JATCORP LIMITED - Proxy Solicitation & Information Statement 2011

JATOIL LIMITED

ABN 31 122 826 242

NOTICE OF EXTRAORDINARY GENERAL MEETING and explanatory statement

TIME : 10.00am (AEDST) DATE : Thursday, 10th February 2011 PLACE : Level 5, 56 Pitt Street, Sydney NSW 2000

The Notice of Meeting, Explanatory Statement and Proxy Form should be read in their entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting, please do not hesitate to contact the Company Secretary on +61 2 8823 3100

Key Dates

The anticipated timetable for completion of the transactions contemplated in this Notice of Meeting is set out below:

Event	Date
Despatch Notice of Meeting	8 January 2011
Last day for tradingin pre-reorganised securities(pre-consolidation)	9 February 2011
Tradingsuspended	10 February 2011
ExtraordinaryGeneral Meeting	10 February2011
Openingdate of Offer under Prospectus	11 February 2011
Closingdate of Offer under Prospectus	28 February 2011
Last day for Company to register transfers on a pre- reorganisation basis	18 February 2011
First day for Company to send notice to each Shareholder of change in holdings	21 February 2011
as a result of reorganisation and to register Shares on a post-reorganisation basis
Date for Consolidation to take effect, Completion to occur and allotment of Initial	4 March 2011
Consideration Shares
Despatch holdingstatements	4 March 2011
Anticipated date for lifting of trading suspension and trading in Company’s	11 March 2011
securities to commence

These dates are indicative only and may be varied by the Company at its discretion and without prior notice, subject to the Corporations Act and ASX Listing Rules.

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The Extraordinary General Meeting of the Shareholders of Jatoil Limited to which this Notice of Meeting relates will be held at 10.00am (AEDST) on Thursday 10th February 2011, at Level 5, 56 Pitt Street, Sydney, New South Wales.

YOUR VOTE IS IMPORTANT

The business of the Extraordinary General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the Extraordinary General Meeting on the date and at the time and place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the proxy form enclosed and send the proxy form by:

(a) post to Jatoil Limited, Level 6, Suite 8, 55 Miller Street, Pyrmont, NSW, 2010; or
(b) facsimile to the Company on facsimile number (+61 2) 9571 8200,

so that it is received not later than 10.00am (AEDST) on 8th February 2011.

Proxy forms received later than this time will be invalid.

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notice is given that the Extraordinary General Meeting of Shareholders of Jatoil Limited will be held at, Level 5, 56 Pitt Street, Sydney at 10.00am (AEDST) on Thursday, 10th February 2011.

The Explanatory Statement, which accompanies and forms part of this Notice of Meeting, provides information on matters to be considered at the Extraordinary General Meeting. The Proxy Form is attached at the end of this Explanatory Statement

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement will, unless the context otherwise requires, have the meaning given to them in the Glossary set out in the accompanying Explanatory Statement.

AGENDA

Ordinary Business

1. RESOLUTION 1: CHANGE IN NATURE AND SCALE OF ACTIVITIES

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“Subject to resolutions 2, 3, 4, 5 and 6 being passed, that for the purposes of ASX Listing Rule 11.1.2 and for all other purposes, approval is given to the Company to change the nature and scale of its activities to include coal exploration and mining by undertaking the acquisition of the Blackrock Shares on the terms and conditions applicable to the Acquisition, as summarised in the Explanatory Statement accompanying this Notice of Meeting.”

Explanation: The Company proposes to acquire the Blackrock Shares. The proposed acquisition of Blackrock Shares (referred to in the Explanatory Statement as the Acquisition), if completed, will result in the Company changing its business activities to include coal exploration and mining. ASX has notified the Company under ASX Listing Rule 11.1.2 that the Company must seek Shareholder approval given the proposed acquisition will constitute a significant change to the nature or scale of the Company’s activities. ASX has also advised that the Company will be required to re-comply with the requirements of Chapters 1 and 2 of the ASX Listing Rules as if it were applying for admission to the official list of ASX, in accordance with ASX Listing Rule 11.1.3. Please refer to the Explanatory Statement for details. The passing of Resolution 1 is conditional on, and subject to, the passing of Resolutions 2, 3, 4, 5 and 6.

Voting Exclusion : The Company will disregard any votes cast on this Resolution by the Blackrock Vendors, any person who may obtain a benefit, except a benefit solely in the capacity of a security holder, if the Resolution is passed, and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it 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.

2. RESOLUTION 2: ISSUE OF INITIAL CONSIDERATION SHARES TO BLACKROCK VENDORS

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“Subject to resolutions 1, 3, 4, 5 and 6 being passed and subject to satisfaction or waiver of the conditions precedent to the Acquisition, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the allotment and issue by the Company of the Initial Consideration Shares, being 25,000,000 Shares (on a post-Consolidation basis), to the Blackrock Vendors as initial consideration for the acquisition by the Company of the Blackrock Shares, as detailed in the Explanatory Statement accompanying this Notice of Meeting.”

Short Explanation: The Company proposes to acquire the Blackrock Shares from the Blackrock Vendors in consideration for the allotment and issue by the Company of the Initial Consideration Shares to the Blackrock Vendors. The Company seeks Shareholder

approval for the issue of the Initial Consideration Shares in accordance with ASX Listing Rule 7.1. Please refer to the Explanatory Statement for details. The passing of Resolution 2 is conditional on, and subject to, the passing of Resolutions 1, 3, 4, 5 and 6.

Voting Exclusion : The Company will disregard any votes on this Resolution by the Blackrock Vendors, any person who may participate in the proposed issue, any person who may obtain a benefit, except a benefit solely in the capacity of a security holder, if the Resolution is passed, and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it 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.

3. RESOLUTION 3: POTENTIAL ISSUE OF PERFORMANCE SHARES TO BLACKROCK VENDORS

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“Subject to resolutions 1, 2, 4, 5 and 6 being passed and subject to satisfaction or waiver of the conditions precedent to the Acquisition, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to allot and issue up to all the Performance Shares, being 37,500,000 Shares (on a post-Consolidation basis), to the Blackrock Vendors as the performance-related consideration for the acquisition by the Company of the Blackrock Shares, on the terms and conditions applicable to the Acquisition, as summarised in the Explanatory Statement accompanying this Notice of Meeting.”

Short Explanation: The Company has entered into the Agreement with the Blackrock Vendors under which the Company has agreed to issue, if various Milestones are achieved, the Performance Shares to the Blackrock Vendors, in addition to the Initial Consideration Shares, in order to acquire the Blackrock Shares. The Company seeks Shareholder approval for the issue of the Performance Shares in accordance with ASX Listing Rule 7.1. Please refer to the Explanatory Statement for details. The passing of Resolution 3 is conditional on, and subject to, the passing of Resolutions 1, 2, 4, 5 and 6.

4. RESOLUTION 4: CONSOLIDATION OF CAPITAL

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, subject to resolutions 1, 2, 3, 5 and 6 being passed and subject to and with effect from the date of, and immediately prior to, Completion of the Acquisition, for the purposes of section 254H of the Corporations Act 2001 (Cth), the constitution of the Company and for all other purposes, approval is given for the issued capital of the Company to be consolidated on the basis that:
(a) every four Shares be consolidated into one Share; and
(b) every four Options be consolidated into one Option with the exercise price amended in inverse proportion to that ratio,

and where this consolidation ratio would otherwise result in a fractional entitlement to a Share or Option (as the case may be), that fractional entitlement be rounded up to the nearest whole Share or Option (as the case may be).”

Short Explanation: The Company must consolidate its capital in order to satisfy Chapters 1 and 2 of the ASX Listing Rules and as a condition of the Company’s securities recommencing trading on ASX following the Acquisition. Please refer to the Explanatory Statement for details. The passing of Resolution 4 is conditional on, and subject to, the passing of Resolutions 1, 2, 3, 5 and 6.

5. RESOLUTION 5: ISSUE OF CAPITAL

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, subject to Resolutions 1, 2, 3, 4 and 6 being passed, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the allotment and issue of up to 10,000,000 Shares on a post-Consolidation basis at an issue price of $0.20 each to raise up to a total of $2,000,000 to applicants under the offer set out in the Prospectus.

