assist in the review of the geology and coal potential associated with the four Project areas.

This report should be read in conjunction with the SRK technical review report.

The Projects that have been valued are held by four separate companies:

PT Bumi Barito Mineral (BBM);
PT Borneo Bara Prima (BBP);
PT Anugerah Alam Manuhing (AAM); and
PT Anugerah Alam Katingan (AAK).

The four projects are located in the Central Kalimantan area in the North Barito Basin area.

It is worth noting that JDC have indicated that the BBM and BBP tenements were held previously by BHP, who, according to JDC, relinquished the tenements. It is reasonable to assume that BHP carried out some work on these tenements prior to relinquishing them. As is often the case with such work, the results of this work are not available to JDC nor IMC to review.

4.2 Tenements

To assist with understanding of the Indonesian Tenement system the following summary is provided.

Indonesia introduced a new mining law in January 2009 (the Mining Law 2009). The new law introduced rather large changes to the manner in which the mining industry in Indonesia is regulated.

The previous system of permits (Kuasa Pertambangan, or KPs) and contracts of work (COW) issued directly by the central Government has been replaced with various forms of mining licenses, mainly the Izin Usaha Pertambangan (IUP). These licenses will be based on newly designated mining areas known as WUPs (Wilayah Usaha Pertambangan) which are commercial mining areas open to general commercial exploitation and WPNs (Wilayah Pencadangan Negara) being areas reserved in the "national strategic interest".

These licences are granted in a two stage process - the initial exploration stage for surveys, feasibility studies and exploration and the production/operation stage for mining, refining, processing and sale. The new law decrees that a licence for production will be granted to the holder of an exploration licence.

The type of mining will determine the duration and area of the licence granted. For coal mines, the exploration IUP granted will be for a maximum of 50,000 hectares and 7 years, with the production IUP being granted for a maximum of 20 years (with possibility to extend) and 15,000 hectares.

The new law shows a shift in power regarding granting of licences. Previously all COWS were issued from Jakarta; however the local Governments can now take authority. Now, depending on the geographical location, IUPs for the proposed mining area may be granted at either a municipality, regency, regional or national level.

Further details on the new mining laws are contained in the Altera Notice of Meeting.

Importantly, a condition precedent to the share transfer and acquisition is that the tenements are held in IUP's. At this time, IMC understand that at least some of the tenements have not been converted to IUP's.

IMC's valuation assumes that all the tenements have been converted to exploration IUP's.

4.3 Risk Assessment

4.3.1 Geological Risk Assessment

IMC agree with the statements by SRK regarding their geological interpretations and comments on coal quality.

The following points are highlighted in the context of assessing the potential of the tenements:

The coal has only been sampled and mapped at surface. Orientations (especially dips of the coal seams) might be affected by soil creep and land slippage;
The very steep dips of the coal seams recorded at the AAM Project could indicate strongly deformed and faulted coal beds which might indicate limited potential to convert Coal Resources to Coal Reserves;
The limited data results in a high degree of uncertainty when assessing exploration potential. Merely because the BBM and BBP projects lie next to projects containing resources (ie adjacent to the Maruwai project) is no guarantee any economic coal resources will be found on the BBM and BBP tenements;
The high relief over the four projects will mean that topographic mapping will become an important part for resource estimations.

4.3.2 Coal Quality Risk Assessment

These points are raised to assist with risk assessment:

Although quality of coal as indicated might have potential for steaming, PCI and Coking Coal, Volatile Matter results tend to suggest the coal might only have steaming coal potential only.
Coal quality is based on minimal samples. Sampling techniques are not mentioned and there could be significant bias in the sampling programme (for example, the samples might have been taken from the highest quality coal outcrops and not a representative sample across the seam);
The Vendors reports give no reference to the laboratory used for quality testing and whether the laboratory is NATA registered and meets necessary ISO standards. Results could therefore vary from true values; and
SRK has reported that Mr Chris Turvey (an Associate of JDC) has carried out a field review on the BBM Project and has confirmed five of the six coal outcrops. He is reported to have taken coal samples for analysis. IMC have requested all information from Mr Turvey's work including the results of any analyses. As at the time of writing this report, no information has been supplied.

4.3.3 Exploration and Project Development Risk Assessment

At the time of writing this report the only exploration programmes and budgets provided to IMC are:

A proposal from Pat Hanna which indicates JDC intend to carry out due diligence within a three month period and expending A\$600,000;
A one line item under "Use of Funds" in the Altera Notice of Meeting where it is proposed to expend A\$3,762,223 on tenements and exploration in Year One.

The due diligence programme includes geological mapping, sampling, 200metres of core drilling (4 x 50m holes), downhole geophysics and analytical testing (including Total Moisture, Inherent Moisture, Ash, Volatile Matter, Fixed Carbon, Total Sulphur, Phosphorus, Crucible Swelling Number, Fluidity, Hardgrove Grindability Index and Calorific Value). The budget dollars should provide enough funds to complete the due diligence works.

IMC considers that a three month technical due diligence schedule is appropriate, thereby lowering the risks associated with subsequent payments. IMC understands that no due diligence has been carried out except for Mr Turvey's initial ground review.

The initial exploration funds of A\$3.76 million represent a reasonable expenditure to arrive at the Inferred Resources, which is a requirement for the making of further payments under each of the four agreements (BBM, BBP, AAK and AAM). The agreement allows a 183 day period to develop Inferred Resources for all four areas. This is an ambitious schedule.

Subsequent to the six month period to define Inferred Resources, the agreement has a further 12 month period in which to complete the work required to obtain production IUP's for BBM and BBP. While the timeframe allocated to this work is achievable, it would entail Altera running two exploration and feasibility studies in parallel with the goal of getting production IUP's issued.

It should be noted that to have an IUP issued requires mine plans and economic analysis to be completed, the AMDAL (environmental assessment document) to be completed and rehabilitation plans to be presented. To do this on one project in Indonesia over a 12 month period is a major undertaking for a small company, and to do it for two projects may be difficult.

No exploration programme for the assessment of the Project areas has been presented by Altera. As such, the following programme and rough estimate of costs have been developed by IMC to assist with the understanding of how the projects could develop utilising the time frame of 18 months as required in the JDC Contracts.

The costs assume Indonesian cost structures with the use of Indonesian exploration staff and contractors where possible.

Phase 1 - Initial Field Mapping and drilling to arrive at the minimum Inferred Resources

This Phase is based on the first 6 months whereby Altera carry out field exploration and exploration drilling to suit a confirmation of the Inferred Coal Resource tonnages as indicated in the JDC-Vendor agreements. It is assumed that all four Projects will be explored to the point that Inferred Resources are outlined or the exploration results indicate that no further work is warranted.

It should be noted that IMC are not aware of the implications regarding Altera's shareholding in the respective local companies in the event they choose to withdraw from a particular Project.

The Phase 1 could be based on the following programme:

An initial detailed project mapping and sampling programme involving two geologists and a number of field assistants per project area;
Initial diamond drilling programmes to gather information on basic seam thickness, coal quality, basin structure and seam correlations;
Downhole geophysics to assist with seam correlations;
If warranted, follow-up drill programme to establish an Inferred Resource with associated coal analysis of plies and selected coal quality sampling to assess the coal resource potential. Holes to be geophysically logged and surveyed; and

Overall cost of this phase could be approximately US\$1.0M per project area (Total US\$4.0M).

Phase 2

Phase 2 represents the work needed to complete Coal Resources and Coal Reserves and all necessary engineering and commercial studies to a level whereby Production

IUPs can be granted. It is assumed that only two of the areas will progress to the Feasibility Study Stage. A possible programme could include:

If initial scoping studies indicate potential for development, drilling should then commence to provide an Indicated Resource with necessary coal analysis and full coal quality sampling and testwork programmes. Down – hole geophysical logging will be required;
As part of the programme a detailed topographic map of the project area and related potential infrastructure corridors needs to be completed; and
Feasibility Studies to be carried out to assess project potential, transport options and final transport requirements and all engineering requirements.

The cost of carrying out such drill programmes and relevant studies could be in the order of US\$10.0M for a small to medium sized coal reserve.

Further capital fund raising will be required to cover the projects which meet ongoing investment requirements for future years.

4.3.4 Other Risks

The following risks might also be present and need to be considered:

1. The exploration may lead to a decision point where there is no economic potential for coal extraction on some or all of the projects;
1. The exploration may lead to resources being announced but no coal reserves;
1. Exploration might define thermal coal, coking coal and or PCI coal resources or only thermal coal resources;
1. The exploration and development programmes might take longer than planned;
1. Government approvals may take longer than expected with a risk of government approvals not occurring;
1. Forestry Concessions and other Concessions might affect access to areas. Until the legal due diligence is completed, details remain unknown;
1. Risks associated with commodity price changes;
1. Risk associated with currency exchange fluctuations;
1. Risks associated with capital markets and the ability to raise exploration and development capital;
1. Risk associated with coal supply and demand fluctuations.

5 PROJECT VALUATIONS

The following points are noted which assisted with the valuation process:

At the time of closing, the projects will have been granted exploration IUP's;
The geological formations over three of the Projects (BBM, BBP, and AAK,) display geology which is favourable to discovering coal deposits;

The AAM project is considered high risk due to the fact the geology of the concession covers metamorphics and intrusive. Therefore a low valuation is placed on this project;
The BBM and BBP Projects are much closer to infrastructure and potential river transport than the AAM and AAK Projects and coal property values are heavily based on infrastructure requirements;
There are virtually no exploration results or geological details which limits the scope of the valuation.
The initial due diligence budget and exploration program provided by JDC is reasonable.

5.1 PT Bumi Barito Mineral (BBM) (50% JDC Interest)

IMC Valuations are proposed for 100% of the project and a proposed JDC interest value is placed in brackets after the total value.

Lower Value US\$2.0 million (US\$1.0 million);
Medium (preferred) Value US\$5.0 million (US\$2.5 million);
Upper Value US\$10 million (US\$5.0 million);

Costs incurred by Altera in relation to BBM

US\$10 million upfront payments (subject to due diligence).

It is noted that further payments are due at various stages and these are:

US\$5.0 million once 20,000,000 tonnes Inferred Coal Resources are defined with a maximum strip ratio of 20 to 1;
US\$10 million once the Production Operation IUP is granted;

Note that JDC (Altera as parent company) need to expend their proportional exploration dollars on the project area on top of the payments made above.

5.2 PT Borneo Bara Prima (BBP) (50% JDC Interest)

IMC Valuations are proposed for 100% of the project and a proposed JDC interest value is placed in brackets after the total value.

Lower Value US\$1.0 million (US\$0.5 million)
Medium (preferred Value) US\$3.0 million (US\$1.5 million)
Upper Value US\$6.0 million (US\$3.0 million)

Costs incurred by Altera in relation to BBP

US\$2.0 million paid after due diligence is completed.

It is noted that further payments are due at various stages in the future and these are:

US\$3.0 million once 10,000,000 tonnes Inferred Coal Resources are defined with a maximum strip ratio of 12 to 1;

US\$5.0 million once the Production Operation IUP is granted;

Note that JDC (Altera as parent company) need to expend their proportional exploration dollars on the project area on top of the payments made above.

5.3 PT Anugerah Alam Manuhing (AAM) (75% JDC Interest)

IMC Valuations are proposed for 100% of the project and a proposed JDC interest value (75%) is placed in brackets after the total value.

Low Value \$0
Medium Value (Preferred) US\$0.5 million (US\$0.375 million)
High Value US\$1.0 million (US\$0.75 million)

Costs incurred by Altera in relation to AAM

US\$0.65 million paid after due diligence is completed.

It is noted that further payments is due in the future and this is:

US\$1.35 million once 10,000,000 tonnes Inferred Coal Resources are defined with a maximum strip ratio of 12 to 1;

5.4 PT Anugerah Alam Katingan (AAK) (75% JDC Interest)

IMC Valuations are proposed for 100% of the project and a proposed JDC interest value is placed in brackets after the total value.

Low Value – US\$0.5 million (US\$0.375 million)

Medium Value (Preferred) – US\$1.25 million (US\$0.94 million)

High value – US\$2.0 million

Costs incurred by Altera in relation to AAK

US\$0.65M paid after due diligence is completed.

It is noted that a further payments is due in the future and this is:

US\$1.35M once 10,000,000 tonnes Inferred Coal Resources are defined with a maximum strip ratio of 12 to 1;

5.5 Total Value of all Projects (For the JDC percentage)

Low Value – US\$1.875 million

Medium Value (Preferred) – US\$5.32 million

High value – US\$10.75 million

Costs incurred by Altera in relation to the Four projects

US\$6 million paid on closure;
US\$7.3 million paid after due diligence is completed.

