JATCORP LIMITED — Management Reports 2012

May 20, 2012

energy now & for the future

jatENERGY

JATENERGY COMMENCES STRONG CASHFLOW GENERATION

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CHAIRMAN’S INTRODUCTION

several current and new projects.

HIGHLIGHTS

We are fully aware that the company’s operational performance has not been reflected in its share price performance. However, we believe that the company has significant strengths when compared with our peers, and our value will be recognised. Our strategy is clear, focussed and achievable in the near future, and we see tremendous upside in the near term as:

• March 2012 - Jatenergy‘s Indonesian operations first cash flow positive quarter.

Alan Broome AM, Chairman

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• First coal production and sales from the Jongkang project in East Kalimantan, Indonesia.

• Jongkang coal output target at 16,000 to 20,000 tonnes/month.

• Jatenergy share of Jongkang project margin average $9/tonne.

• further cash-producing mines are opened up in Indonesia

• our major Katingan asset is JORC-drilled

• we find development partners for our Queensland tenements, and

Dear Shareholder,

• New production licence granted for Atan Bara project in East Kalimantan and mine planning commenced.

• oil revenue continues to increase, and we increase sales of our proprietary seed and know-how.

The previous quarter has been a watershed for Jatenergy, with our first significant revenues from coal and oil sales resulting in a cash -flow positive March Quarter 2012 for our Indonesian operations — the first in the company’s history.

We thank you for your on-going support.

• Acquisition of a large coal resource at Katingan in Central Kalimantan proceeding, awaiting regulatory approvals.

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In this newsletter we will update you on the significant progress in our coal and oilseeds businesses over the last few months. Our CEO, Phil Hodgson, will provide an update on the key elements of our strategy and outline the significant potential for the company in

• Significant interest from potential partners in Katingan asset.

• Portfolio of new coal projects in Kalimantan under review.

Alan Broome, May 2012

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• Acquisition of coal tenements in Central Queensland progressing with several more applications granted.

• Bumper season oil seed harvest produces 850+ tonnes of renewable crude oil.

• First sales of elite seed from oil seed breeding program.

• Indonesian oil seed operations on track to becoming cash flow positive this year.

Jatenergy sells it coal onto barges like these for shipment down the Mahakam River, Samarinda, East Kalimantan.

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INVESTOR NEWSLETTER MAY 2012

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CEO REPORT

Phil Hodgson, CEO

Dear Shareholder,

Since the company re-listed in April 2011, we have focussed on three key strategic elements to grow the value of the business:

• generate cash from small, fast-toproduction coal projects

• use that cash to:

• develop a portfolio of other fast-toproduction coal projects in Indonesia

• commence exploration drilling to JORC standards on our significant Katingan asset in Indonesia

• monetise our Queensland coal tenements through JV/farm-in

• develop other growth projects, and

• continue to grow our oil seeds business.

I am pleased to say that the business is advancing rapidly on all fronts.

Phil Hodgson at Jatenegy’s Jatropha plantation in Central Java, intercropped with corn, spices and teak.

Chris Flanagan, our COO in Indonesia, has achieved first coal production and sales from our Jongkang projects, and is rapidly advancing our next fast-to-production project, Atan Bara. Jatenergy is one of few Australian companies to have gained an operational beach head in Indonesia, and our first project is already cash flow positive. Chris is also reviewing a number of new coal opportunities in Indonesia to add to our coal asset portfolio, as well as some exciting developments with our major Indonesian asset, Katingan. See Chris’s article for more details.

I join our Chairman, Alan Broome, in thanking you for your support of Jatenergy, and will continue to work hard to ensure our growing business value is fully reflected in the share performance.

are in discussion now with several key players with a view to developing these assets.

Our oil seeds business is rapidly expanding to be a significant revenue earner. We harvested a bumper seed crop this season of more than 3400 tonnes. This should result in over 850 tonnes of oil production, which will be shipped to Europe for use in sustainable micro -power generation. Next season’s crop at the end of the year is likely to be larger. Based on current renewable crude oil prices of US$850– 1600/tonne, this next crop should gross approximately US$3 million, meeting the projects development expenses and clearing the way for it to become profitable. Our plant breeding and consulting business has also started to take off. The size and maturity of our oil seeds business has resulted in several portfolio options opening up to us. See Tony Crimmins’ and Dave Granger’s oil seeds article for more details.

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Phil Hodgson, May 2012

We have also advanced the transfer of several coal tenements in Queensland to Jatenergy, one of which adjoins Linc Energy and Guildford Coal in the north-west Galilee Basin. We

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Finally, I see a very positive outlook for our businesses in Indonesia. The broad consensus on the coal industry in Indonesia appears to be pragmatic, given its reliance on export revenue to fund its subsidised fuel scheme, and so policies need to allow this to happen. We remain confident in our projects and for business opportunities in Indonesia.

Coal loading facility for the Jongkang project on the Mahakam river.

Phil Hodgson at a major coal outcrop at Katingan, Central Kalimantan.

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INVESTOR NEWSLETTER MAY 2012

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INDONESIAN COAL HITS PRODUCTION TARGET

Chris Flanagan, COO (Indonesia)

Starting with our first coal shipment in early March, the Jongkang coal project has now produced more than 30,000 tonnes. We are on track to emulate production from similar operations, which are shipping 16,000–24,000 tonnes per month as the mines achieve good efficiencies.