Short Explanation: The Company is seeking to raise funds for project-specific working capital and for general working capital purposes to fund its ongoing operations after the transactions contemplated by the Acquisition. The Company must also issue a Prospectus in order to satisfy the requirements of Chapters 1 and 2 of the ASX Listing Rules and as a condition of the Company’s securities recommencing trading on ASX following the Acquisition. Please refer to the Explanatory Statement for details. The passing of Resolution 5 is conditional on, and subject to, the passing of Resolutions 1, 2, 3, 4 and 6.

Voting Exclusion : The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue, any person who may obtain a benefit, except a benefit solely in the capacity of a security holder, if the Resolution is passed, and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it 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.

6. RESOLUTION 6: CHANGE OF NAME

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a special resolution :

“That, subject to Resolutions 1, 2, 3, 4 and 5 being passed and subject to Completion occurring in relation to the Acquisition, and with effect from the date of issue of the Initial Consideration Shares contemplated in Resolution 2, approval be given for the Company’s name to be changed from Jatoil Limited to Jatenergy Limited.”

Short Explanation: Resolution 6 seeks to change the Company’s name from Jatoil Limited to Jatenergy Limited, subject to the passing of all other Resolutions and to Completion. Please refer to the Explanatory Statement for details. The passing of Resolution 6 is conditional on, and subject to, the passing of Resolutions 1, 2, 3, 4 and 5.

7. RESOLUTION 7: RATIFY PREVIOUS ISSUE OF SHARES TO SHENG RUN

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Shareholders ratify the issue and allotment on 13 December 2010 of 17,144,888 Shares at an issue price of $0.04 per Share to Sheng Run Holdings Group (Australia) Pty Ltd.”

Short Explanation: Resolution 7 seeks to ratify the previous issue of shares to Sheng Run which were issued to provide funds for the Company’s working capital purposes and development capital for energy projects in Indonesia. Please refer to the Explanatory Statement for details.

Voting Exclusion : The Company will disregard any votes cast on this Resolution by Sheng Run, and any associates of Sheng Run. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it 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.

8. RESOLUTION 8: ISSUE OF SHARES TO SHENG RUN

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“Subject to resolutions 1, 2, 3, 4, 5 and 6 being passed, that, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the allotment and issue of 8,250,000 Shares on a post-Consolidation basis at an issue price of $0.16 per Share to Sheng Run Holdings Group (Australia) Pty Ltd.”

DATED: 23 DECEMBER 2010 BY ORDER OF THE BOARD

EMMANUEL CORREIA COMPANY SECRETARY

PROXY APPOINTMENT AND VOTING INSTRUCTIONS

Proxies

A member entitled to attend and vote at the Extraordinary General Meeting of the Company is entitled to appoint not more than two proxies to attend and vote instead of the member. The proxy may, but need not, be a member of the Company.
If two proxies are appointed, and a member does not specify the proportion or number of the member’s votes each proxy may exercise, each proxy may exercise half the votes. A proxy need not be a member of the Company.
In order to vote on behalf of a company that is a shareholder of Jatoil Limited, a valid Power of Attorney in the name of the attendee may be lodged with the Company prior to the Extraordinary General Meeting, or be presented at the Extraordinary General Meeting before registering on the attendance register for the Meeting.
A body corporate may elect to appoint an individual to act as its representative in accordance with section 250D of the Corporations Act, in which case the Company will require a certificate of appointment of the corporate representative executed in accordance with the Corporations Act. The certificate of appointment must be lodged with the Company or the Company's share registry, Security Transfer Registrars, before the Extraordinary General Meeting or at the registration desk on the day of the meeting before registration.
If you wish to appoint the Chairman of the Extraordinary General Meeting as your proxy, mark the box. If the person you wish to appoint as your proxy is someone other than the Chairman of the Extraordinary General Meeting, the name of the person should be inserted on the Proxy Form where indicated. If you leave the section blank, or your named proxy does not attend the meeting, the Chairman of the Extraordinary General Meeting will be your proxy.

Lodgement of Proxy Forms

Proxy Forms, and any power of attorney or other authority under which it is signed, must be lodged not less than 48 hours before the time of the Extraordinary General Meeting or resumption of the adjourned meeting at which the person named in the instrument proposes to vote as follows:

(a) by hand: Jatoil Limited, Level 6, Suite 8, 55 Miller Street, Pyrmont, NSW, 2010; or
(b) by post to Jatoil Limited, Level 6, Suite 8, 55 Miller Street, Pyrmont, NSW, 2010; or
(c) by facsimile to the Company on facsimile number (+61 2) 9571 8200.

Any Proxy Form received after 10.00am on 8th February 2011 will not be valid for the Extraordinary General Meeting.

Voting Entitlement

Pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) and for the purposes of determining voting entitlements at the Extraordinary General Meeting, Shares will be taken to be held by the persons who are registered as holding Shares at 10.00am (AEDST) on 8th February 2011.

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Extraordinary General Meeting to be held at Level 5, 56 Pitt Street, Sydney NSW at 10.00am (AEDST) on Thursday 10th February 2011.

The purpose of this Explanatory Statement is to provide information that the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions in the Notice of Meeting.

Terms used in this Explanatory Statement will, unless the context otherwise requires, have the meaning given to them in the Glossary set out in this Explanatory Statement.

1. RESOLUTION 1: CHANGE IN NATURE AND SCALE OF ACTIVITIES

(a) General comments

Resolution 1 seeks Shareholder approval to change the nature and scale of the activities of the Company to include coal exploration and mining by undertaking the acquisition of all the issued shares in the capital of Blackrock on the terms and conditions set out in the Agreement and as summarised in this Explanatory Statement.

All information contained in the Explanatory Statement relating to Blackrock, its group companies, its interests in coal projects in Indonesia and details of those projects has been provided to the Company by the Blackrock Vendors. The Company assumes no responsibility for the accuracy or completeness of this information. The Company is conducting due diligence investigations into the Blackrock group of companies and the Indonesian coal projects to independently assess the information. A condition of the Acquisition is the Company's satisfaction with the results of those investigations. In addition, the Company and Blackrock Vendors intend to enter into an agreement on binding terms, under which the Company will seek appropriate representations and warranties from the Blackrock Vendors."

(b) Background and explanation

The Company is an ASX listed oil and energy company with a current focus on socially, environmentally and economically sustainable energy. The Company was admitted to ASX on 25 January 2008 under a prospectus dated 8 November 2007. The Company has predominantly operated in the sustainable fuel feedstock industry through investment in Jatropha curcas crops in developing countries in Asia (including Vietnam and Indonesia).

On 6 September 2010, the Company announced that it had signed a binding Memorandum of Understanding with Blackrock Resources Pty Limited, a private Australian company with coal assets in Indonesia.

Blackrock was incorporated in New South Wales on 23 July 2009 and has 39 shareholders. Its current issued capital comprises 88,420,000 fully paid ordinary shares. Blackrock holds 100% of the issued share capital of Blackrock Energy (Singapore) Pte Limited, which has secured a number of coal projects in Kalimantan, Indonesia, through 100%-owned foreign investment companies. Consequently, Blackrock has interests in coal projects in Indonesia, with legally binding agreements in place for four projects, and agreements in-principle on several further projects. Details of these projects are set out in Sections 1(c)(i)–(iv) below.

Under the terms of the Memorandum of Understanding, the Company and Blackrock contemplate entering into a conditional share purchase agreement with the Blackrock Vendors ( Agreement ) to proceed with the Acquisition and acquire all of the issued shares in the capital of Blackrock in consideration for the issue of the Consideration Shares to the Blackrock Vendors, comprising:

the Initial Consideration Shares, being 25,000,000 Shares in the Company (on a post-Consolidation basis)
the Performance Shares, being up to 37,500,000 Shares in the Company (on a post-Consolidation basis).

As the proposed Acquisition will result in a significant change in the nature and scale of activities of the Company, ASX has indicated that the Company is required to:

(i) obtain Shareholder approval for the change in the nature and scale of the Company’s activities; and
(ii) in accordance with ASX Listing Rule 11.1.3, re-comply with the admission requirements set out in Chapters 1 and 2 of the ASX Listing Rules as if the Company were applying for admission to the official list of ASX.