Plus potential future payments subject to targets and tenements being issued of:

US\$10.7 million once the Inferred Coal Resources are defined with relevant strip ratios;
US\$15 .0 million once the Production Operation IUPs are granted.

6 STATEMENT OF CAPABILITY

This report has been prepared by Mr Stewart Lewis, Managing Director of IMC and Mr Alistair Barton, Principal Geologist, IMC.

IMC are based in Brisbane with affiliated offices in Chicago and Perth.

The firm specialises in mining feasibility studies, exploration management, mineral evaluations, due diligence assessments, independent expert reports as well as more general geological, mining and process consulting.

The experience of the consultants engaged in this valuation on behalf of IMC is summarised below:

Mr Stewart Lewis BE (Mining), BE (Civil) MBA, MAusIMM, MAICD, is the Chief Executive Officer of IMC. He is a mining engineer with more than 25 years' experience in the areas of feasibility studies, reserve estimation, due diligence studies and project management.

Mr Alistair Barton Alistair graduated with an Associate Diploma and Fellowship Diploma in Geology from the Royal Melbourne Institute of Technology in 1973 and 1974 respectively. He is a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM) and is an accredited Chartered Professional (Geology). Alistair is a Principal Geologist with IMC.

Alistair has worked as a geologist for a total of 37 years since graduation and has experience in gold, base metals, coal and industrial minerals industries including exploration, project development, mining operations, contract mining and engineering services, consulting, capital fund raising and public company management. Commodity experience includes copper, lead, zinc, gold, silver, tin, tungsten, molybdenum, nickel, cobalt, tantalite, uranium, indium, heavy mineral sands, coal, iron ore, blue metal quarry products, some clays, silicon, silica sand, semi-precious gem stones (aquamarine, topaz), limestone and dolomite. Alistair has operated throughout Australia and also have overseas experience in Canada, China, Mongolia, Mozambique, Mexico, Fiji, the Philippines, Solomon Islands and New Zealand.

7 STATEMENT OF INDEPENDENCE

Neither the principals nor associates of IMC have any material interest or entitlement in the securities or assets of Altera, or any associated companies or entities. IMC will be paid a fee for this report comprising its normal professional rates and reimbursable expenses. The fee is not contingent on the conclusions of this report.

8 LIMITATIONS AND CONSENT

This assessment has been based on data, reports and other information made available to IMC by Altera and JDC. IMC has been advised that the information is complete as to material details and is not misleading.

IMC have not studied or provided advice on the validity or legality of the tenement status of this report, political issues, financial issues or other issues outside the scope of the contract. No field trip has been undertaken to the four Project areas in Kalimantan.

A draft copy of this report has been provided to BDO and Altera for comment as to any material errors of fact, omissions or incorrect assumptions. The opinions stated herein are given in good faith. We believe that the basic assumptions are factual and correct and the interpretations reasonable.

With respect to the IMC report and use thereof by Alteran, it advisors and BDO, Altera agrees to indemnify and hold harmless IMC and its shareholders, directors, officers, and associates against any and all losses, claims, damages, liabilities or actions to which they or any of them may become subject under any securities act, statute or common law, except for negligence, and will reimburse them on a current basis for any legal or other expenses incurred by them in connection with investigating any claims or defending any actions.

This report is provided to the Directors of Altera in connection with the proposed capital raising, share transfer and acquisition of JDC and should not be used or relied upon for any other purpose. This report does not constitute a technical or legal audit.

Neither the whole nor any part of this report nor any reference thereto may be included in or with or attached to any document or used for any purpose without our written consent to the form and context in which it appears.

This report is to be read as a whole, and sections or parts thereof should therefore not be read or relied upon out of context.

This disclaimer must accompany every copy of the IER, which is an integral document and must be read in its entirety.

9 REFERENCES

Agreement between Altera Resources Limited, Jack Doolan Capital Pty Ltd and others. 2010.

Altera Resources Limited, 2010. Draft Notice of General Meeting.

VALMIN Code, 2005. Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports. 2005 Edition. Prepared by the VALMIN Committee; AusIMM.

McGaughan, G. 2010. Independent Geologist's Report on Coal Projects in Central Kalimantan, Indonesia. Report prepared by SRK Consulting , Sep 2010. ALT001_IGR_Central Kalimantan Coal.

Hanna, P. 2010, Technical Due Diligence Proposal Memo for JDC Coal Tenements, Central Kalimantan.

Independent Geologist's Report on Coal Projects in Central Kalimantan, Indonesia

Report prepared by

September 2010 Project Code: ALT001

Independent Geologist's Report on Coal Projects in Central Kalimantan, Indonesia ALT001

Document Reference: ALT001_IGR_Central Kalimantan Coal Projects_Rev3.docx

Altera Resources Limited PO Box 414 WEST PERTH WA 6005

SRK Consulting (Australasia) Pty Ltd Unit 1, 1 Balbu Close, BERESFIELD NSW 2322

Compiled by: Peer Reviewed by:

Gerry McCaughan PhD, BA (Hons), MAusIMM Senior Consultant (Coal Geology)

Email: [email protected]

Author: Gerry McCaughan

Mike Warren BSc (Mining Eng), MBA, FAusIMM, FAICD Principal Consultant (Project Evaluations)

SRK Report Distribution Record

Project Number: ALT001

Date Issued: 28 October 2010

Name/Title	Company
Harjinder Kehal	Altera Resources Ltd
Jeremy Shervington	Altera Resources Ltd

This document is protected by copyright vested in SRK. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission of the copyright holder, SRK.

Rev No.	Date	Revised By	Revision Details
0	5 August 2010	G McCaughan	Initial draft for client review
1	27 August 2010	G McCaughan	Revised draft for client review
2	31 August 2010	G McCaughan	Revised draft for client review
3	2 September 2010	G McCaughan	Final report issued to client

Executive Summary

SRK Consulting (Australasia) Pty Ltd ("SRK") has been commissioned by Altera Resources Limited ("Altera") to provide an Independent Geologist's Report on a number of coal projects on the island of Kalimantan, Indonesia. These coal projects proposed are to be acquired via a private Australian company ("Jack Doolan Capital Pty Ltd" or "JDC") which, in turn, has entered into contractual arrangements to acquire them from the current owners. The report is to be included in a Notice of Meeting to be lodged by Altera with the Australian Securities and Investments Commission ("ASIC"), on or about the first week of September 2010. SRK understands that Altera has (or will) commissioned a legal due diligence of the properties independently from this report.

The projects comprise four coal exploration concessions in Central Kalimantan Province. SRK understands that the projects are currently owned by two Kalimantan based business proprietors. The principal sources of information for all four tenements are an exploration report for each concession, commissioned by the tenement owners. None of the reports are authored. The PT BBM and PT BBP reports are more comprehensive and more coal assay data is available for these tenements. The PT AAK and PT AAM reports are less detailed and contain less coal quality information.

Geologically, the four concessions are located in or around the margins of the North Barito Basin in Central Kalimantan and are prospective for coal measures of Eocene age. Most of the areas where Eocene coals outcrop have a moderate to high regional level of coal rank. Coking coal deposits are known to occur within parts of the Northern Barito Basin in Central Kalimantan. In particular the PT BBM and PT BBP coal projects are situated proximal to known coking coal deposits.

The PT Bumi Barito Mineral (BBM) project is located in the North Barito Basin, immediately to the south of PT Juloi Coal (BHP 75%, Adaro Energy 25%). Only limited exploration has been undertaken on the concession to date, consisting of a general geological survey which was commissioned by the tenement owners in 2008. The initial geological investigation in the concession area has identified two main coal horizons, each comprising at least four individual seams with a composite coal thickness of 3-4 m in each horizon. Based on the regional geology mapping data for the area, the seams occur within a formation considered to economically prospective for economic coal seams (Haloq Sandstone). Coal quality analysis indicates that the coals are of low volatile bituminous rank (ASTM), with low ash, low sulphur and high calorific value. Given the location of the BBM concession and the available coal quality data, a range of products may be possible, from a high quality export thermal, to a PCI or coking product.

The ash and sulphur contents of the analysed BBM coals are comparable with those reported in NW Juloi tenement. However, the reported volatile matter of the NW Juloi coals is considerably higher than that of the BBM coals. The generally low volatile matter may impact the coking potential. Further analyses (CSN, fluidity, dilation) are required to test the suitability of these coals for a coking product.

Further work is required to allow the identified coal measures to be upgraded to Resources in accordance with the JORC Code (2004). This will require further outcrop mapping, an exploration drilling programme, detailed topographic mapping and additional verification of coal quality analyses. Further investigation of the Haloq Sandstone in the northwest and northern parts of the concession, adjacent to PT Juloi Coal may identify coal seams additional to the outcrops found near the Barito River.

The PT Borneo Bara Prima (BBP) project is located in the North Barito Basin to the west of the Maruwai Coal Project (BHP 75%, Adaro Energy 25%). The Maruwai Coal Project hosts the Lampunut coking coal deposit in the Batu Ayau Formation immediately to the southeast of the eastern PT BPP project area. Exploration activities to date have comprised an initial reconnaissance mapping programme which has identified the presence of up to three coal seams in the undivided Haloq Sandstone and Batu Kelau Formation in the south central area of the concession. The coal seams are generally thin. Analyses of outcrop samples to date indicate a low ash, low sulphur coal with excellent specific energies. The ash and sulphur are comparable with those reported at Lampunut (Batu Ayau Formation), however the Lampunut coals have considerably higher volatile matter than the BBP samples analysed to date. The generally low volatile matter of the outcrop samples analysed to date may impact the coking potential of these coals, and further metallurgical coal analyses are warranted to test the suitability of these coals for a coking product.

Further field mapping may identify better seam thickness development along strike of the mapped coal outcrops and there is potential for the discovery of additional coal seams elsewhere in the undivided Haloq Sandstone and Batu Kelau Formation. Investigation of the Batu Ayau Formation in the northwest parts of the concession and eastern parts of the concession, adjacent to PT Maruwai Coal may identify coal seams additional those already identified in the undivided Haloq Sandstone and Batu Kelau Formation. The Lampunut deposit appears to be generally contained within a southeast strike extension of the Batu Ayau Formation sediments in the eastern part of the BPP concession. It is reasonable to postulate that the Batu Ayau Formation seam development in the Lampunut deposit may extend to the northwest into the eastern area of the BPP concession. In the western area of the BPP project, the Batu Ayau Formation, which is present on the western flank of the regional anticline, may also be prospective for similar coal seam development. The Batu Ayau Formation in this region is known to be prospective for coking coal.

Given the size and location of the BBP concession and the limited exploration data to date, SRK is of the opinion that there is potential to discover one or more economically significant coal deposits, which may support a range of products, from a high quality export thermal, to a PCI or coking product.

The PT Anugerah Alam Manuhing (AAM) project is largely covered by metamorphic rocks belonging to the pre-Tertiary Pinoh Metamorphics. To date, field exploration has been limited to a geological field mapping survey which was commissioned by the tenement owners during 2009. A range of lithologies were reported in the concession area, including claystone, alternating sandstone, carbonaceous claystone, granite and granodiorite, and coal. A total of eleven coal outcrops were recorded during the investigation. The recorded seam thickness ranged between 0.42 m and 4.20 m. The reported coal outcrops show a range of strikes and dips. Two strike directions are identified broadly as NE-SW and NW-SE, with dips ranging from 20º to 80º.

The reported occurrence of Kalimantan coal in a pre-Tertiary high grade metamorphic terrane is unusual. An independent field investigation is warranted to test the veracity of the reported coal occurrences in the concession area. If the coal occurrences are confirmed, a detailed field mapping investigation should be undertaken to better understand the stratigraphy and lithologies in the broader concession area.

The reported ash and specific energy of the single analysed coal sample are suggestive of a low rank, low ash thermal product. However, it is the opinion of the author that the validity of the reported assay results is questionable. Coal which occurs in a metamorphic belt would be expected to have undergone a high degree of coalification (metamorphism) resulting in an anthracite or semi-anthracite rank. The field descriptions and photographic evidence are supportive of a high rank coal. These higher coal ranks are characterised by very low volatile matter content, very high carbon content and high specific energies.

The PT Anugerah Alam Katingan (AAK) project located in the North Barito Basin. Based on the published 250,000 scale Geology Map for the region, the surface geology concession area is represented entirely by the Late Eocene Haloq Sandstone. Initial geological mapping within the project area has identified five coal outcrops of between 1.2 m and 1.8 m thick. Based on the available data, it is not clear whether the reported outcrops are representative of one or more seams. The coals occur within the Haloq Sandstone, parts of which are known to be coal bearing (e.g.: NW Juloi).