Coal qualities have been better than expected, with low sulphur and high thermal energies resulting in FOB barge sales in excess of US$90/tonne, despite softening prices during the last quarter.

To date we have banked more than $340,000 in free cash flow from these operations, earning an average of US$9/tonne of coal sold, plus some payback of working capital.

Exposed coal face at the Jongkang Project site .

Our next production project, Atan Bara, achieved a significant milestone by obtaining a production licence, permitting planning to commence for mining during the second half of 2012. Based on current coal prices, we expect to achieve at least US$10/tonne in free cash flow from this joint venture. The Atan Bara project is in an established coal producing area, and the adjacent tenement run by the Koperasi has been in production for some time.

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plete, our drilling program will commence. BHP Billiton’s nearby $1.3 billion IndoMet coal project is in the pre-feasibility stage of a staged development aimed at producing 20– 40 million tonnes of coal annually. It is very encouraging that the adjacent 5,000 hectare tenement covering Realm Resources’ Katingan Ria project, which covers a comparable area to our Katingan project, recently established a JORC indicated resource of 92 Mt.

Our 5,000 hectare Katingan project is still undergoing regulatory approval. Once com-

Coal operations at the tenements immediately adjacent to the Atan Bara project.

As a result, we are fielding significant interest from third parties to assist with development of our asset.

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JATENERGY ACQUISITION OF COAL TENEMENTS IN BOWEN AND GALILEE BASINS

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Jatenergy is discussing development opportunities for tenements in Queensland with several parties. Jatenergy has rights covering coal exploration permits and applications in the Galilee and Bowen Basins, based on transaction agreements executed in 2011.

Two permit applications were recently granted, and four exploration permits are now in the process of being transferred to Jatenergy as planned.

Local business partner, Hendry Dirgo, with Chris Flanagan at the Jongkang Project.

Coalfrom the Jongkang Project stockpiled for export near Samarinda, Kalimantan.

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INVESTOR NEWSLETTER MAY 2012

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OILSEEDS BUSINESS TAKING OFF

Tony Crimmins, Business Development Manager Dave Granger, Field Operations Manager

Jatenergy’s oilseed JV in Indonesia has increased production as the jatropha trees reach their fourth year. The seasonal harvest exceeded 3400 tonnes, yielding more than 850 tonnes of crude jatropha oil destined for Europe for use in power generation. The demand from this sector is increasing as a result of more stringent sustainability requirements for biofuels in the European Union. The JV will receive around US$200/tonne in free cash flow from the shipments, which it will use for development expenses. The JV is already selffunding and with similar growing and harvest conditions, the next seasonal shipment in late

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Healthy bunches of Jatropha fruit.

2012 will be cash-flow positive.

Jatenergy’s plant breeding and consulting arm, Jatoil, is capitalising on its strong focus on research and development in jatropha during the past four years. We expect strong demand for our seed products and services

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Dave Granger inspecting plants at Jatenergy’s plant breeding site in Cambodia.

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COMPETENT PERSON’S STATEMENT

The information in this Investor Newsletter which relates to Exploration Results, Mineral Resources or Ore Reserves, is based on information compiled by Mr Allen J Maynard, who is a member of the Australian Institute of Geoscientists and a corporate member of the Australasian Institute of Mining and Metallurgy. Allen Maynard is the principal of Al Maynard & Associates Pty Limited (ACN 102 492 435) and has more than 30 years of exploration and mining experience in a variety of mineral deposit styles.

Mr Maynard has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Hand pollination to selectively breed superior cultivars that maximise fruit yield.

because the quality of seed used to establish a jatropha plantation is critical to its long term economic success. The company’s proprietary cultivars have a yield potential approaching double that of the cheap, wild seed that is readily available. The proprietary cultivars include important agronomic and yield traits such as high germination rate, vigorous seedling growth, strong pest and disease resistance, large seeds, and high oil content.

Al Maynard & Associates Pty Limited consents to the inclusion in this document of the matters based on their information in the form and context in which it appears.

development of crude oil plantations. If the trials replicate the performance seen in our breeding program, development of these projects will result in growth in sales and royalty type payments, and demand for our consultancy services.

Jatenergy recently sold the first of its highyielding jatropha seeds from its specialist breeding program to companies in Europe, Japan and Mexico, for use in trialling the

Forward Looking Statements

This report contains ‘forward-looking information’ that is based on the Company’s expectations, estimates and projections as of the date on which the statements were made. This forwardlooking information might include, among other things, statements with respect to the Company’s business strategy, plans, objectives, performance, outlook, growth, shareholder value, projections, targets and expectations, Mineral Reserves and Resources, results of exploration and related expenses, property acquisitions, mine development, mine operations, drilling activity, sampling and other data, grade and recovery levels, future production, capital costs, expenditures for environmental matters, life of mine, completion dates, commodity prices, demand for off -take, and currency exchange rates.

Forward-looking information is subject to, and based on assumptions about, known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Persons reading this newsletter are cautioned that such statements are only predictions, and that the Company’s actual future results or performance may be materially different.

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