Among other things, completion of the Acquisition will depend on each of the resolutions set out in the Notice of Meeting and described in this Explanatory Statement being passed at the Extraordinary General Meeting.

(c)

Acquisition highlights

The main highlights of the proposed Acquisition are as follows:

(i) the Target Mineralisation identified across the two secured projects is from 36 million tonnes to 43 million tonnes, plus a project slate under due diligence of at least a further target estimate of more than 20 million tonnes with a coal quality range from 5,500 kcal/kg to 6,500 kcal/kg (see note below);
(ii) the coal quality is suitable for both domestic and export thermal coal markets, with possibly some coking-quality coal;
(iii) the projects are located in known coal production areas;
(iv) there is potential to increase exploration targets significantly through further drilling and/or additional acquisitions;
(v) Blackrock has a well-credentialed team with extensive experience in mining; and
(vi) Blackrock has a well-developed strategy based on early revenues from smaller projects and pre-sales of coal to fund full mining operations across all projects.

The structure of the Company following the Acquisition, if implemented, is illustrated in Figure 1 below.

*NOTE: The potential exploration target coal tonnage range is conceptual in nature and insufficient work has been completed to report a Mineral Resource in accordance with the JORC Code (2004). It is uncertain if further exploration work will result in the determination of a Mineral Resource.

==> picture [400 x 426] intentionally omitted <==

----- Start of picture text -----

Jatenergy Limited
(Australia)
100% 100% 46%
Blackrock Jatenergy Green
Energy
Resources Pty Ltd Holdings Pte Ltd Vietnam JSC
(Australia) (Singapore) (Vietnam)
100% 100%
Blackrock Energy Jatenergy
(Singapore) Indonesia Pte Ltd
Pte Ltd (Singapore)
80% 100% 70%
PT Barata PT Jatoil
PT Coal Soil Brick
Energy Waterland
(Indonesia)
(Indonesia) (Indonesia)
100% 100%
Katingan Mining services and coal off-
Project take agreements
Atan
Bara Other
Project Projects
----- End of picture text -----

Figure 1. Structure of the Company following the Acquisition.

The Secured Projects are summarised in the following table:

		Indicative	Potential		Estimated
		calorific	exploration	Haulage	time to
Secured Projects	Status	value	target	distance	production
		(kcal/kg)	(Mt)	(km)
Katingan	Exploration IUP	5,500–5,800*	37.3	50	2–3 years
Atan Bara	Exploration IUP	5,900–6,400	0.6	6	6-9 months
Other projects	Under due diligence		>20
Total			>38

The potential exploration target coal tonnage range is conceptual in nature and insufficient work has been completed to report a Mineral Resource in accordance with the JORC Code (2004). It is uncertain if further exploration work will result in the determination of a Mineral Resource

The location of each Secured Project is illustrated in Figure 2 below:

Figure 2. The two Secured Projects are situated in Central and East Kalimantan on the island of Borneo in Indonesia, the world’s largest exporter of thermal coal. Kalimantan is an established coal mining area and produces over 75% of Indonesia’s coal.

(i) Katingan project

The Katingan project is the most significant asset in the Blackrock portfolio. The project comprises a single tenement held in the name of PT Coal Soil Brik (CSB).

The project is located 160km northwest of the city of Palangkaraya in the South Kalimantan Province on the island of Borneo (Figure 2).

There have been numerous surveys conducted on the area, to the level of semi-detailed mapping. From the studies to date several outcrops have been identified and mapped for inclusion into a resource model. Some significant seams of greater than 6m true thickness have been recorded. A total of 15 samples have been taken from surface outcrops and analysed to industry standards for establish coal specifications.

Early in 2009, CV Sinar Peridotindo Utama (SPU) was appointed by Blackrock to undertake a scoping drilling program. The objectives of the program were to core sample the coal seams and provide data on the geometry of the coal structures in the immediate area. In total eight holes, including two partially cored holes, were completed for 305m of drilling.

A very basic estimate of the volumes of coal defined within the area over varying strike lengths in a 500 m wide corridor for recovered coal seam aggregating up to 9.0m thickness using a bulk density of 1.3 t/m³ neglecting seam dip of 5° to15° has been used. Similar parameters were used for the other two areas.

Highlights of the Katingan project are as follows:

(1) the project offers a good quality coal resource estimate of 36.4 to 43.1 Mt based on the outcrop localities shown in Table 1. Please note ‘Qualifying Statement’ - footnote 2. There is significant potential to increase this estimate;

(2) there is a current exploration permit;
(3) there are no identified impediments to future mining activities;
(4) there is established road access;

(5) more than 30 coal outcrops are located in the project area with significant seams >6m thick. A total of 58 coal outcrops are located in the project area with thickness ranging from 0.1 to >6 m dipping at 3° to 29° in numerous directions.