Laboratory analysis of one of the coal samples indicates the coal is a good quality anthracite with low ash and good specific energy. The field descriptions of the coal are also indicative of a hard high rank coal. Further investigations are warranted to ascertain the distribution and number of coal seams present based on the identified outcrops and the possibility of thicker coal development in the concession.

SRK is of the opinion that all of the coal projects are prospective and worthy of further exploration, including drilling and additional sample analyses.

		Executive Summary
		Disclaimer
		List of Abbreviations
1.		Introduction
	1.1 1.2 1.3 1.4 1.5 1.6	Terms of Reference Qualifications and Experience Statement of SRK Independence Warranties Indemnities Consents
2.		Kalimantan - General Information
3.	2.1 2.2 2.3	Geographic Setting Indonesian Coal Industry Kalimantan Coal Geology The Coal Projects
	3.1	Tenure
	3.2	Regional Geological Setting
	3.3	PT Bumi Barito Mineral (BBM)
		3.3.1 Introduction
		3.3.2 Local Geology
		3.3.3 Previous Exploration
		3.3.4 Coal Quality Analysis
		3.3.5 Neighbouring Tenements
		3.3.6 0pinion
	3.4	PT Borneo Bara Prima (BBP)
		Introduction 3.4.1 3.4.2
		Local Geology 3.4.3 Previous Exploration
		3.4.4 Coal Quality Analysis
		Neighbouring Tenements 3.4.5
		3.4.6 Opinion
	3.5	PT Anugerah Alam Manuhing (AAM)
		3.5.1 Introduction
		3.5.2 Local Geology
		3.5.3 Previous Exploration
		3.5.4 Coal Quality Analysis
		3.5.5 Opinion
	3.6	PT Anugerah Alam Katingan (AAK) 3.6.1
		Introduction 3.6.2 Local Geology
		3.6.3 Previous Exploration
		3.6.4 Coal Quality Analysis
		3.6.5 Opinion
4.		References
5.		Glossary of Terms	.34

List of Tables

Table 3-1: Summary of reported BBM coal outcrop data from 2008 field investigation14
Table 3-2: Comparison of reported coal outcrop data from 2008 and 2010 field investigations
(source Chris Turvey)15
Table 3-3: Reported coal quality of BBM coal outcrop samples (Anonymous, 2008)16
Table 3-4: Summary of reported BBP coal outcrop data (Anonymous, 2008)21
Table 3-5: Reported coal quality of BBP coal outcrop samples (Anonymous, 2008)22
Table 3-6: Summary of reported AAM coal outcrop data (AAM, 2010) 27
Table 3-7: Summary of reported AAK coal outcrop data (AAK, 2010)31

List of Figures

Figure 2-1: Locality plan of the Central Kalimantan Coal Projects on the island of Kalimantan 3
Figure 2-2: General characteristics of Palaeogene and Neogene coal deposits in Kalimantan 5
Figure 2-3: Simplified summary of Kalimantan Palaeogene and Neogene basin areas6
Figure 3-1: Location map showing tenements of interest 7
Figure 3-2: Summary of Eocene, Oligocene and Miocene sediment distribution and coking
coal potential in Central and Eastern Kalimantan8
Figure 3-3: DTM of the BBM concession area9
Figure 3-4: Regional geology in the PT BBM concession area 10
Figure 3-5: BBM coal outcrop locations and seam correlation 12
Figure 3-6: Photograph showing coal outcrop at site BBM/T/C-02A 13
Figure 3-7: Photograph showing part of coal horizon 1 exposed in creek near outcrop site
BBM/Mh/C01 13
Figure 3-8: Photograph showing 4 seams of coal horizon 1 taken from the river13
Figure 3-9: Photograph of a coal sample from outcrop site BBMMh/C0213
Figure 3-10: DTM of the PT BBP concession area18
Figure 3-11: Regional geology in the PT BBP concession area 19
Figure 3-12: PT BBP coal outcrop locations and seam correlation 20
Figure 3-13: DTM of the PT AAM concession area 24
Figure 3-14: Regional geology in the area of the PT AAM and PT AAK concessions25
Figure 3-15: PT AAM reported coal outcrop locations 26
Figure 3-16: PT AAM coal quality analysis 28
Figure 3-17: DTM of the PT AAK concession area30
Figure 3-18: AAK coal quality analysis 32

List of Appendices

Appendix1: Concession Details

Disclaimer

The opinions expressed in this Report have been based on the information supplied to SRK Consulting (Australasia) Pty Ltd (SRK) by Altera Resources Ltd ("Altera"). The opinions in this Report are provided in response to a specific request from Altera to do so. SRK has exercised all due care in reviewing the supplied information. Whilst SRK has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. SRK does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them.

List of Abbreviations

Abbreviation	Meaning
' or min	minutes
" or sec	seconds
%	per cent
<	less than
>	greater than
° or deg	degrees
°C	degrees celcius
AAK	Anugerah Alam Katingan
AAM	Anugerah Alam Manuhing
ad or adb	air dried basis
AICD	Australian Institute of Company Directors
Altera	Altera Resources Limited
ar	as received
ASIC	Australian Securities and Investments Commission
AusIMM	Australasian Institute of Mining and Metallurgy
BBM	Bumi Barito Mineral
BBP	Borneo Barito Prima
BTU	(British Thermal Unit) The quantity of heat required to raise the temperature of one pound of distilled water 1°F at its point of maximum density
cal/g	calories per gram
CAPEX	capital expenditure
CSN	crucible swelling number, the higher the number, the better the coking properties
CV	calorific value
daf	dry ash free
db	dry basis
DEM or DTM	digital elevation model or digital terrain model
DMS	degrees minutes seconds (latitude / longitude)
E	east
E–W	east-west
FC	fixed carbon
g/cc	grams per cubic centimetre
gar	gross as received
ha	hectare
HGI	Hardgrove Grindability Index - ease of pulverisation (e.g. 30 is very hard, 70 is soft)
IM	inherent moisture
JDC	Jack Doolan Capital Pty Ltd
k	thousand
kg	kilogram
km	kilometre
KP	Kuasa Pertambangan – licence for exploration and exploitation of mineral resources issued by the Department of Mines

Abbreviation	Meaning
m	metre
M	million
m RL	metres reduced level
mE	metres east
MJ/kg	megajoules per kilogram
mN	metres north
mS	metres south
Mt	million tonnes
Mtpa	million tonnes per annum
N	north
NE	northeast
NNE	north-northeast
NW	northwest
PCI	pulverised coal injection
PT	Perusahaan Terbatas (Indonesian: Limited Business)
RD	relative density
S	south
SE	southeast
SRK	SRK Consulting (Australasia) Pty Ltd
SSE	south-southeast
SW	southwest
t	tonne
Tea	Batu Ayau Formation
Teh	Haloq Sandstone
Teh+ Tek	undivided Haloq Sndstone and Batu Kelau Formation
TM	total moisture
Toms	Sintang Intrusives
tpa	tonnes per annum
TS	total sulphur
US or USA	United States of America
VM	volatile matter
W	west
WGS84	World Geodetic System 1984 (WGS84) - geodetic reference system used by GPS.
WNW	west-northwest

1. Introduction

1.1 Terms of Reference

SRK Consulting (Australasia) Pty Ltd ("SRK") has been commissioned by Altera Resources Limited ("Altera") to provide an independent technical report on a number of coal projects located in Kalimantan, Indonesia. These coal projects are proposed to be acquired via a private Australian company ("Jack Doolan Capital Pty Ltd" or "JDC") which, in turn, has entered into contractual arrangements to acquire them from the current owners, two Kalimantan based business proprietors.

This report is to be included in a Notice of Meeting to be lodged by Altera with the Australian Securities and Investments Commission ("ASIC"), on or about the first week of September 2010.

This Report has been prepared to the standard of, and is considered by SRK to be, a Technical Assessment Report under the guidelines of the VALMIN Code. The VALMIN Code is the code adopted by the Australasian Institute of Mining and Metallurgy and the standard is binding upon all AusIMM members. The VALMIN Code incorporates the JORC Code for the reporting of Mineral Resources and Ore Reserves.

This Report is not a Valuation Report and does not express an opinion as to the value of mineral assets. Aspects reviewed in this Report do include product prices, socio-political issues and environmental considerations; however, SRK does not express an opinion regarding the specific value of the assets and tenements involved.

This Report does not provide any comment on the fairness and reasonableness of any transactions related to the proposed acquisition.

Given the time constraints imposed on the completion of this report, no confirmatory site inspections have been undertaken by SRK at any of the coal projects to test the veracity of reported coal outcrop data.

The legal status associated with the tenure of the coal properties is addressed by an expert other than SRK Consulting and these matters have not been independently verified by SRK Consulting. The present status of the tenements in this report are based on information provided by JDC, and the report has been prepared on the assumption that the tenements are, or will prove to be, lawfully accessible for evaluation and development.

Experience

1.2 Qualifications and

SRK Consulting is an independent, international consulting company providing focused advice and problem solving. SRK is one of the world's first one-stop consultancies offering specialist services to mining and exploration companies for the entire life cycle of a mining project, from exploration through to mine closure. Among SRK's clients are most of the world's major and medium-sized metal and industrial mineral mining houses, exploration companies, banks, petroleum exploration companies, agribusiness companies, construction firms and government departments.

Formed in Johannesburg, South Africa, in 1974, SRK now employs more than 900 professionals internationally in 37 permanent offices in 16 countries. A broad range of internationally recognised associate consultants complements the core staff.

The SRK Group's independence is ensured by the fact that it holds no equity in any project. SRK is wholly owned by its employees. This allows the SRK Group to provide its clients with conflict-free and objective recommendations on crucial judgment issues.

SRK employs leading specialists in each field of science and engineering. Its seamless integration of services and global base has made the company an international leader in due diligence, feasibility studies and confidential internal reviews.

The author of this report is Dr Gerry McCaughan (Senior Consultant, Coal Geology) who is a professional geologist with eight years industry and consulting experience in coal and base metals, and a full time employee of SRK. Dr McCaughan has completed high level reviews, more detailed independent evaluations and resource estimations on a number of coal exploration/resource projects in Australia and Indonesia. Dr McCaughan is a member of the Australasian Institute of Mining and Metallurgy (AusIMM). Dr McCaughan has the appropriate relevant qualifications, experience, competence and independence to be considered as "Expert" under the definitions provided in the VALMIN Code.

The document has subsequently been reviewed by Mr Mike Warren (Principal Consultant, Project Evaluations). Mr Warren is a mining engineer with over 30 years' experience, including on-site and head office roles and five years in investment banking for mining projects. He has a strong technical background, to which he has added financial modelling and evaluation skills. Mr Warren is a Director of SRK and based in Sydney. He is a fellow of the AusIMM and fellow of the Australian Institute of Company Directors (AICD).

1.3 Statement of SRK

Independence

Neither SRK nor any of the authors of this Report have any material present or contingent interest in the outcome of this Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of SRK.

SRK has no prior association with Altera or JDC in regard to the mineral assets that are the subject of this Report. SRK has no beneficial interest in the outcome of the technical assessment being capable of affecting its independence.

SRK's fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The payment of that professional fee is not contingent upon the outcome of the Report.

1.4 Warranties

Altera has represented to SRK that full disclosure has been made of all material information and that, to the best of its knowledge and understanding, such information is complete, accurate and true.

1.5 Indemnities

As recommended by the VALMIN Code, Altera has agreed to provide SRK with an indemnity under which SRK is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

Which results from SRK's reliance on information provided by Altera or to Altera not providing material information; or
Which relates to any consequential extension workload through queries, questions or public hearings arising from this Report.

1.6 Consents

SRK consents to this Report being included, in full, in a Notice of Meeting to be lodged by Altera with the Australian Securities and Investments Commission ("ASIC"), on or about the first week of September 2010, in the form and context in which the technical assessment is provided, and not for any other purpose.

If required the report may be utilised by any independent expert that Altera may need to appoint to prepare a report on the "fairness/reasonableness" of the proposed acquisition of JDC.

SRK provides this consent on the basis that the technical assessments expressed in the Summary and in the individual sections of this Report are considered with, and not independently of, the information set out in the complete Report and the Cover Letter.