Table 1: Exploration Target Estimate of Katingan Block

Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 A 1 CSB 24 2314 6.0 3 16,4Mt to 18,9Mt A 2 CSB 25 1493 0.6 7 A 3 CSB 26 1792 0.3 9 A 4 CSB 17 1664 3.5 7 2.0Mt to 2.5Mt B CSB 13 & 14 1370 3.5 4 2.9Mt to 3.6Mt C CSB 12 703 0.1 3 D 1 CSB 16 650 3.0 6 0.8Mt to 0.97Mt D 2 CSB 15 112 2.2 5 0.12Mt to 0.15Mt E CSB 44 & 45 1357 1.8 7 0.82Mt to 0.95Mt F 1 CSB 53 & 21 2398 2.1 5 2.4Mt to 3.0Mt F 2 CSB 40 843 2.3 7 0.67Mt to 0.82Mt G 1 CSB 39 2314 1.6 8 0.95Mt to 1.0Mt G 2 CSB 43 519 1.8 7 0.32Mt to 0.389Mt G 3 CSB 42 740 1.5 10 0.22Mt to 0.24Mt H 1 CSB 41 2706 1.3 7 1.0 Mt to 1.1 Mt H 2 CSB 56-58 1437 1.3 8 0.49 Mt to 0.54 Mt H 3 CSB 31 & 32 1608 3.7 7 2.0 Mt to 2.5 Mt H 4 CSB 37 & 38 984 2.3 7 0.77 Mt to 0.94 Mt I 1 CSB 46 1948 2.5 7 1.7 Mt to 2.1 Mt I 2 CSB 23 1252 1.5 15 0.26 Mt to 0.28 Mt J 1 CSB 51 1712 1.2 9 0.47 Mt to 0.51 Mt J 2 CSB 01 797 0.8 5 K 1 CSB 07 1231 2.2 12 0.55 Mt to 0.68 Mt K 2 CSB 29 880 0.5 9 K 3 CSB 04 194 0.5 10 K 4 CSB 02 168 0.6 10 K 5 CSB 03 134 0.2 11 K 6 CSB 09 1025 0.3 43	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 A 1 CSB 24 2314 6.0 3 16,4Mt to 18,9Mt A 2 CSB 25 1493 0.6 7 A 3 CSB 26 1792 0.3 9 A 4 CSB 17 1664 3.5 7 2.0Mt to 2.5Mt B CSB 13 & 14 1370 3.5 4 2.9Mt to 3.6Mt C CSB 12 703 0.1 3 D 1 CSB 16 650 3.0 6 0.8Mt to 0.97Mt D 2 CSB 15 112 2.2 5 0.12Mt to 0.15Mt E CSB 44 & 45 1357 1.8 7 0.82Mt to 0.95Mt F 1 CSB 53 & 21 2398 2.1 5 2.4Mt to 3.0Mt F 2 CSB 40 843 2.3 7 0.67Mt to 0.82Mt G 1 CSB 39 2314 1.6 8 0.95Mt to 1.0Mt G 2 CSB 43 519 1.8 7 0.32Mt to 0.389Mt G 3 CSB 42 740 1.5 10 0.22Mt to 0.24Mt H 1 CSB 41 2706 1.3 7 1.0 Mt to 1.1 Mt H 2 CSB 56-58 1437 1.3 8 0.49 Mt to 0.54 Mt H 3 CSB 31 & 32 1608 3.7 7 2.0 Mt to 2.5 Mt H 4 CSB 37 & 38 984 2.3 7 0.77 Mt to 0.94 Mt I 1 CSB 46 1948 2.5 7 1.7 Mt to 2.1 Mt I 2 CSB 23 1252 1.5 15 0.26 Mt to 0.28 Mt J 1 CSB 51 1712 1.2 9 0.47 Mt to 0.51 Mt J 2 CSB 01 797 0.8 5 K 1 CSB 07 1231 2.2 12 0.55 Mt to 0.68 Mt K 2 CSB 29 880 0.5 9 K 3 CSB 04 194 0.5 10 K 4 CSB 02 168 0.6 10 K 5 CSB 03 134 0.2 11 K 6 CSB 09 1025 0.3 43	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 A 1 CSB 24 2314 6.0 3 16,4Mt to 18,9Mt A 2 CSB 25 1493 0.6 7 A 3 CSB 26 1792 0.3 9 A 4 CSB 17 1664 3.5 7 2.0Mt to 2.5Mt B CSB 13 & 14 1370 3.5 4 2.9Mt to 3.6Mt C CSB 12 703 0.1 3 D 1 CSB 16 650 3.0 6 0.8Mt to 0.97Mt D 2 CSB 15 112 2.2 5 0.12Mt to 0.15Mt E CSB 44 & 45 1357 1.8 7 0.82Mt to 0.95Mt F 1 CSB 53 & 21 2398 2.1 5 2.4Mt to 3.0Mt F 2 CSB 40 843 2.3 7 0.67Mt to 0.82Mt G 1 CSB 39 2314 1.6 8 0.95Mt to 1.0Mt G 2 CSB 43 519 1.8 7 0.32Mt to 0.389Mt G 3 CSB 42 740 1.5 10 0.22Mt to 0.24Mt H 1 CSB 41 2706 1.3 7 1.0 Mt to 1.1 Mt H 2 CSB 56-58 1437 1.3 8 0.49 Mt to 0.54 Mt H 3 CSB 31 & 32 1608 3.7 7 2.0 Mt to 2.5 Mt H 4 CSB 37 & 38 984 2.3 7 0.77 Mt to 0.94 Mt I 1 CSB 46 1948 2.5 7 1.7 Mt to 2.1 Mt I 2 CSB 23 1252 1.5 15 0.26 Mt to 0.28 Mt J 1 CSB 51 1712 1.2 9 0.47 Mt to 0.51 Mt J 2 CSB 01 797 0.8 5 K 1 CSB 07 1231 2.2 12 0.55 Mt to 0.68 Mt K 2 CSB 29 880 0.5 9 K 3 CSB 04 194 0.5 10 K 4 CSB 02 168 0.6 10 K 5 CSB 03 134 0.2 11 K 6 CSB 09 1025 0.3 43	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 A 1 CSB 24 2314 6.0 3 16,4Mt to 18,9Mt A 2 CSB 25 1493 0.6 7 A 3 CSB 26 1792 0.3 9 A 4 CSB 17 1664 3.5 7 2.0Mt to 2.5Mt B CSB 13 & 14 1370 3.5 4 2.9Mt to 3.6Mt C CSB 12 703 0.1 3 D 1 CSB 16 650 3.0 6 0.8Mt to 0.97Mt D 2 CSB 15 112 2.2 5 0.12Mt to 0.15Mt E CSB 44 & 45 1357 1.8 7 0.82Mt to 0.95Mt F 1 CSB 53 & 21 2398 2.1 5 2.4Mt to 3.0Mt F 2 CSB 40 843 2.3 7 0.67Mt to 0.82Mt G 1 CSB 39 2314 1.6 8 0.95Mt to 1.0Mt G 2 CSB 43 519 1.8 7 0.32Mt to 0.389Mt G 3 CSB 42 740 1.5 10 0.22Mt to 0.24Mt H 1 CSB 41 2706 1.3 7 1.0 Mt to 1.1 Mt H 2 CSB 56-58 1437 1.3 8 0.49 Mt to 0.54 Mt H 3 CSB 31 & 32 1608 3.7 7 2.0 Mt to 2.5 Mt H 4 CSB 37 & 38 984 2.3 7 0.77 Mt to 0.94 Mt I 1 CSB 46 1948 2.5 7 1.7 Mt to 2.1 Mt I 2 CSB 23 1252 1.5 15 0.26 Mt to 0.28 Mt J 1 CSB 51 1712 1.2 9 0.47 Mt to 0.51 Mt J 2 CSB 01 797 0.8 5 K 1 CSB 07 1231 2.2 12 0.55 Mt to 0.68 Mt K 2 CSB 29 880 0.5 9 K 3 CSB 04 194 0.5 10 K 4 CSB 02 168 0.6 10 K 5 CSB 03 134 0.2 11 K 6 CSB 09 1025 0.3 43	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 A 1 CSB 24 2314 6.0 3 16,4Mt to 18,9Mt A 2 CSB 25 1493 0.6 7 A 3 CSB 26 1792 0.3 9 A 4 CSB 17 1664 3.5 7 2.0Mt to 2.5Mt B CSB 13 & 14 1370 3.5 4 2.9Mt to 3.6Mt C CSB 12 703 0.1 3 D 1 CSB 16 650 3.0 6 0.8Mt to 0.97Mt D 2 CSB 15 112 2.2 5 0.12Mt to 0.15Mt E CSB 44 & 45 1357 1.8 7 0.82Mt to 0.95Mt F 1 CSB 53 & 21 2398 2.1 5 2.4Mt to 3.0Mt F 2 CSB 40 843 2.3 7 0.67Mt to 0.82Mt G 1 CSB 39 2314 1.6 8 0.95Mt to 1.0Mt G 2 CSB 43 519 1.8 7 0.32Mt to 0.389Mt G 3 CSB 42 740 1.5 10 0.22Mt to 0.24Mt H 1 CSB 41 2706 1.3 7 1.0 Mt to 1.1 Mt H 2 CSB 56-58 1437 1.3 8 0.49 Mt to 0.54 Mt H 3 CSB 31 & 32 1608 3.7 7 2.0 Mt to 2.5 Mt H 4 CSB 37 & 38 984 2.3 7 0.77 Mt to 0.94 Mt I 1 CSB 46 1948 2.5 7 1.7 Mt to 2.1 Mt I 2 CSB 23 1252 1.5 15 0.26 Mt to 0.28 Mt J 1 CSB 51 1712 1.2 9 0.47 Mt to 0.51 Mt J 2 CSB 01 797 0.8 5 K 1 CSB 07 1231 2.2 12 0.55 Mt to 0.68 Mt K 2 CSB 29 880 0.5 9 K 3 CSB 04 194 0.5 10 K 4 CSB 02 168 0.6 10 K 5 CSB 03 134 0.2 11 K 6 CSB 09 1025 0.3 43	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 A 1 CSB 24 2314 6.0 3 16,4Mt to 18,9Mt A 2 CSB 25 1493 0.6 7 A 3 CSB 26 1792 0.3 9 A 4 CSB 17 1664 3.5 7 2.0Mt to 2.5Mt B CSB 13 & 14 1370 3.5 4 2.9Mt to 3.6Mt C CSB 12 703 0.1 3 D 1 CSB 16 650 3.0 6 0.8Mt to 0.97Mt D 2 CSB 15 112 2.2 5 0.12Mt to 0.15Mt E CSB 44 & 45 1357 1.8 7 0.82Mt to 0.95Mt F 1 CSB 53 & 21 2398 2.1 5 2.4Mt to 3.0Mt F 2 CSB 40 843 2.3 7 0.67Mt to 0.82Mt G 1 CSB 39 2314 1.6 8 0.95Mt to 1.0Mt G 2 CSB 43 519 1.8 7 0.32Mt to 0.389Mt G 3 CSB 42 740 1.5 10 0.22Mt to 0.24Mt H 1 CSB 41 2706 1.3 7 1.0 Mt to 1.1 Mt H 2 CSB 56-58 1437 1.3 8 0.49 Mt to 0.54 Mt H 3 CSB 31 & 32 1608 3.7 7 2.0 Mt to 2.5 Mt H 4 CSB 37 & 38 984 2.3 7 0.77 Mt to 0.94 Mt I 1 CSB 46 1948 2.5 7 1.7 Mt to 2.1 Mt I 2 CSB 23 1252 1.5 15 0.26 Mt to 0.28 Mt J 1 CSB 51 1712 1.2 9 0.47 Mt to 0.51 Mt J 2 CSB 01 797 0.8 5 K 1 CSB 07 1231 2.2 12 0.55 Mt to 0.68 Mt K 2 CSB 29 880 0.5 9 K 3 CSB 04 194 0.5 10 K 4 CSB 02 168 0.6 10 K 5 CSB 03 134 0.2 11 K 6 CSB 09 1025 0.3 43
A 1	CSB 24	2314	6.0	3	16,4Mt to 18,9Mt
A 2	CSB 25	1493	0.6	7
A 3	CSB 26	1792	0.3	9
A 4	CSB 17	1664	3.5	7	2.0Mt to 2.5Mt
B	CSB 13 & 14	1370	3.5	4	2.9Mt to 3.6Mt
C	CSB 12	703	0.1	3
D 1	CSB 16	650	3.0	6	0.8Mt to 0.97Mt
D 2	CSB 15	112	2.2	5	0.12Mt to 0.15Mt
E	CSB 44 & 45	1357	1.8	7	0.82Mt to 0.95Mt
F 1	CSB 53 & 21	2398	2.1	5	2.4Mt to 3.0Mt
F 2	CSB 40	843	2.3	7	0.67Mt to 0.82Mt
G 1	CSB 39	2314	1.6	8	0.95Mt to 1.0Mt
G 2	CSB 43	519	1.8	7	0.32Mt to 0.389Mt
G 3	CSB 42	740	1.5	10	0.22Mt to 0.24Mt
H 1	CSB 41	2706	1.3	7	1.0 Mt to 1.1 Mt
H 2	CSB 56-58	1437	1.3	8	0.49 Mt to 0.54 Mt
H 3	CSB 31 & 32	1608	3.7	7	2.0 Mt to 2.5 Mt
H 4	CSB 37 & 38	984	2.3	7	0.77 Mt to 0.94 Mt
I 1	CSB 46	1948	2.5	7	1.7 Mt to 2.1 Mt
I 2	CSB 23	1252	1.5	15	0.26 Mt to 0.28 Mt
J 1	CSB 51	1712	1.2	9	0.47 Mt to 0.51 Mt
J 2	CSB 01	797	0.8	5
K 1	CSB 07	1231	2.2	12	0.55 Mt to 0.68 Mt
K 2	CSB 29	880	0.5	9
K 3	CSB 04	194	0.5	10
K 4	CSB 02	168	0.6	10
K 5	CSB 03	134	0.2	11
K 6	CSB 09	1025	0.3	43

Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 L 1 CSB 28 1700 0.3 6 L 2 CSB 05 1537 0.6 14 L 3 CSB 06 528 0.2 13 L 4 CSB 27 679 0.5 3 M CSB 10 263 2.9 11 0.17 Mt to 0.21 Mt N CSB 22 453 3.0 7 0.47 Mt to 0.58 Mt O CSB 49 706 2.0 4 0.86 Mt to 1.0 Mt P CSB 47 546 0.4 3 (Rounded Total) Total 36.45 Mt to 43.1 Mt	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 L 1 CSB 28 1700 0.3 6 L 2 CSB 05 1537 0.6 14 L 3 CSB 06 528 0.2 13 L 4 CSB 27 679 0.5 3 M CSB 10 263 2.9 11 0.17 Mt to 0.21 Mt N CSB 22 453 3.0 7 0.47 Mt to 0.58 Mt O CSB 49 706 2.0 4 0.86 Mt to 1.0 Mt P CSB 47 546 0.4 3 (Rounded Total) Total 36.45 Mt to 43.1 Mt	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 L 1 CSB 28 1700 0.3 6 L 2 CSB 05 1537 0.6 14 L 3 CSB 06 528 0.2 13 L 4 CSB 27 679 0.5 3 M CSB 10 263 2.9 11 0.17 Mt to 0.21 Mt N CSB 22 453 3.0 7 0.47 Mt to 0.58 Mt O CSB 49 706 2.0 4 0.86 Mt to 1.0 Mt P CSB 47 546 0.4 3 (Rounded Total) Total 36.45 Mt to 43.1 Mt	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 L 1 CSB 28 1700 0.3 6 L 2 CSB 05 1537 0.6 14 L 3 CSB 06 528 0.2 13 L 4 CSB 27 679 0.5 3 M CSB 10 263 2.9 11 0.17 Mt to 0.21 Mt N CSB 22 453 3.0 7 0.47 Mt to 0.58 Mt O CSB 49 706 2.0 4 0.86 Mt to 1.0 Mt P CSB 47 546 0.4 3 (Rounded Total) Total 36.45 Mt to 43.1 Mt	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 L 1 CSB 28 1700 0.3 6 L 2 CSB 05 1537 0.6 14 L 3 CSB 06 528 0.2 13 L 4 CSB 27 679 0.5 3 M CSB 10 263 2.9 11 0.17 Mt to 0.21 Mt N CSB 22 453 3.0 7 0.47 Mt to 0.58 Mt O CSB 49 706 2.0 4 0.86 Mt to 1.0 Mt P CSB 47 546 0.4 3 (Rounded Total) Total 36.45 Mt to 43.1 Mt	Seam Ref. O/C Strike (m) Thick. (m) Dip (0) Tonnage1, strip ratios of 1:6.5-1:8 L 1 CSB 28 1700 0.3 6 L 2 CSB 05 1537 0.6 14 L 3 CSB 06 528 0.2 13 L 4 CSB 27 679 0.5 3 M CSB 10 263 2.9 11 0.17 Mt to 0.21 Mt N CSB 22 453 3.0 7 0.47 Mt to 0.58 Mt O CSB 49 706 2.0 4 0.86 Mt to 1.0 Mt P CSB 47 546 0.4 3 (Rounded Total) Total 36.45 Mt to 43.1 Mt
L 1	CSB 28	1700	0.3	6
L 2	CSB 05	1537	0.6	14
L 3	CSB 06	528	0.2	13
L 4	CSB 27	679	0.5	3
M	CSB 10	263	2.9	11	0.17 Mt to 0.21 Mt
N	CSB 22	453	3.0	7	0.47 Mt to 0.58 Mt
O	CSB 49	706	2.0	4	0.86 Mt to 1.0 Mt
P	CSB 47	546	0.4	3
(Rounded Total)				Total	36.45 Mt to 43.1 Mt

1 1.3t/m3 used as coal seam density.

2 The potential exploration target coal tonnage range is conceptual in nature and insufficient work has been completed to report a Mineral Resource in accordance with the JORC Code (2004). It is uncertain if further exploration work will result in the determination of a Mineral Resource.

The coal is located in the Dahor Formation which consists of fine to coarse grained sandstone cross-bedded with conglomerates containing metamorphic and granitic clasts, with some intercalations of limonitic layers. Coal beds have been previously identified as 0.3 to 3.0m thick beds hosted in coarse sandstone layers. The Formation has been designated as Middle Pliocene–Pleistocene in age with a thickness estimated to be 300m in total and may thicken in the eastern direction.

There are two definable rock units that both contain coal seams in the investigation area, with the oldest being a sandstone unit and the youngest a mudstone unit. Both units contain thick, major coal seams of greater than 6.5m and several smaller seams of 0.50 to 3.0m in thickness.

The older sandstone unit and coal seams are interpreted to be deposited in a choked lagoon environment with a high fluid energy and a marine influence. The younger mudstone unit and associated coal seams were deposited in a more static environment, possibly a restricted lagoon, with a lower fluid energy and a fresh water influx, rather than marine.

It is anticipated that the thicker coal seams will show more consistent coal quality parameters than those already obtained and the total deposit quality is likely to improve when the weighted averages of the coal quality are determined on a seam-by-seam basis.

(6) the shallow dipping seams indicate potentially low strip ratios;

(7) core drilling has confirmed 6m thick coal seams and intersected additional 0.5 to 2m coal seams;

(8) preliminary sampling indicates energy values of 5,500 to 5,800 kcal/kg (adb) and other qualities suitable for the export thermal coal market.