2. Kalimantan - General Information

2.1 Geographic Setting

Formerly known as Borneo, Kalimantan is the world's second largest island. The north and northwestern part of the island are the East Malaysian states of Serawak and Sabah, with the independent state of Brunei Darusalam between them. The rest of the island is part of Indonesia, divided into four provinces - East Kalimantan, West Kalimantan, Central Kalimantan and South Kalimantan.

The four coal projects that are the subject of this report are located in the Central Kalimantan Province, Indonesia (Figure 2-1).

The Schwaner Mountains stretch from the northeast of the province to the southwest, 80% of which is covered in dense forest, peatland swamps, mangroves, rivers, and traditional agriculture land. Highland areas in the northeast are remote and not easily accessible. The centre of the province is covered with tropical forest, which produces rattan, resin and valuable timber such as Ulin and Meranti. The southern lowlands are dominated by peatland swamps that intersect with many rivers.

Kalimantan has tropical climate and very high rainfall throughout the year, with generally drier conditions between July and October. Average annual rainfall is around 3000 mm per annum. The temperature varies between 29ºC and 34ºC and the humidity is in the range of 95-98%.

Figure 2-1: Locality plan of the Central Kalimantan Coal Projects on the island of Kalimantan Coal concession areas are shown in red.

Industry

2.2 Indonesian Coal

Coal exploration in Indonesia was essentially initiated during the 1970's. However, the major expansion in exploration activity occurred in the 1980's as a result of foreign investment. The exploration by these historical miners was successful and several mines were established as a consequence of the successful exploration resulting in a new export Industry for Indonesia.

Indonesia is currently the world's second largest coal exporter and the world's leading exporter of thermal coal. In 2008 Indonesian producers shipped 173 Mt of thermal coal and 30 Mt of coking coal (World Coal Institute). Considering only legal operations, Indonesia currently produces thermal coals from more than 40 different mines in East Kalimantan, South Kalimantan and Sumatra.

Indonesian coal is transported from mines to shipping points primarily via a combination of trucking and barging. In Indonesia, coal trucking and barging operations are typically performed by contractors. At most export coal operations, coal is trucked directly to a coal processing/barge loading facility located on the tidewater or on a river that is navigable by barge. Coal trucking distances for these direct-haul operations typically vary between 10 km and 35 km, with a few mines experiencing longer hauls of up to 75 km (Ewart and Vaughan, 2009).

The majority of export coals from Indonesia are typically loaded into barges at either river or coastal sited loading facilities and transported to an offshore transfer point for loading onto ocean going vessels, or barged to a deep water coal terminal, such as Balikpapan Coal Terminal, Indonesia Bulk Terminal or Arutmin's North Pulau Laut Coal Terminal.

2.3 Kalimantan Coal

Geology

In the Indonesian Archipelago, coal deposits are mainly distributed in the islands of Sumatera and Kalimantan. The sedimentary basins within which the coals were deposited are very young geologically.

Based on the time of deposition, coal measures on the island of Kalimantan are divided on the basis of their age into Paleogene and Neogene coal measures (Figure 2-2 and Figure 2-3). In general, the majority of the coal is Eocene and Miocene in age. High relative sea levels during the Oligocene resulted in deposition of mainly marine sediments and whilst further coal formed during the Pliocene they tend to be of a lower rank as a result of the young age (Friederich et al., 1999). The existence of higher rank coals at the land surface is dependent on uplift or the presence of igneous intrusions.

In general, there are significant differences in the coal quality and thickness of coal seams between those of the Eocene and those of the Miocene-Pliocene epochs. The Eocene coals generally tend to be more continuous but thinner than coal formed during the Miocene-Pliocene. The Eocene coals are considered to have formed under extensional structural regimes (rift basins) as transgressive depositional environments Seams are typically 4 to 6 m thick in exposed economic deposits. The rank of the Eocene coals is generally higher, with a lower moisture content and higher calorific value making the coals suitable for export thermal coals (Figure 2-2). In some areas of Central and Western Kalimantan, Eocene coals with coking properties are found.

The Neogene coals were generally deposited during the regressive phase of syn-orogeny in the basins. Seam thickness is variable but generally thicker (some greater than 25 m thick) and more numerous. Neogene coal seams found in the Kutei and Barito Basins are commonly characterized by the occurrence of intensive splitting and washouts (Friederich et al., 1999). In general, these coals tend to be low in ash and sulphur (Figure 2-2).

The quality of Kalimantan coals varies across the island and is strongly influenced by the geological environments, resulting in a wide variation of coal characteristics including coking properties. In general terms, the variation of Kalimantan coal properties is dependent on the depositional environment (coal type) and the degree of coalification (coal rank).

In general, coal type varies little. Kalimantan coals differ markedly in type from most Australian or US bituminous coals, but are similar to the Tertiary coals from Germany and the Gippsland Basin (Cook and Daulay, 2000). Both the Paleogene and Neogene coals are generally rich in vitrinite macerals, while inertinite is almost absent. Vitrinite contents of the coals are commonly in the range 80% to 96%. Although liptinite contents are not generally high (typically less than 5% of the coal constituents), some coals do show unusually high contents of liptinite.

Relatively higher in ash and sulphur content	Low in ash and sulphur content
Low moisture and high calorific value	Mostly sub-bituminous coals and lignites, high moisture content and low calorific value
Export commodity coals	Domestic power consumption

Figure 2-2: General characteristics of Palaeogene and Neogene coal deposits in Kalimantan

Coal rank varies quite markedly across Kalimantan, from lignite through sub-bituminous, high to low volatile bituminous and semi-anthracite to anthracite. Paleogene coals are commonly bituminous or higher in rank. The rank of Neogene coals, in normal geological conditions, is relatively low, except for heat-effected coal deposits. Therefore, the occurrence of high rank coal in Kalimantan is mainly controlled by the distribution pattern of the Paleogene coal measures, and to some extent is also affected by the occurrence of volcanic activity associated with the Neogene coal measures (Nas and Hidartan, 2010).

Figure 2-3: Simplified summary of Kalimantan Palaeogene and Neogene basin areas

3. The Coal Projects

3.1 Tenure

The tenements that are the subject of this report are shown in Figure 3-1. SRK understands that all of the tenements have either been, or are in the process of being converted from KP to IUP status. The legal status associated with the tenure of the coal properties has not been independently verified by SRK. The present status of the tenements in this report are based on information provided by JDC, and the report has been prepared on the assumption that the tenements are, or will prove to be, lawfully accessible for evaluation and development. The concession (KP) details are provided in Appendix 1 of this report.

Figure 3-1: Location map showing tenements of interest

3.2 Regional Geological

Setting

Geologically, the four concessions are located in or around the margins of the North Barito Basin in Central Kalimantan and are prospective for coal measures of Eocene age. The Barito Basin initially formed as part of a broader continuous system of Early Tertiary rifts formed along the margins of the uplifting and eroding Schwaner batholith. These developed into separate basins during the Oligocene and Miocene and sedimentation has continued throughout most of the Neogene. The Schwaner batholith, which forms the high ranges in Central and Western Kalimantan is a complex of Cretaceous granititic rocks which intrudes Palaeozoic and Mesozoic volcanics, volcaniclastics and marine sediments.

Most of the areas where Eocene coals outcrop have a moderate to high regional level of coal rank. Coking coal deposits are known to occur within the Northern Barito Basin in Central Kalimantan, in particular from the Barito (North, South and East) and Murung Raya Regencies (Nas and Hidartan, 2010). Two trends of higher rank coals prospective for coking coal deposits have been identified in the central part of Eastern Kalimantan (Figure 3-2, Nas and Hidartan, 2010). These trends are broadly located a regional structural lineament (Adang Flexure) and the increasing rank is probably controlled by this structure along with the thermal effects of igneous activity in the area (Nas and Hidartan, 2010).

Figure 3-2: Summary of Eocene, Oligocene and Miocene sediment distribution and coking coal potential in Central and Eastern Kalimantan

After Nas and Hidartan, 2010. Central Kalimantan Coal Project are shown in grey.

3.3 PT Bumi Barito

Mineral (BBM)

3.3.1 Introduction

The PT BBM concession is located around the village of Tumbang Iram, in the Permata Intan and Sumber Barito District, Murung Raya Regency, in the province of Central Kalimantan. The nearest major town to the concession is Puruk Cahu (the capital of Murung Raya Regency), which is located on the Barito River approximately 60 km to the southeast. At Puruk Cahu 5,000 tonne transport barges can be loaded, however the capacity of the river may vary in the drier months between July and October.

With the exception of minor alluvial and swamp lowland areas, most of the Murung Raya Regency is represented as hilly plateau. A number of river systems dissect the Murung Raya Regency and these represent an important irrigation and transport network for the local people.

Access to the broader area from Jakarta is via a 1.5 hour flight to Palang Karaya. Domestic flights operate from Palang Karaya to Puruk Cahu (~45 minutes). Access to the concession area from Puruk Cahu is via a ~6 hour boat trip on the Barito River, followed by foot access to Tumbang Iram village (~1 hour).

Geomorphologically, the concession area is comprised of steep rugged hills over the majority of the concession area, with the exception of the central area of the concession which is dissected by the Barito River. The elevation of the surface topography ranges from < 100 m around the Barito River to 800-900 m in the high areas as shown in the digital terrain model (DTM) in Figure 3-3.

The area of the PT BBM concession is 19,920 Ha. The concession does not overlap with Protection Forest however the majority of the concession is covered by Production Forests. Permits are required from the forest owner before certain exploration activities (e.g.: drilling) can be undertaken. In some instances, this can delay exploration activities by six months to two years.

Figure 3-3: DTM of the BBM concession area

BBM concession is shown in red.

3.3.2 Local Geology

Geologically, the PT BBM concession is located in the North Barito Basin.

Based on the published 1:250,000 scale Geological Map of the Muaratewe Quadrangle (Figure 3-4), the oldest formation identified within the concession area is the Late Cretaceous age Selangkai Formation (Kse), which subcrops in a very small area in the northwest of the concession. This formation is described as "shale, mudstone, sandstone, conglomerate, fossiliferous limestone, commonly carbonaceous and calcareous, moderate well bedded".

Elsewhere in the concession area, the Cretaceous sediments are unconformably overlain by the Late Eocene age Haloq Sandstone Formation (Teh), which subcrops over the majority of the area (Figure 3-4). The Haloq Sandstone Formation is described (Supriatna, et al., 1995) as "quartz sandstone, minor conglomerate, and mudstone, rare limestone, moderate, to thick bedded".

The Haloq Sandstone is conformable below the Batu Kelau Formation and Batu Ayau Formation. Locally, the Haloq Sandstone interfingers with the Batu Kelau Formation.

In the southeast area of the concession, the Haloq Formation is unconformably overlain by the Puruk Cahu Formation (Tomc, Figure 3-4). The Puruk Cahu Formation is described as "fossiliferous claystone, dark grey, interbedded with siltstone, containing small lenses, and thin layered vitrinite coal and parallel and convolute lamination sandstone, intercalated by breccia, the fragments consist of andesite, dacite, gneiss, and coal, the matrix consist of coarse sandstone, containing vitrinite coal fragments". The Puruk Cahu Formation was deposited during a period of marine transgression during the Late Oligocence to Early Miocene.

Although not mapped in the concession area, igneous intrusive rocks of the Middle to Late Miocene Sintang Intrusives (Toms) are identified the broader area in a wide belt extending to the east and south of the concession (Figure 3-4). The Sintang Intrusives comprise stocks, plugs, dykes and sills of porphrytic andesite, diorite and granodiorite. It is possible that unknown local occurrences of the Sintang Intrusives may be present within the concession area.

The coal measures under discussion are interpreted to occur in the Haloq Sandstone. Although the 250,000 scale geology map description for the Haloq Sandstone does not include coal, Marks (1957) records the depositional environment of the Haloq Sandstone as shallow marine to deltaic, lagoonal and estuarine. These depositional settings could support peat formation and coal development.

Figure 3-4: Regional geology in the PT BBM concession area

Source 1:250,000 scale Geological Map of the Muaratewe Quadrangle. PT BBM concession is shown in red. Proximal Indonesia Coal Project (BHP 75%, Adaro Energy 25%) concessions are shown in black.

3.3.3 Previous Exploration

To date, field exploration has been limited to a general geological survey which was undertaken by the tenement owners over a six day period during June 2008. The field programme resulted in general mapping of outcrop and topographic features, such as rivers, and tracks (Anonymous, 2008). Outcrop mapping was conducted along a number of traverses, following existing rivers, roads, logging tracks and valley areas.

A total of six coal outcrops were recorded in the vicinity of the Barito River, in the central part of the concession area (Figure 3-5). The coals are described as generally black, bright and brittle. Recorded individual ply thicknesses vary between 0.60 m and 1.56 m (Table 3-1). Based on the 250,000 scale geology map for the region, all of the coal outcrops occur within the Haloq Sandstone.