Table 2: Katingan Outcrop Coal Analyses.

Report reference	Date	Moisture received %	Moisture % (adb)	Calorific value Cal/g (adb)	Ash content Cal/g (ab)	Total sulphur % (adb)	Volatile matter % (adb)	Fixed carbon % (adb)
00115/GAEDAC	9/01/2009	35.1	12.5	5,846	2.5	0.28	42.1	42.9
00116/GAEDAC	9/01/2009	33.6	12.7	5,792	2.4	0.23	42.6	42.3
00120/GAEDAC	9/01/2009	37.6	15.3	5,723	1.4	0.16	40.5	42.8
00119/GAEDAC	9/01/2009	34.8	12.3	5,608	6.3	0.19	41.5	39.9
00118/GAEDAC	9/01/2009	35.5	12.7	5,630	5.0	0.22	40.1	42.2

0017/GAEDAC	9/01/2009	32.8	13.0	5,400	7.9	0.27	39.5	39.6
07647/GAEDAB	9/01/2009	26.9	12.1	6,016	4.0	0.26	41.8	42.1
07646/GAEDAB	5/10/2008	37.2	15.2	5,519	2.1	0.23	40.5	42.2
07645/GAEDAB	5/10/2008	38.2	12.8	5,794	3.2	0.22	43.3	40.7
06848/GAEDAB	4/09/2009	21.0	13.7	6,035	2.1	0.25	42.9	41.3
07644/GAEDAB	5/10/2008	36.6	13.3	5,885	1.8	0.24	43.4	41.5
07643/GAEDAB	5/10/2008	35.6	12.3	6,007	1.8	0.24	43.6	42.3
ASTM Method		D3302-05	D3173-03	D5865-04	D3174-04	D4239- 05	D3175- 02	D3172-03

Table 3: Katingan Core Sampling Coal Analyses.

Report reference	Sample	Moisture received%	Moisture % (adb)	Calorific value Cal/g (adb	Ash content Cal/g (adbd)	Total sulphur % (adb)	Volatile matter % (adb)	Fixed carbon% (adb)
KT.1904/09	DH-02 0- 0.7	31.19	13.82	5734	3.18	0.26	40.44	42.56
KT.1905/09	DH03 0-1	28.86	14.00	5457	5.50	0.23	38.68	41.82
KT.1906/09	DH03 1-2	27.95	15.52	5584	2.57	0.18	39.60	42.31
KT.1907/09	DH03 2-3	28.28	14.30	5612	4.00	0.22	39.87	41.83
KT.1908/09	DH06 0-1	27.64	13.82	5488	7.44	0.20	40.28	38.46
ASTM Method		D3302-05	D3173-03	D5865-04	D3174-04	D4239- 05	D3175- 02	D3172-03

The key outcomes from the these analyses are a mean composite coal quality within the range of 5,500 to 5,800g/cal with corresponding moisture of 12 to 15% (adb). All other parameters are within specification for a thermal coal product.

The Katingan project area contains significant potential for the definition of a substantial coal deposit. An exploration target has already been identified of 36.4Mt to 43.1Mt with 5,500 to 5,800 kcal/kg and acceptable moisture levels in CSB and with large potential if strike extensions can be confirmed. The exploration target is conceptual in nature. There has been insufficient exploration to define a mineral resource under JORC guidelines and it is uncertain whether further exploration will result in the determination of a mineral resource. This conceptual target may or may not be outlined with future work, either in whole or in part.

Provided JV negotiations with neighbours are successful, the total potential of the district is very large.

(ii) Atan Bara project

The Atan Bara project is located in the North Panajam Pasir regency of East Kalimantan, about two hours’ drive along sealed roads from Balikpapan. The concession is subject to an exploration IUP covering 200.1ha. Based on regional geology, the concession is located in the Balikpapan and Pulaubalang Formations which are well known coal bearing sequences.

The Pulaubalang Formation consists of alternating greywacke and quartz sandstone with intercalations of limestone, claystone, coal and dacitic tuff. The Balikpapan Formation consists of sandstone and clay intercalation with silt shale, limestone and coal. The quartz sandstone contains a coal layer 5cm to 10cm thick.

Based on two programs of mapping several outcrops of coal were located in the Koperasi area on the southwest side of Atan. In an operating coal pit the strike and dip of the coal seam can be clearly seen and has been used to model the continuation of coal in the Atan block. The coal seam in the Atan concession is a continuation of the coal discovered in Koperasi Buluminung which is located to the southwest as well as the coal seam in Koperasi Serimpun to the southeast.

Based on the correlation of the coal outcrops discovered within the concession and in the close vicinity of the adjacent concessions there are four interpreted coal seams with thicknesses as follows:

a. Seam 1: 1.30m (at south narrow section, adjacent with Serimpun)
b. Seam 2: 1.30m
c. Seam 3: 0.25m
d. Seam 4: 0.30m

An Inferred Resource estimate of the coal based on these four seams is presented in Table 4.

Table 4. Coal Inferred Resource estimate of the Atan Bara Project.

Seam	Panjang Strike (m)	Panjang Downdip (m)	Teba l(m)	BJ	Total (T)
Seam 1	730	170	0.8	1.3	129,000
Seam 2	790	165	1.2	1.3	203,300
Seam 3	800	150	0.8	1.3	124,800
Seam 4	125	150	1.1	1.3	26,800
			(Rounded)		484,000

Eight boreholes (DH01 to DH08) were completed during the initial phase of drilling from 6th to 13th November 2010 using a Power Rig. The depth drilled varied from 9 to 30 metres. Due to the presence of hard sandstone and limestone the majority of boreholes were finished at shallow depths (9 to 11 metres). The drilling program was continued using a more powerful Jacro Drill (Table 5)

Table 5. Summary of drilling phase 2 using a Jackro Drill.

DH ID	EASTING	EASTING	EASTING	NORTHING	NORTHING	NORTHING	ELEV (m)	DEPTH (m)	COAL INTERSECT	COAL INTERSECT	Thick	Remarks
	Deg	Min	Sec	Deg	Min	Sec			From	To	(m)
DH-09	9863673 UTM			458905 UTM			36	40.00	22.30	23.10	0.80	Finished hole
DH-10	9863762			458961			38	45.00	9.80	11.00	1.20	Finished hole
DH-13	116	37	57.5	-1	14	41.4	40	30.00	15.0	15.80	0.80	Finished hole
DA-06	9864245			459595			36	48.50	21.45	22.10	0.65	Finished hole

It is planned to redrill DH01 or DH08 . Drillhole DH09 and DH13 are proposed index holes to establish the continuation of the two main coal seams (1.30m). The depth of drilling is 50m. The phase 2 drilling commenced on 25[th] November and was completed on 30[th] November 2010. Total of 232m of drilling was completed. During the second phase of drilling geological mapping of an area to the northeast revealed two additional outcrops of coal.

Bituminous coal seams occur in the northeast-southwest region of the property with six seams (A to F) mapped over semi continuous and restricted strike intervals. Block I consists of three coal seams (A, B & C) with thicknesses ranging from 0.6 to 1.2 m, striking 030° to 045°, with shallow southeast dips of 15° to 20°. Semi-continuous coal exposures, individually up to 10 metres in length are observed along the 1km metre strike extent within the property boundaries. Block II comprises three coal seams (D, E, F) with thicknesses of 0.90 to 1.45m, striking 040° to 055° with shallow southeast dips of 20° to 26°.

An exploration target resource potential within the property, a total of 500,000 metric tonnes (“t”) (-50 m RL) to 680,000t (-75 m RL) with a coal quality range from 5,500 to 6,500kcal/kg is considered to be a reasonable estimate. The potential exploration target coal tonnage range is conceptual in nature and insufficient work has been completed to report a Mineral Resource in accordance with the JORC Code (2004). It is uncertain if further exploration work will result in the determination of a Mineral Resource.

Further surface prospecting, along with shallow scout drilling along the strike of coal Seams D to F may increase the exploration target resource by 20% to 25%. Thick outcropping Balikpapan Formation coal seams (>1.4m) in the southwest corner of the adjoining Koperasi Buluminung property, are considered higher priority acquisition targets. Surface exposures of

coal seams have been found in the northwest and eastern portions of the property. The estimated exploration target for the project is 500kt to 680kt of coal. Samples indicate calorific values of 5,900 to 6,400 kcal/kg (adb).