Based on the preliminary outcrop investigations, two main coal horizons, each comprising at least four individual seams with a composite coal thickness of 3-4 m, are interpreted to be present along the Barito River in central part of the concession (Figure 3-5). In this area, the coal seams strike broadly east-west and dip at 10-25º to the south. It is possible that a number of the steeper dips may be the result of movement (slumping) of the coal outcrop.

Up to four coal seams (A-D) have been identified (Anonymous, 2008) as part of coal horizon 1:

Seam 1A: 1.10-1.60 m (BBM/T/C-03, BBM/Mh/C-01, BBM/Mh/C-02 and BBM/Mh/C-03)
Seam 1B: 1.10-1.15 m thick (BBM/T/C-03 and BBM/Mh/C-03)
Seam 1C: 0.64-0.84 m thick (BBM/T/C-03 and BBM/Mh/C-03)
Seam 1D: 0.50 m thick (BBM/T/C-03).

Seam interburden varies from approximately 2 m to >4 m in thickness and generally comprises claystone and shaly coal.

Up to four coal seams (A-D) have been identified (Anonymous, 2008) as part of coal horizon 2:

Seam 2A: 1.20-1.30 m thick (BBM/T/C-01 and BBM/T/C-02)
Seam 2B: 1.20-1.28 m (BBM/T/C-01 and BBM/T/C-02)
Seam 2C: 1.20-1.35 m thick (BBM/T/C-01 and BBM/T/C-02)
Seam 2D: 0.60-1.18 m thick (BBM/T/C-01 and BBM/T/C-02) with parting 0.26 m.

After Anonymous, 2008.

SRK has not undertaken an independent field investigation to the project site and is therefore unable to confirm the veracity of the reported coal outcrops. JDC engaged Mr Chris Turvey to investigate the reported coal outcrops in the PT BBM concession during 31 July and 1 August 2010. Mr Turvey is a professional geologist and principal of ACEL Consulting Pte Ltd.

A comparison of the recorded outcrops is presented in Table 3-2. Mr Turvey reports that he located five of the six reported coal outcrops. Poor ground conditions as a result of recent rains precluded access to outcrop BBM/T/C-01. Allowing for minor differences in strike and dip measurement, the 2010 investigation confirms the existence of two coal seam intervals in the central concession area, striking broadly east-west to east-southeast and dipping at 10-25º. Field photographs (Figure 3-6 to Figure 3-9) support the earlier description of the coals as generally black, bright and brittle.

SRK understands that Mr Turvey collected several coal samples for coal quality analysis in an internationally accredited coal laboratory in Brisbane, Australia.

Figure 3-6: Photograph showing coal outcrop at site BBM/T/C-02A

Figure 3-7: Photograph showing part of coal horizon 1 exposed in creek near outcrop site BBM/Mh/C01 (August 2010, source Chris Turvey) (August 2010, source Chris Turvey)

Figure 3-8: Photograph showing 4 seams of coal horizon 1 taken from the river (August, 2010, source Chris Turvey) (August 2010, source Chris Turvey)

Figure 3-9: Photograph of a coal sample from outcrop site BBMMh/C02

No	Co Ou de tc ro p	Lo	i tu ng	de		La i t tu	de	U ( W G S	T M 8 4z 5 0 S )	S i ke tr	D ip	Sa Co le de mp	Re ks ma r
		o) (	( ')	( '')	o) (	( ')	( ' )	E m	N m	( °)	( °)
												B B M / T / C- 0 1 A	Co l: b lac k, br ig h t, br i t t le, t h ic k 1. 2 0 m a
1.	B B M / T / C- 0 1	1 1 4	5	4 7. 1	0	1 9	3 9. 7	1 7 6 7 7 0	9 9 6 3 7 3 3	1 0 3	1 0	B B M / T / C- 0 1 B	Co l: b lac k, br ig h t, br i t t le, t h ic k 1. 2 8 m a
												B B M / T / C- 0 1 C	Co l: b lac k, br ig h br i le, h ic k 1. 3 t, t t t 5 m a
												-	Co l: b lac k, br ig h t, br i t t le, t h ic k 0. 6 0 m a
												B B M / T / C- 0 2 A	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p y r 1. 3 0 m
2.	B B M / T / C- 0 2	1 1 4	5	5 1. 7	0	1 9	4 8. 6	1 7 6 9 1 2	9 9 6 3 4 5 9		1 2	B B M / T / C- 0 2 B	Co l: b lac k, br ig h br i le, in, i h ic k t, t t te, t a re s p y r 1. 2 0 m
										2 7		B B M / T / C- 0 2 C	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p y r 1. 2 0 m
												-	Co l: b lac k, br ig h br i le, in, i h ic k t, t t te, t a re s p y r 1. 1 8 m ( ) 0. 2 6 m i t h p t ing ly lay w ar co a c
												B B M / T / C- 0 3 A	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p y r 1. 3 0 m
											1	B B M / T / C- 0 3 B	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p r y 1. 1 5 m
3.	B B M / T / C- 0 3	1 1 4	5	1 5	0	2 0	4 1	1 7 5 7 7 7	9 9 6 1 8 4 8	1 0 9	5	-	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p y r 0. 6 4 m
												-	Co l: b lac k, br ig h br i le, in, i h ic k t, t t te, t a re s p y r 0. 0 m 5
4.	B B M / M h / C- 0 1	1 1 4	6	1 8. 2	0	2 0	3 2. 0	1 7 7 7 3 3	9 9 6 2 1 2 5	9 1	2 2	B B M / M h / C- 0 1	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p r y 1. 5 6 m i t h p t ing ( ly ha l l ) 1 c ar co a s m w
5.	/ / C- 0 2 B B M M h	1 1 4	6	2 0. 6	0	2 0	3 1. 7	1 8 0 7 7 7	9 9 6 2 1 3 5	9 5	2 0	/ / C- 0 2 B B M M h	Co l: b lac k, br ig h br i le, in, i h ic k t, t t te, t a re s p y r 1. 1 0 m
												B B M / M h / C- 0 3 A	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p y r 1. 6 0 m
6.	B B M / M h / C- 0 3	1 1 4	5	4 3. 9	0	2 0	2 8. 0	1 7 6 6 7 1	9 9 6 2 2 4 8	7 0	2 5	-	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p y r ( ) 1. 1 0 m i t h p t ing ly lay 7 c ar co a c m w
												-	Co l: b lac k, br ig h t, br i t t le, in, i te, t h ic k a re s p y r 0. 8 4 m i t h p t ing ( ly lay ) 7 c w ar co a c m

Table 3-1: Summary of reported BBM coal outcrop data from 2008 field investigation

		2 0 0 8				2 0 1 0
Ou tc ro p Co de	E m	N m	S ke ( i tr °)	D ip ( °)	T k ( h ic ) m	E m	N m	E lev ion t a ( R L ) m	S ke ( i tr °)	D ip( °)	T k ( h ic ) m	Re ks ma r
/ / C- B B M T 0 1	1 7 6 7 7 0	9 9 6 3 7 3 3	1 0 3	2 0		/ N A	/ N A	/ N A	/ N A	/ N A	/ N A	Un b le to h s i te du to b le a rea c e un se as on a fro in l t ing ive ra res u p oo r a cc es s m r r
					A: 1. 3 0				5 5	1 0	1. 7
					B: 1. 2 0				9 5	1 0	1. 2
/ / C- 0 2 B B M T	1 6 9 1 2 7	9 9 6 3 9 4 5	2 7	1 2	C: 1. 2 0	1 6 9 1 0 7	9 9 6 3 8 4 5	3 7	1 0 5	1 0	1. 5
					1. 1 8 D:				1 1 5	1 3	1. 1 1	Pa ing 0. 2 m 0. 2 6 m B B M t t r - v s se e rep or tes no
					1. 3						1. 4
					1. 1 5						1. 7	Ma be be du to lum ing ? e s p y
B B M / T / C- 0 3	1 7 5 7 7 7	9 9 6 1 8 4 8	1 0 9	1 5	0. 6 4	1 8 1 7 5 7	9 9 6 1 8 8 5	1 0 2	1 0 2	2 0	0. 8
					0. 5						0. 5	o). Br d, fac ( lop 3 5- 4 0 Po i b le tee oa s p e s e ss lum ing f c l s for d ip t o s p mo ve me n oa ea ms ,
/ / C- B B M M h 0 1	1 7 7 7 3 3	9 9 6 2 1 2 5	9 1	2 2	1. 5 6	1 7 7 7 2 9	9 9 6 2 1 1 0	1 7 7	1 1 5	1 3	1. 7 5
B B M / M h / C- 0 2	1 7 7 8 0 7	9 9 6 2 1 3 5	9 5	2 0	1. 1	1 7 7 8 1 3	9 9 6 2 1 4 3	2 0 5	1 1 0	1 4	1. 1 5	Se 1. 5 m be low 0. 8 m t h ic k am ap p rox , b le to de ter ine f loo for tua l un a m r ac t h ic kn es s
					1. 6
					1. 1
B B M / M h / C- 0 3	1 6 6 1 7 7	9 9 6 2 2 4 8	0 7	2 5	0. 8 4	1 6 6 4 7 7	9 9 6 2 2 3 8	1 9 7	4 5	2 5	0. 9	G P S loc t ion ha be ta ke t a m ay ve en n a h ig he ( A ) - b le to du to r s ea m un a ac ce ss e t im /co Ou tcr ha d be le d e ve r. op en sa mp

Table 3-2: Comparison of reported coal outcrop data from 2008 and 2010 field investigations (source Chris Turvey)

3.3.4 Coal Quality Analysis

A total of 10 coal samples were collected as representative of the mapped coal seams and dispatched to PT. Geoservices laboratory at Banjarmasin. The samples were analysed for Total Moisture, Inherent Moisture, Ash, Total Sulphur, Fixed Carbon, Volatile Matter, Calorific Value and HGI (sample BBM/Mhn/C-01 only) (Table 3-3).

Sample Code	TM (% ar)	IM (% ad)	Ash (% ad)	VM (% ad)	FC (% ad)	TS (% ad)	CV (cal/g ad)	HGI (point)
BBM/Mhn/C-01	6.51	1.61	1.45	13.51	83.43	0.36	8441	95
BBM/Mhn/C-02	5.73	2.76	2.51	11.98	82.75	0.36	7983
BBM/Mhn/C-03	5.75	1.51	2.61	12.87	83.01	0.40	8359
BBM/T/C-01	15.54	7.30	6.25	19.92	66.53	0.28	6452
BBM/T/C-02	20.67	11.14	3.69	23.04	62.53	0.25	5993
BBM/T/C-03	4.62	2.46	2.06	14.55	80.93	0.35	8077
BBM/T/C-04	4.10	0.90	3.25	14.62	81.23	0.31	8502
BBM/T/C-05	5.36	1.02	1.12	14.13	83.73	0.37	8604
BBM/T/C-06	7.55	4.09	2.99	12.82	80.10	0.38	7545
BBM/T/C-07	7.51	3.35	5.66	11.21	79.78	0.36	7524

Table 3-3: Reported coal quality of BBM coal outcrop samples (Anonymous, 2008)

The assay data generally indicate a hard low ash (<5% ad), low sulphur (<0.4% ad) low volatile bituminous coal with very good specific energy.

3.3.5 Neighbouring Tenements

The PT BBM concession is located immediately south of the PT Juloi Coal concession (BHP 75%, Adaro Energy 25%) (Figure 3-4).

BHP has reported (BHP Billiton, 2010) a large Inferred Resource of metallurgical and thermal coal in the PT Julio Coal concession in accordance with the JORC Code (2004). The reported Resource occurs in the northwest area of the PT Juloi concession, some 30 km to the north of the coal occurrences reported in the PT BBM concession. Based on the regional geological mapping data, the reported Resource occurs within the Haloq Sandstone. The stratigraphic relationship between the NW Juloi Coal Resource and the PT BBM coal seams is unclear. However, if a regional southerly dip is assumed for the Haloq Sandstone strata and provided that the sequence has not been displaced by major faulting, the NW Juloi coal seams would occur lower in the Haloq Sandstone succession than the PT BBM coal seams.

3.3.6 Opinion

The initial geological investigation in the concession area has identified two coal horizons within the formation considered to economically prospective for economic coal seams (Haloq Sandstone). Further work is required to allow the identified coal measures to be upgraded to Resources in accordance with the JORC Guidelines (2004). This will require further outcrop mapping, an exploration drilling programme, detailed topographic mapping and additional verification of coal quality analyses.

The high energy, together with the low ash and low sulphur may make these coals suitable for a range of products, from a high quality export thermal, to a PCI or coking product. The ash and sulphur contents of the analysed PT BBM coals are comparable with those reported in NW Juloi. However, the reported volatile matter of the NW Juloi coals is considerably higher (27.7% ad) than that of the BBM coals. The generally low volatile matter could impact the coking potential and further analyses (CSN, fluidity, dilation) are required to test the suitability of these coals for a coking product.

Further investigation of the Haloq Sandstone in the northwest and northern parts of the concession, adjacent to PT Juloi Coal may identify coal seams additional to the outcrops found near the Barito River.

3.4 PT Borneo

Bara Prima (BBP)

3.4.1 Introduction

Administratively, the PT BBP concession is located around Baloi village, in the Laung Tuhup and Tanah Siang District, Murung Raya Regency, Central Kalimantan Province. The nearest major town to the concession is Puruk Cahu (the capital of Murung Raya Regency), located on the Barito River approximately 65 km to the south. At Puruk Cahu 5,000 tonne transport barges can be loaded, however the capacity of the river may vary in the drier months between July and October.

The area of the PT BBP concession is approximately 25,000 Ha.

Access to the broader area from Jakarta is via a 1.5 hour flight to Palang Karaya. Domestic (~45 minutes) flights operate from Palang Karaya to Puruk Cahu. From Puruk Cahu the concession area can be accessed is via 4WD vehicle over approximately 118 km, followed by 8 km on foot.

The geomorphology of the concession area is characterized by steep rugged hills over the majority of the concession area (Figure 3-10). The elevation of the surface topography ranges from ~150 m in low-lying central areas of the concession to 800-900 m in the hill areas. The concession does not overlap with a Protection Forest, however the majority of the concession is covered by Production Forest.

Figure 3-10: DTM of the PT BBP concession area

PT BBP concession is shown in red.

3.4.2 Local Geology

Geologically, the PT BBP concession is located in the North Barito Basin.

Based on the published 1:250,000 scale geological mapping for the region (Figure 3-11), the oldest formation identified within the concession area is identified as Late Eocene undivided Haloq Sandstone and Batu Kelau Formation (Teh + Tek, Figure 3-11), which occupies a large area in the central part of the concession. The undivided Haloq Sandstone and Batu Kelau Formation is described as quartz sandstone, shale, mudstone, siltstone, minor conglomerate, which is interpreted to have been deposited in a shallow marine environment.

The undivided Haloq Sandstone and Batu Kelau Formation is exposed in the centre of a regional south-plunging anticline and is conformably overlain by the Batu Ayau Formation (Tea, Figure 3-11). The Batu Ayau Formation subcrops along the flanks of the anticline structure and is present in the east of the concession, to the north of the concession and through the entirety of the western concession area. The Batu Ayau Formation is also of Late Eocene age and is described as sandstone, mudstone, siltstone, commonly carbonaceous, in places intercalation of coal and lignite.

Igneous intrusive rocks of the Middle to Late Miocene Sintang Intrusives (Toms, Figure 3-11) are identified in a small area in the south central area of the lease. The Sintang Intrusives comprise stocks, plugs, dykes and sills of porphrytic andesite, diorite and granodiorite. It is possible that other occurrences of the Sintang Intrusives may be present locally.

Figure 3-11: Regional geology in the PT BBP concession area

Source: Long Pahangai 250,000 Geology and Muaratewe Quadrangle 250,000 Geology sheets. PT BBP concession is shown in red. Indonesia Coal Project concessions (BHP 75%, Adaro Energy 25%) are also shown in black, including the general location of the Lampunut deposit.

3.4.3 Previous Exploration

To date, field exploration has been limited to a general geological survey which was undertaken by the tenement owners over a six day period during June 2008. Outcrop mapping was conducted along a number of traverses, following existing rivers, roads, logging tracks and valley areas (Anonymous, 2008).

A total of four coal outcrops were recorded (Table 3-4) in the central east part of the concession area (Figure 3-12). Based on the 250,000 scale geology map for the region, the coal outcrops occur within the undivided Haloq Sandstone and Batu Kelau Formation. The coals are described as generally black, bright and brittle. Recorded coal seam thicknesses at outcrop are generally thin varying between 0.45 m and 1.53 m (Table 3-4).

Based on the preliminary outcrop investigations, three mappable coal seams which strike broadly NW-SE and dip between 7º and 14º, are interpreted to be present in the central concession area:

Seam 1: >0.48-1.53 m (BBP/T/C-01 and BBP/T/C-02)
Seam 2: 1.02 m thick (BBP/T/C-03)
Seam 3: 0.82 m thick with 0.10 m clay parting (BBP/F/C-01).

After Anonymous, 2008.

No	Co Ou tc de	Lo	itu ng	de		La itu de t		U T M ( W	G S 8 4z 5 0 S )	S i tr ke	ip D	Re ks
	ro p	o) (	( ')	( '')	o) (	( ')	( '')	E m	N m	( °)	( °)	ma r
1.	B B P / T / C- 0 1	1 1 4	4 5	3 0. 6	0	0	3 9. 7	2 5 0 5 1 3	9 9 9 8 7 8 0	7 0	7	Co l, b lac k, br ig h t, br i t t le, t h ic k a >0 4 8 m
2.	B B P / T / C- 0 2	1 1 4	4 5	3 8	0	0	3 7. 6	2 0 7 4 2 5	9 9 9 8 8 4 5	1 1 0	9	Co l, b lac k, br ig h br i le, h ic k 1. 3 m t, t t t 5 a
3.	/ / C- B B P T 0 3	1 1 4	4 6	1 5. 3	0	0	4 2. 1	2 5 1 8 9 6	9 9 9 8 7 0 6	1 4 4	7	Co l, b lac k, br ig h t, br i t t le, t h ic k 1. 0 2 m a
4.	B B P / F / C- 0 1	1 1 4	4 7	1 8. 6	0	1	5. 1	2 5 3 8 5 2	9 9 9 8 0 0 0	2 6 0	1 4	Co l, b lac k, br ig h t, c ho i da l, a on c be d d ing br i t t le, t h ic k 0. 8 2 w i t h p t ing ar , 0. 1 0 m

Table 3-4: Summary of reported BBP coal outcrop data (Anonymous, 2008)

3.4.4 Coal Quality Analysis

A total of three coal samples were collected as representative of the mapped coal seams and dispatched to PT. Geoservices laboratory at Banjarmasin. The samples were analysed for Total Moisture, Inherent Moisture, Ash, Total Sulphur, Fixed Carbon, Volatile Matter, Calorific Value and HGI (sample BBP/T/C-03 only) (Table 3-5).

Sample Code	TM (% ar)	IM (% ad)	Ash (% ad)	VM (% ad)	FC (% ad)	TS (% ad)	CV (cal/g ad)	HGI (point)
BBP/T/C-01	5.89	1.31	3.10	13.56	82.03	0.79	8663
BBP/T/C-02	13.71	5.39	10.64	18.71	65.26	0.53	8626
BBP/T/C-03	6.37	1.66	3.54	13.46	81.34	0.70	7525	107

Table 3-5: Reported coal quality of BBP coal outcrop samples (Anonymous, 2008)

The assay data generally indicate a generally hard low ash (<4% ad), generally low sulphur (0.5-0.8% ad) low volatile bituminous coal with very good specific energy. The high energy, together with the low ash and low sulphur could support a range of products, from a high quality export thermal, to a PCI or coking product. The generally low volatile matter could impact the coking potential, and further analyses (CSN, fluidity, dilation) are required to test the coking potential of these coals.

3.4.5 Neighbouring Tenements

The Lampunut deposit has been identified within the PT Maruwai Coal concession (BHP 75%, Adaro Energy 25%), which is located immediately to the southeast of the PT BPP concession. The deposit is located within the Batu Ayau Formation immediately to the southeast of the eastern PT BPP concession area (Figure 3-11).

BHP has reported (BHP Billiton, 2010) a large Resource of metallurgical and thermal coal in the Lampunut deposit in accordance with the JORC Code (2004). The coal is a low ash (<5% ad), mid volatile (28.5% ad) coking coal with low sulphur (0.61% ad). The deposit is made up of a number of seams from 0.5 m to 2.5 m which are suitable for open pit mining.

Based on the limited regional 250,000 scale geological mapping data (Figure 3-12), the Lampunut deposit appears to be generally contained within a southeast strike extension of the Batu Ayau Formation sediments in the eastern part of the PT BPP concession. It is reasonable to postulate that the Batu Ayau Formation seam development in the Lampunut deposit may extend to the northwest into the eastern area of the PT BPP concession. In the western area of the PT BPP concession the Batu Ayau Formation which is present on the western flank of the regional anticline is also considered by the author to be prospective for similar coal seam development.

It should be noted however, that the published 250,000 Geology Maps for the region are generally not accurate at the project scale. Based on the author's experience, the disparity between geological contacts mapped at 250,000 scale and those mapped at the project scale is typically as much as 2.5 km.

3.4.6 Opinion

Limited reconnaissance mapping to date has identified the presence of up to three coal seams in the undivided Haloq Sandstone and Batu Kelau Formation in the south central area of the concession. The coal seams are generally thin. Further field mapping may identify better seam thickness development along strike of the mapped coal outcrops and there is potential for the discovery of additional coal seams elsewhere in the undivided Haloq Sandstone and Batu Kelau Formation.

Analyses of outcrop samples to date indicate a low ash, low sulphur coal with excellent specific energies. The ash and sulphur are comparable with those reported at Lampunut (Batu Ayau Formation), however the Lampunut coals have considerably higher volatile matter (28.5% ad) than the PT BBP samples analysed to date. The generally low volatile matter of the outcrop samples analysed to date may impact the coking potential, and further analyses (CSN, fluidity, dilation) are warranted to test the suitability of these coals for a coking product.

Investigation of the Batu Ayau Formation in the northwest parts of the concession and eastern parts of the concession, adjacent to PT Maruwai Coal may identify coal seams additional those already identified in the undivided Haloq Sandstone and Batu Kelau Formation. The Batu Ayau Formation in this region is known to be prospective for coking coal.

Manuhing (AAM)

3.5 PT Anugerah Alam

3.5.1 Introduction

Administratively, the PT AAM concession is located around Kanji Lawang village, in the Damang Batu District, Gunung Mas Regency, Central Kalimantan Province. The concession is located approximately 100 km from the Tumbang Manggu, where 5,000 tonne barges can be loaded.

The area of the PT AAM concession is 10,000 Ha.

The concession area can be accessed either by:

1 Airplane 1.5 hour flight to from Jakarta to Palang Karaya followed by road via 4WD vehicle to Tumbang Miri (capital of the Mount Mas Regency) for approximately 6 hours. From there the concession area is accessed via the Kahayan River by klotok (motor boat) for approximately 3.5 hours.
2 Airplane 1.25 hour flight to from Jakarta to Banjarmasin (South Kalimantan) followed by road via 4WD vehicle to Tumbang Miri (capital of the Mount Mas Regency) for approximately 10+ hours. From there the concession area is accessed via the Kahayan River by motor boat for approximately 3.5 hours.

Geomorphologically, the PT AAM concession area is comprised of low undulating hills, with elevation of the surface topography ranging from <100 m 250 m (Figure 3-13). Part of the northern concession area (about 10%) overlaps with Production Forest (PT. Fitamaya Asmapara). The concession does not overlap with a Protection Forest.

Figure 3-13: DTM of the PT AAM concession area

The PT AAM concession is shown in red.

3.5.2 Local Geology

The majority of the concession area is covered by metamorphic rocks belonging to the Pinoh Metamorphics (PzTRp, Figure 3-14). This unit is presumed Permo-Carboniferous in age and comprises a variety of metamorphic rocks including mica and hornblende schists, gneiss, slate and quartzite, which are indicative of a high grade metamorphic terrane.

In the northwest area of the concession, the Pinoh Metamorphics are in faulted contact with the Late Cretaceous age granites of the Sepauk Tonalite (KLS, Figure 3-14).

Volcanic and volcaniclastic rocks of the Malasan Volcanics (Tomv, Figure 3-14), occupy a small area in the northern part of the eastern concession area. These comprise volcanic breccia, tuff, agglomerate and andesitic lavas. The Malasan Volcanics interfinger with the lower part of the Tanjung Formation and are probably Early Miocene in age, deposited in littoral environments.