The following summary analysis of coal from Atan Bara is presented in Table 6.

Table 6. Summary analysis of coal samples from the Atan Bara project

COAL QUALITY PARAMETERS	QUALITY RANGE
Calorific Value, adb (kcal/kg)	5900 - 6400
Calorific Value, arb (kcal/kg)	4900 - 5580
Total Moisture, adb (%)	22 -27
Inherent Moisture, adb (%)	10 - 15
Ash Content, adb (%)	1.18 - 5
Sulphur, adb, (%)	0.65 – 1.3
Volatile Matter, adb,(%)	38 - 42

The project offers excellent logistics. The project is situated 6km from the nearest coal loading facility on Balikpapan Bay, with an established haulage road and a stockpile jetty capable of handling 100m barges. However, some repairs of the haulage road and jetty are required.

Due to limited surface geology data the property requires scout drilling to establish estimates of coal quantity and quality parameters.

Competent Persons Statements

The information in this report which relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Allen Maynard, who is a Member of the Australian Institute of Geosciences (“AIG”), a Corporate Member of the Australasian Institute of Mining & Metallurgy (“AusIMM”) and independent consultant to the Company. Mr Maynard is the principal of Al Maynard & Associates Pty Ltd and has over 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 which 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”. Mr Maynard consents to inclusion in the report of the matters based on his information in the form and context in which it appears.

(d) Overview of coal market

Coal is one of the world’s most important commodities. It is used to generate almost 40% of the world’s electricity, including 77% of the electricity used in China.

According to the World Coal Institute, consumption of steam coal is projected to grow by 1.5% per year until 2030. China alone currently accounts for over 42% of global coal consumption, followed by the USA (17%), the European Union (9%), India (7%) and Japan (4%). China projects its annual demand for coal will exceed 3 billion tonnes by 2010.

Indonesian coal industry

Indonesian coal

Indonesian coal is generally low in ash and sulphur but high in volatiles and moisture. Nearly 80% of Indonesian coal production is rated as sub-bituminous and has a niche position in domestic and international markets where demand for environmentallyfriendly, low ash, sulphur and nitrogen thermal coal is on the rise.

Indonesian coal is commonly sold for blending with higher sulphur coal to meet emissions standards. The quality of Indonesian coal combined with its strategic location near the growing markets of Asia have helped secure its current competitive advantage in export markets.

Industry size, growth and trends

In recent years, Indonesia’s coal mining sector has become one of the most attractive and fastest growing industries in the country. Indonesia recently overtook Australia as the world’s largest exporter of thermal coal. Its coal exports increased more than sixfold from 31 million tonnes ( Mt ) in 1995 to 190 Mt in 2009. Indonesia plans to double its production within the next five years, prompting a significant amount of investment in new mines. Global economic development is affecting Indonesia’s coal exports, as is economic development in the main export countries for Indonesian coal—China, India, Korea, Japan and Taiwan. At an international level, globalisation and development of regional trading blocs, such as in the ASEAN and APEC regions, are creating new opportunities for the Indonesian coal-mining industry to become competitive internationally. Indonesia’s proximity to these markets allows for lower transportation costs and increased competitiveness.

China has recently emerged as the largest customer of Indonesian coal. Indonesia accounted for over 26% of China’s thermal coal imports in 2009, while China accounted for 16.5% of Indonesia’s thermal coal exports in 2009, compared to 7% in 2008.

Table 1. Indonesia has almost 70 billion tonnes of known resources and proven reserves of 5,462 Mt, with 83% of proven reserves found in Kalimantan.

Mt, with 83% of proven reserves found in Kalimantan.
Region hypothetical inferred indicated measured total total	reserves
	probable proven
(Mt) (Mt) (Mt) (Mt) (Mt) (%) Sumatra 764 12,270 12,447 3,634 29,115 41.6 Java 5 7 2 – 14 0.0 Kalimantan 3,389 21,029 2,894 13,156 40,468 57.8 Sulawesi – 147 33 53 233 0.2 Maluku – 2 – – 2 0.0 Papua 89 64 – – 153 0.1 Total 4,247 33,519 15,376 16,843 69,985 100.0	(Mt) (Mt) 3,781 905 – – 2,606 4,557 – – – – – – 6,387 5,462

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250
production 175
exports ICI-1 (6500 kcal/kg)
consumption ICI-2 (5800 kcal/kg)
ICI-3 (5000 kcal/kg)
150
200
125
150
100
75
100
50
50
25
0
0
a b
coal production, consumption and exports (Mt)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
weekly average Indonesian coal prices (US$/t)
Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10
----- End of picture text -----

Figure 1. While coal prices are down from their recent peaks, Indonesian coal production volumes have been trending higher in recent years.

(a) Annual volume of Indonesian coal production, consumption and exports from 1995 to 2009.

(b) Weekly average Indonesian Coal Index from October 2007 to May 2010.

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China 16.5%
Others 27.3% Others 27.9%
India 15.9% Metallurgy
0.6% Coal-Fired
Pulp Industry Power Plant
3.6% 57.2%
Taiwan 10.6%
Cement
Korea 14.9% Industry 10.7%
Japan 14.7%
a b
----- End of picture text -----

Figure 2. Much of Indonesia’s coal is exported to Asia or used domestically for electricity generation.

(a) Volume of Indonesian coal exports by country (for 2009).

(b) Volume of domestic Indonesian coal consumption by industry (for 2006).

Domestic demand for coal in Indonesia has also been growing strongly in recent years as Indonesia attempts to make up for several years of underinvestment in electricity generation capacity. Domestic demand increased from 9.2 Mt in 1995 to over 61 Mt in 2009. Domestic customers, however, still consume less than 25% of the country’s annual coal production. As of June 2008, Indonesia’s state-owned electricity company PT Perusahaan Listrik Negara ( PLN ) has signed agreements for the development of 29 coal-fired power projects with a total capacity of 8,718 MW of a targeted 9,816 MW. Of the signed project agreements, nine power projects totalling 6,672 MW are in the construction stage. PLN has also signed power purchase agreements with several electricity developers proposing to build a total of 866 MW of additional coal-fired power plants.

The major coal basins of Kalimantan have a network of large rivers that makes access to the ocean relatively easy for many regions. Much of the area has been logged, so there are timber haul roads to major rivers throughout the area. The area has also been used for oil and gas production, so a number of ports and loading faculties have already been established. Most of Indonesia’s coal-producing companies are located on the islands of Kalimantan and Sumatra, while the majority of domestic consumers are located on the island of Java. Most of Indonesia’s coal is produced using low-cost, open-pit mining methods.

(e)

Indonesian mining laws

Indonesian Law No. 4/2009 re Mineral and Coal Mining ( New Mining Law ) became effective on 12 January 2009 and repealed the Previous Mining Law. The New Mining Law provides that the existing system of Contracts of Works ( COWs ), Coal Contracts of Works ( CCOWs ) and Kuasa Pertambanhan ( KPs ) will be collapsed into a single form of mining right, known as a Mining Business Permit (Ijin Usaha Pertambangan or IUP ). All KPs must have been converted into IUPs by 12 January 2010. Under the Previous Mining Law, it was not possible for a foreign investment company (Penanaman Modal Asing or PMA ) to obtain a direct interest in mining projects. Under the New Mining Law, IUPs may be held by either PMAs or general Indonesian companies (Perseroan Terbatas Biasa).

The New Mining Law provides opportunities for investment into mining projects in

Indonesia by foreign companies such as the Company. The New Mining Law provides a simplified legal framework and potentially higher governance standards. It also allows for direct ownership of project companies rather than indirect control via the cumbersome system that existed under the Previous Mining Law.

(f) Indonesian coal prices

According to the Argus/Coalindo Indonesian Coal Index (ICI) Report of 14 May 2010, the weekly average ICI prices were as given in Table 2.

Table 2. Indonesian coal prices (Argus/Coalindo Indonesian Coal Index (ICI) Report, 14 May 2010).