Based on the available stratigraphic descriptions, conventional wisdom would not consider any of the above stratigraphic formations to be prospective for the discovery of economic coal deposits in Kalimantan. However, the stratigraphic explanations accompanying the regional geology maps are often "broad brush" descriptions, which do not necessarily represent the full range of lithologies, present.

Figure 3-14: Regional geology in the area of the PT AAM and PT AAK concessions

After Tumbanghiram Quadrangle 250,000 Geology Sheet. PT AAM and PT AAK concession areas are shown in red.

3.5.3 Previous Exploration

To date, field exploration has been limited to a general geological survey which was undertaken by the tenement owners during August and September 2009 (PT Anugerah Alam Manuhing, 2010).

A range of lithologies are reported in the concession area, including claystone, alternating sandstone, carbonaceous claystone, granite and granodiorite, and coal.

A total of eleven coal outcrops were recorded during the investigation (Table 3-6). Of these eight were recorded in the central area of the concession and three which were recorded outside the concession boundary (Figure 3-15). Based on the 250,000 scale geology map for the region, the coal outcrops occur within the pre-Tertiary Pinoh Metamorphics.

The recorded seam thickness ranged between 0.42 m and 4.20 m. The reported coal outcrops show a range of strikes and dips. Two strike directions are identified broadly as NE-SW and NW-SE, with dips ranging from 20º to 80º.

The coal is described as black, glossy and vitreous with a black streak. The coal is easily broken and has a concoidal and blocky fracture. These descriptions are indicative of a high rank coal.

SRK has not undertaken an independent field investigation to the project site and is therefore unable to confirm the veracity of the reported coal outcrops.

Figure 3-15: PT AAM reported coal outcrop locations

After PT Anugerah Alam Manuhing, 2010.

No	Ou Co de tc ro	Lo	i tu ng	de		La i t tu	de	( U T M W G	S S ) 8 4z 5 0	S i ke tr	D ip	T h ic kn es s	Re ks ma r
	p	( °)	( ')	( '')	( °)	( ')	( '')	E m	N m	( °)	( °)	( ) m
1	A A M- 0 1	1 1 3	2 2	2 9. 1	0	4 5	2 8. 9	9 8 9 9 3 3 6	6 4 3 2 7 7	2 0 4	4 7	1. 9 3	Co l a
2	A A M- 0 2	1 1 3	2 1	3 8. 4	0	5 5	0 4. 1	9 8 9 8 2 5 6	7 6 2 8 0 3	5 6	4 3	0, 7 4	Co l a
3	A A M- 0 3	1 1 3	2 1	3 8. 8	0	5 5	0 4. 5	9 8 9 8 2 4 3	7 6 2 8 1 5	5 0	2 3	1, 1 0	Co l a
4	A A M- 0 4	1 1 3	2 1	3 9. 2	0	5 5	0 5. 2	9 8 9 8 2 2 2	7 6 2 8 2 8	1 1 5	4 2	0. 4 2	Co l a
5	A A M- 0 5	1 1 3	2 1	3 8. 9	0	5 5	0 5. 6	9 8 9 8 2 1 0	7 6 2 8 1 8	2 5 0	2 0	0. 6 6	Co l a
6	A A M- 0 6	1 1 3	2 1	3 8. 9	0	5 5	0 4. 6	9 8 9 8 2 4 0	7 6 2 8 1 9	2 4 5	6 7	1. 8 3	Co l a
7	A A M- 0 7	1 1 3	2 1	3 8. 6	0	5 5	0 4. 5	9 8 9 8 2 4 4	7 6 2 8 0 9	2 3 0	8 0	0. 9 0	Co l a
8	A A M- 0 8	1 1 3	2 1	2 8. 3	0	5 5	1 0. 5	9 8 9 8 0 5 6	7 6 2 4 9 1	7 1	3 6	1. 0 0	Co l a
9	A A M- 0 9	1 1 3	2 1	2 7. 2	0	5 5	1 0. 6	9 8 9 8 0 5 6	7 6 2 4 5 6	8 0	4 8	0. 4 5	Co l a
1 0	A A M- 1 0	1 1 3	2 2	3 9. 2	0	5 4	2 1. 3	9 8 9 9 5 7 0	7 6 4 6 8 5	8 0	3 5	2. 0 0	Co l a
1 1	A A M- 1 1	1 1 3	2 2	5 7. 3	0	5 4	1 5. 3	9 8 9 9 7 5 4	7 6 5 2 4 5	9 5	3 3	4. 2 0	Co l a

Table 3-6: Summary of reported AAM coal outcrop data (AAM, 2010)

3.5.4 Coal Quality Analysis

Of the reported 11 coal outcrops, coal assay data is available for only one sample (Figure 3-16). The assay report indicates a low ash coal with good specific energy (7,283 kcal/kg). However, it is the opinion of the author that the assay report is questionable (further discussion below). The laboratory at which the assay was undertaken is unknown to the author and it is unknown if the laboratory holds any internationally accepted certification. The basis (e.g.: air dried) for the analyses is not stated and key parameters such as sulphur or Total Moisture are not reported.

Figure 3-16: PT AAM coal quality analysis

3.5.5 Opinion

The reported ash and specific energy of the single analysed coal sample are suggestive of a low rank, low ash thermal coal. However, it is the opinion of the author that the validity of the reported assay results is questionable.

Coal which occurs in a metamorphic belt would be expected to have undergone a high degree of coalification (metamorphism) resulting in an anthracite or semi-anthracite rank. These higher coal ranks are characterised by very low volatile matter content, very high carbon content and high specific energies. The assay data are indicative of a much lower rank coal (high volatile matter, high inherent moisture). Although no total moisture data are presented, the available data would suggest a total moisture content in the range of 30-50% ar, which would result in a significantly lower net wet specific energy.

3.6 PT Anugerah Alam

Katingan (AAK)

3.6.1 Introduction

Administratively, the PT AAK concession is located around Harowu village, in the Miri Manasa District, Gunung Mas Regency, Central Kalimantan Province. The concession is located approximately 100 km from the Puruk Cahu, where 5,000 tonne barges can be loaded.

The area of the PT AAK concession is 5,100 Ha.

Topographically, the concession area is characterised by two broad NW trending topographic high areas with elevations of up to 1,150 m, separated by a broad low area with elevations between 350 m and 650 m (Figure 3-17). The entire concession area is covered by Protection or Production Forests.

Figure 3-17: DTM of the PT AAK concession area

PT AAK concession is shown in red.

3.6.2 Local Geology

Geologically, the concession is located in the North Barito Basin.

Based on the published 250,000 scale Geology Map for the region, the surface geology of the AAK concession is represented entirely by the Late Eocene Haloq Sandstone (Teh, Figure 3-14). The Haloq Sandstones is described on the published 250,000 scale Geology Map for the region as "quartz sandstone, quartz lithic sandstone, pebbly sandstone, rare siltstone, mudstone; locally limestone" with marine fossils which was "deposited in a high energy shallow marine" environment.

Although the 250,000 scale geology map description for the Haloq Sandstone does not include coal, Marks (1957) records the depositional environment of the Haloq Sandstone as shallow marine to deltaic, lagoonal and estuarine. These depositional settings could support peat formation and coal development. Coal Resources are known to occur in the Haloq Sandstone elsewhere in the North Barito Basin (e.g, PT Juloi Coal).

3.6.3 Previous Exploration

To date, field exploration has been limited to a general geological survey which was undertaken by the tenement owners between March and May 2009.

A total of five coal outcrops were recorded in the south and southwest areas of the concession (PT Anugerah Alam Katingan, 2010). The reported coal occurrences (Table 3-7) show a consistent NE-SW strike, with dips between 33º and 42º to the east. Based on the 250,000 scale geology map for the region, the coal outcrops occur within the Haloq Sandstone.

Outcrop Code	Longitude			Latitude			Thickness	Dip	Strike	Remarks
	(°)	(')	('')	(°)	(')	('')	(m)	(°)	(°)
OC-01	113	44	28.9	0	28	4	0.8	42 E	224	Bright coal
OC-02	113	44	34.1	0	28	8.7	1.2	35 E	224	Bright coal
OC-03	113	44	39.1	0	28	9	1.4	33 E	224	Bright coal
OC-04	113	44	3.9	0	27	23.3	1.8	35 E	225	Bright coal
OC-05	113	44	44.7	0	27	16.8	1.5	34 E	225	Bright coal

The coal is described as shiny, black and glassy with a black streak. The coal is reported to be hard and dense with concoidal fracture. Locally, fractures are filled with resinous material. These descriptions are indicative of a high rank coal.

SRK has not undertaken an independent field investigation to the project site and is therefore unable to confirm the veracity of the reported coal outcrops

3.6.4 Coal Quality Analysis

Coal quality analysis of one sample was undertaken at PT tekMIRA Laboratory Testing (Bandung). The analysis (Figure 3-18) indicates that the coal is of high thermal rank (anthracite) with low ash (<3% ad), low volatile matter (<4% ad), high fixed carbon content (85% ad) and good energy (7,300 cal/g ad).

The HGI is typically low (36) - coals with a low HGI (<30) are considered to be very hard and difficult to make into a pulverized fuel, requiring a greater number of grinding mills in the plants.

	SERTIFIKAT ANALISIS (CERTIFICATE OF ANALYSIS) Terakreditasi No. LP-051-IDN tgl. 27 Desember 2006
Nomor / Number	: 317/LBB/III/2009			Tanggal / Date: 12 Maret 2009
Dibuat untuk / Certified for		PT. Anugrah Alam Katinga Kel. Bukit Tunggal, Palangkaraya Kalimantan Tengah		Jl. Danau Rangas I Nomor 06 RT.02 RW. VII
Jenis contoh / Type of Sample		Batubara
Sifat / Kondisi Barang yang diuji / Description of sample Asal contoh / Origin of sample		Bongkah
		Desa Harowu Kec. Miri Manasa Kab. Gunung Mas, Kalimantan Tengah
Jumlah contoh / Amount of sample		$1$ (satu)
Nomor Laboratorium / Laboratory Number		1341/09
Contoh diterima tanggal / Sample received on		4 Maret 2009
Waktu pelaksanaan pengujian / Date of testing 4 Maret 2009 HASIL ANALISIS / ANALYSIS RESULTS:
ANALYSIS PARAMETERS	Sample Marks No. Lab. 1341/2009 BB. AAK	Unit	Basis	Standar Acuan:
TOTAL MOISTURE	7.49	%	ar	ASTM D.3302
PROXIMATE:
MOISTURE IN AIR	7.37	%	adb	ASTM D.3173
		$\frac{1}{6}$	adb	ASTM D. 3174
DRIED SAMPLE			adb	ISO 562
ASH VOLATILE MATTER	4.90			ASTM D. 3172
FIXED CARBON	5.16 85.07	%
TOTAL SULPHUR	0.76	% %	adb adb	ASTM D. 4239
CALORIFIC VALUE	7300	Cal/g	adb	ASTM D. 5865
HGI	35			ASTM D. 409
TSG	1.67	Manajer Teknis		ASTM D. 167

Figure 3-18: AAK coal quality analysis

3.6.5 Opinion

The initial geological investigation into the concession area has identified five coal outcrops of between 1.2 m and 1.8 m thick. Based on the available data, it is not clear whether the reported outcrops are representative of one or more seams.

The coals occur within the Late Eocene Haloq Sandstone (Teh), parts of which are known to be coal bearing (e.g.: NW Juloi).

Further investigations are warranted to ascertain the distribution and number of coal seams present based on the identified outcrops and the possibility of thicker coal development in the concession.

4. References

Anonymous (1), 2008. PT Borneo Bara Mineral Site visit coal deposit in Tumbang Iram and surrounding area, Murung Raya Regency, Central Kalimantan Province – Final Report (Jakarta, August 2008).
Anonymous (2), 2008. PT Borneo Bara Prima Site visit coal deposit in Mangketek and surrounding area, Murung Raya Regency, Central Kalimantan Province – Final Report (Jakarta, August 2008).
BHP Billiton, 2010. BHP Billiton enters into a joint venture for its Indonesian Coal Project (Maruwai). BHP Billiton media release (March 2010).
Cook, A. & Daulay, B., 2000. The Indonesian Coal Industry. The Australian Coal Review (April 2000).
Ewart D.L. (Jr) & Vaughan, R., 2010. Indonesian Coal. World Coal (May 2010).
Friederich, M.C., Langford, R.P. & Moore, T.A., 1999. The geological setting of Indonesian coal deposits. In: Weber, G. (Ed). International Congress on Earth Science, Exploration and Mining around the Pacific Rim. Proceedings PACRIM '99 Congress. AusIMM Publication Series No 4/99: pp. 625-631.
JORC, 2004. Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves.
Marks, P., 1957. Stratigraphic lexicon of Indonesia. Republik Indonesia, Kementerian Perekonomian, Pusat Djawatan Geologi (Bandung).
Nas, C. & Hidartan, 2010. Quality of Kalimantan Coking Coals, Indonesia. Proceedings of the 37th Symposium of the Geology of the Sydney Basin. Hunter Valley, NSW (May 2010).
PT Anugerah Alam Katingan, 2010. Laporan hasil eksplorasi potensi batubara PT. Anugerah Alam Katingan di wilayah Harowu Kecamatan Miri Manasa Kabupaten Gunung Mas Provinsi Kalimantan Tengah.
PT Anugerah Alam Manuhing, 2010. Laporan Peninjauan Pt. Anugerah Alam Manuhing Lokasi: Lawang Kanji.

5. Glossary of Terms

Term	Meaning
alluvial	Pertaining to silt, sand and gravel material, trans-ported and deposited by a river.
alluvium	Clay silt, sand, gravel, or other rock materials trans-ported by flowing water and deposited in comparatively recent geologic time as sorted or semi-sorted sediments in riverbeds, estuaries, and floodplains, on lakes, shores and in fans at the base of mountain slopes and estuaries.
andesite	An intermediate volcanic rock composed of andesine and one or more mafic minerals.
anthracite	Coal with the highest energy content, from 86% to 98%, by weight, and high caloric values.
ash	Impurities consisting of iron, alumina and other incombustible matter that are contained in coal. Since ash increases the weight of coal, it adds to the cost of handling and can affect the burning characteristics of coal.
assay	The testing and quantification metals of interest within a sample.
bituminous coal	The most common type of coal and characterized by a moisture content of less than 20% by weight and heating value of 10,500 to 14,000 Btu per pound. Bituminous coal is a soft, dense and black coal containing large amounts of carbon, often with well-defined bands of bright and dull material. It is used primarily as fuel in steam-electric power generation, with substantial quantities also used for heat and power applications in manufacturing and to make coke.
blends	A mixture of two or more coal types or brands. In the case of coke making, blending provides the manufacturer with the potential to mix lower cost poorer coking coals with higher cost hard coking coals and thereby reduce the overall cost of the coke oven feed.
calorific value or specific energy	Coal sample's energy content measured as the heat released on complete combustion in air or oxygen, usually expressed as the amount of heat (measured in kilocalories) per unit weight of coal (measured in kilograms) or (kcal/kg).
clastic	Pertaining to a rock made up of fragments or pebbles (clasts).
coal	A readily combustible black or brownish-black rock with a composition, including inherent moisture, which consists of more than 50% by weight and more than 70% by volume of carbonaceous material. It is formed from plant remains that have been compacted, hardened, chemically altered and metamorphosed by heat and pressure over time.
coal rank or rank	The degree of alteration (or metamorphism) that occurs as a coal matures from peat to anthracite is referred to as the "rank" of the coal. Low-rank coals include lignite and sub-bituminous coals. These coals have a lower energy content because they have a low carbon content. They are lighter (earthier) and have higher moisture levels. As time, heat, and burial pressure all increase, the rank does as well. High-rank coals, including bituminous and anthracite coals, contain more carbon than lower-rank coals which results in a much higher energy content. They have a more vitreous (shiny) appearance and lower moisture content then lower-rank coals.
coal seam or seam	Coal deposits occur in layers in a bed of coal lying between a roof and floor with each layer called a "seam."
coke	Hard, dry carbon substance produced by heating coal to a very high temperature in the absence of air and used in the manufacture of iron and steel.
coking coal	Coal used to make coke and also referred to as metallurgical coal.
dolerite	Medium grained mafic intrusive rock composed mostly of pyroxenes and sodium-calcium feldspar.
dry coal basis	Coal quality data calculated on a theoretical basis in which no moisture is associated with the sample.
dyke	Body of intruding igneous rock that cross cuts the host strata at a high angle.

Term	Meaning
fault	Fracture in rocks along which rocks on one side have been moved relative to the rocks on the other.
fluidity	The degree to which coal becomes plastic over certain temperature ranges during the carbonisation process. The measurement of " maximum fluidity " is used by some steel makers, particularly Japanese steel mills, in assessing the ability of coal particles to mix with other coals in a coke oven blend. Maximum fluidity is determined by placing a sample of finely ground coal in a crucible and measuring the speed of rotation of a paddle placed within the crucible which is heated. A gravitational force is applied to the paddle and the maximum rotation of the paddle is measured in dial divisions per minute or DDPM. The temperature at which the paddle reaches maximum rotation differs for varying coal types.
follow-up	Term used to describe more detailed exploration work over targets generated by regional exploration.
gneiss	Rock type formed by regional metamorphism, in which a sedimentary or igneous rock has been deeply buried and subjected to high temperatures and pressures. Nearly all traces of the original structures (including fossils) and fabric (such as layering and ripple marks) are wiped out as the minerals migrate and recrystallise.
granite	Coarse-grained igneous rock containing mainly quartz and feldspar minerals and subordinate micas.
granodiorite	Coarse grained igneous rock composed of quartz,feldspar and hornblende and/or biotite.
hectare	Metric unit of square measurement of surface or land equal to 10,000 square meters, or approximately 2,471 acres.
igneous	Rocks that have solidified from a magma.
Intrusion/Intrusive	A body of igneous rock that invades older rocks.
JORC Code	Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC), December 2004.
cal/g	Calories per gram.
Kabupaten or Regency	Second tier of local government in Indonesia, having its own local government and legislative body
Kecamatan or District	Third tier of local government in Indonesia
lignite	The lowest ranked coal. Often called "soft" or "brown" coal, it is a brownish-black coal with carbon content of 25-35%. It has energy values ranging from 15,000-20,000 kJ/kg (6,300-8,300 BTUs/lb) and high moisture content of up to 45% by weight. Lignite is strictly a thermal coal and is used as a fuel in power generating plants.
metallurgical coal	The various grades of coal suitable for making steel, such as coking coal, which is used to make coke, and PCI coal, which is used in the steelmaking process for its calorific value.
metamorphic	Rock that has been altered by physical and chemical processes involving heat, pressure and derived fluids.
open cut mining	Form of mining designed to extract minerals that lie near the surface. Overburden is removed to expose the minerals for mining. Rock covering the minerals may be blasted and removed by large draglines or electric shovels and trucks.
PCI coal	Coal that is pulverized and injected into a blast furnace. Those grades of coal used in the PCI process are generally non-coking. However, since such grades are utilized by the metallurgical industry, they are considered to be a metallurgical coal. PCI grade coal is used primarily as a heat source in the steelmaking process in partial replacement for high quality coking coals which are typically more expensive.
resources	In situ mineral occurrence from which valuable or useful minerals may be recovered.

Term	Meaning
Province	Highest tier of local government, sub-national entity in Indonesia, having its own local government, headed by a Governor.
schist	A crystalline metamorphic rock having a foliated or parallel structure due to the recrystallisation of the constituent minerals.
sedimentary	Term describing a rock formed from sediment.
shale	Fine grained, laminated sedimentary rock formed from clay, mud and silt.
sills	Sheets of igneous rock which is flat lying or has intruded parallel to stratigraphy.
silts	Fine-grained sediments, with a grain size between those of sand and clay.
stocks	Small intrusive mass of igneous rock, usually possessing a circular or elliptical shape in plan view.
strata	Sedimentary rock layers.
stratigraphic	Composition, sequence and correlation of stratified rocks.
strike	Horizontal direction or trend of a geological structure.
sub-bituminous coal	Dull black coal with carbon content of 35-45%, energy content values in the range of 20,000-27,000 kJ/kg (8,300-10,500 BTUs/lb) and moisture content generally between 20% and 30% by weight. Sub-bituminous coal generally has a lower sulphur content which makes it attractive for combustion purposes. It is primarily used as a fuel source in thermal power plants and for industrial heating purposes.
sulphur	One of the elements present, in varying quantities, in coal that contributes to environmental degradation when coal is burned. Sulphur dioxide is produced as a gaseous by-product of coal combustion. Low sulphur" coal has a variety of definitions, but typically is used to describe coal consisting of 1.0% or less sulphur.
thermal coal	Coal that is used primarily for its heating value. Thermal coal tends not to have the carbonization properties possessed by metallurgical coals. Most thermal coal is used to produce electricity in thermal power plants.
tonnes	Metric ton or tonne which is equivalent to 1,000 kilograms, or 2,204.60 pounds.
VALMIN Code	The VALMIN Code establishes standards of best practice for the technical assessment and valuation of mineral and petroleum assets and securities by geologists involved in the preparation of Independent Expert Reports. The VALMIN Code is binding on members of The AusIMM when preparing public Independent Expert Reports required by the Corporations Act concerning mineral and petroleum assets and securities.
volatile matter	Those products, exclusive of moisture, released by a material as gas or vapour
volcanic	Formed or derived from a volcano.

Appendices

Appendix1: Concession Details

AI assistant

COKAL LIMITED — Proxy Solicitation & Information Statement 2010

64656_rns_2010-10-28_6c9f836b-325d-43d0-8a94-bfed9fb3a6c0.pdf

ACQUISITION OF JDC

ALTERA RESOURCES LIMITED ACN 082 541 437

NOTICE OF GENERAL MEETING

AND

EXPLANATORY MEMORANDUM

ALTERA RESOURCES LIMITED ACN 082 541 437

ALTERA RESOURCES LIMITED ACN 082 541 437

NOTICE OF GENERAL MEETING

RESOLUTION 1 - APPROVAL OF JDC TRANSACTION

RESOLUTION 2 - ISSUE OF SHARES AND OPTIONS

RESOLUTION 3 - ISSUE OF OPTIONS

RESOLUTION 4 - POTENTIAL CANCELLATION OF SHARES

DATED THIS 26th DAY OF OCTOBER 2010

BY ORDER OF THE BOARD

J SHERVINGTON DIRECTOR

Definitions

Note

Proxies

Bodies Corporate

Voting Exclusion Statement

ALTERA RESOURCES LIMITED ACN 082 541 437

EXPLANATORY MEMORANDUM

$\mathbf{1}$ RESOLUTION 1

$1.1$ Background - JDC Transaction

Share Sale Agreement

JDC Contracts

BBM Contract and BBP Contract

The material terms of the BBM Contract and the BBP Contract are otherwise as follows:

AAK Contract and AAP Contract

The material terms of the AAK Contract and the AAP Contract, both of which are in almost identical terms, are outlined below.

("Minimum Resource Requirement").

JDC Conditions - Share Sale Agreement Conditions and Warranties

"Vendors' Warranties

Altera Warranties

Other Terms of the Share Sale Agreement

Proposed Board & Management

Mr Peter Lynch B.Eng (Mining) University of New South Wales - Proposed Chairman

Financial Position of JDC

Kalimantan/The Projects

Kalimantan Mining Code

Indonesian Mining Rights

Foreign Investment in Indonesian Mining

Surface Rights

Forestry issues

1.2 Impact on capital structure

$1.3$ Pro Forma Consolidated Balance Sheet

Use of Funds $1.4$

$1.5$ Requiatory Requirements - Resolution 1

Listing Rule 11.1.2

$2.$ RESOLUTION 2 - ISSUE OF SHARES AND OPTIONS

$2.1$ Background to Resolution 2

$2.2$ Requlatory Requirements - Resolution 2

Listing Rules Chapter 7 $(a)$

$(b)$ Chapter 2E of the Corporations Act

Valuation of the Options

$(c)$ Listing Rules Chapter 10

$2.3$ Terms of the Options

RESOLUTION 3 - ISSUE OF EXECUTIVE OPTIONS $\overline{3}$ .

$(a)$ Background

Regulatory Requirements - Resolution 3 (b)

Listing Rules Chapter 7

$(c)$ Chapter 2E of the Corporations Act

Valuation of the Options

$(c)$ Listing Rules Chapter 10

4. RESOLUTION 4 - POTENTIAL CANCELLATION OF SHARES

$4.1$ Background

$4.2$ Regulatory Requirements - Resolution 4

Chapter 2J of the Corporations Act

"Special shareholder approval for selective reduction

ASIC Policy

DEFINITIONS $5.$

ANNEXURE "A"

JDC BALANCE SHEET AS AT 25 AUGUST 2010

ALTERA RESOURCES LTD Independent Expert"s Report

Financial Services Guide

26 October 2010

Financial Services Guide

COKAL LIMITED Proxy Solicitation & Information Statement 2010