2010).
								Calorific
Grade				Timing	Sulphur	Ash	Moisture	value	Price
					(%)	(%)	(%)	(kcal/kg ar) (US$/t FOB)
Indonesian	6,500	GAR (6,200	NAR)	in 90 days	up to 1.0	up to 12	up to 12	6,500	96.42
Indonesian	5,800	GAR (5,500	NAR)	in 90 days	up to 0.8	up to 10	up to 18	5,800	79.81
Indonesian	5,000	GAR (4,700	NAR)	in 90 days	up to 0.6	up to 8	up to 30	5,000	62.57
Indonesian	4,200	GAR (3,900	NAR)	in 90 days	up to 0.4	up to 6	up to 40	4,200	41.23

(g) Strategy

(i) Development of current projects

If implemented, the proposed acquisition will provide the Company with binding interests in one relatively small project (Atan Bara) and one substantially larger project (Katingan). The Company plans to use the funding from the proposed capital raising together with existing cash reserves to further develop the projects, as well as to add several new projects which are currently under due diligence assessment. The Company intends to endeavour to bring the smaller projects into production first to generate early revenues, which can be used in part to further develop the larger project. This would enable the Company to build itself into a substantial player in the coal industry with a long-term presence in the region.

The recent surge in demand for coal has resulted in opportunities for funding the development of coal operations using pre-sales of coal through a number of financial institutions and coal buyers. This pre-sales strategy will assist the Company to build its operations from a smaller capital base. The strategy requires that sufficient drilling and other pre-production work be completed to ‘de-risk’ the operation. Unmined coal can then be sold at a discount to the current market price, essentially providing a loan that is then repaid with coal.

Coal in Indonesia is almost entirely extracted using low cost, open pit mining methods. The Company will work with experienced mining contractors to assist in the development of its operations. The Company will focus on sustainable growth in production and handling capacity while maximising the long-term potential of its coal assets.

(ii) New projects

Over the short to medium term, the Company will explore further opportunities for accessing coal concessions across Indonesia, with a particular focus on deposits in Kalimantan with good logistics and moderate production costs. [The Company] will continue detailed due diligence on projects with potential for acquisition.

Over the longer term, the Company intends to seek to build a presence in the region, through which it will explore and develop opportunities in higher value coal concessions.

(iii) Marketing

Indonesian coal is highly regarded for its low sulphur and ash content. This type of coal offers numerous environmental and economic benefits including reduced emissions of sulphur dioxide, nitrous oxides and fly ash, reduced need for flue gas desulphurisation, high combustion efficiency, and reduced ash deposition and waste.

In many developed countries, low-sulphur coal is blended with domestic highsulphur coals to help meet stringent environmental regulations. The Company will highlight its environmental and economic benefits to help market its coal to electricity generators and other users.

(h) Heads of Agreement—Material terms of the Acquisition

As announced to ASX on 6 September 2010, the Company signed a Heads of Agreement with Blackrock Resources Pty Limited in relation to the acquisition of 100% of the issued capital of Blackrock.

The material terms of the Acquisition, as outlined in the Heads of Agreement, are as follows:

(i) Conditions precedent: The Acquisition is conditional on satisfaction or waiver of the following conditions precedent:
the advance of a $750,000 facility ( Facility ) to Blackrock in consideration for the issue of a convertible note under the terms of a Convertible Note Deed dated 6 September 2010 ( Convertible Note Deed );
the Company conducting due diligence investigations into Blackrock and being satisfied, in its sole and absolute discretion, with the results of those investigations;
Blackrock conducting due diligence investigations into the Company and being satisfied, in its sole and absolute discretion, with the results of those investigations;
the Company having complied with the requirements of Chapters 1 and 2 under the ASX Listing Rules;
the Company obtaining shareholder approval to the Acquisition;
the parties generally obtaining all other regulatory and statutory approvals and consents that may be required whether under the Corporations Act or the ASX Listing Rules to give effect to the Acquisition; and
The Company and Blackrock shareholders entering into a share sale agreement and other required documentation on binding terms and conditions mutually agreed between them to record the terms of the transaction.
(ii) Consideration: The initial consideration for the Acquisition is $5,000,000 (exclusive of GST) payable by issue of the Initial Consideration Shares, being 25,000,000 Shares (on a post-Consolidation basis) at an effective issue price of $0.20 per Share to the Blackrock Vendors.
(iii) Performance Shares: The Blackrock Vendors will receive an additional 37,500,000 Shares (on a post-Consolidation basis), in three separate tranches of 12,500,000 Shares upon the Company achieving the following milestones:
Tranche 1: On achieving production of 20 kT per month for three consecutive months at the first coal mine in Indonesia with an indicated JORC mineral resource of >750 kT or sufficient resource to secure off-take pre-payment.
Tranche 2: On achieving production of 20 kT per month for three consecutive months at a second coal mine in Indonesia with an indicated JORC mineral resource of >1 MT or sufficient resource to secure off-take prepayment.
Tranche 3: On achieving an indicated JORC mineral resource of 40 MT at its Indonesian coal projects.
(iv) Consolidation of capital: Consolidation of the existing issued capital of the Company on a one-for-four basis (rounded up to the nearest whole number).
(v) Prospectus issue : The Company will undertake the Capital Raising by offering under a Prospectus up to 10,000,000 Shares (on a post-Consolidation basis) at a price of $0.20 each to raise up to $2,000,000.
(vi) Change of name : The Company will change its name from “Jatoil Limited” to “Jatenergy Limited”.
(vii) Appointment of director: On Completion, the Blackrock Vendors are entitled to nominate a potential candidate for appointment as a director of the Company.
(viii) Other: The Agreement otherwise contains terms and conditions typical for an agreement of this nature.

Completion of the Acquisition is conditional on each of the Resolutions being passed at the Extraordinary General Meeting.

Convertible Note Deed

As indicated above, one of the conditions precedent to the Acquisition is the advance of a Facility to Blackrock under the terms of a Convertible Note Deed. The Convertible Note Deed was executed on 6 September 2010.

Under the Facility, the Company will invest up to $750,000 into Blackrock prior to completion of the Acquisition. This investment will be in the form of a convertible note attracting a coupon rate of 10% per annum, and will be structured in two tranches:

(i) $375,000, which is payable immediately; and
(ii) $375,000, which is payable on completion of due diligence to the Company’s satisfaction.

The Company had advanced $750,000 to Blackrock as at 21 December 2010.

If the Acquisition is completed, the Convertible Note will be cancelled by the consolidation of accounts of the Company and Blackrock. If the Acquisition is not completed, then the Convertible Note will be repayable by Blackrock within 180 days of notification being given that the Acquisition will not proceed.

Copies of the Agreement and Convertible Note Deed between the Company and Blackrock will be available for inspection at the general meeting.

(j) Regulatory requirements – Change in nature of activities

ASX Listing Rule 11.1 provides that, where an entity proposes to make a significant change, either directly or indirectly, to the nature and scale of its activities, it must provide full details to ASX as soon as practicable and must comply with the following:

(i) provide to ASX information regarding the change and its effect on future potential earnings, and any information ASX asks for;
(ii) if ASX requires, obtain the approval of the company’s shareholders and any requirements ASX has in relation to the notice of meeting; and
(iii) if ASX requires, meet the requirements of Chapters 1 and 2 of the ASX Listing Rules as if the company were applying to the official list of ASX.

As indicated above, ASX has informed the Company that the Acquisition requires the Company to:

(i) obtain Shareholder approval for the change in nature and scale of its activities; and
(ii) in accordance with ASX Listing Rule 11.1.3, re-comply with the admission requirements set out in Chapters 1 and 2 of the ASX Listing Rules as if the Company were applying to the official list of ASX.

If Resolution 1 is approved by Shareholders, the securities of JAT will be suspended until the Company satisfies the requirements of Chapter 1 and 2 of the ASX Listing Rules

(k) Pro-forma statement of financial position

An unaudited pro-forma balance sheet of the Company to illustrate the financial

impact of the Company acquiring the Blackrock Shares and undertaking the Capital Raising and the Consolidation (see details of Resolution 4 below) is set out in Schedule A to this Explanatory Statement. The unaudited pro-forma balance sheet has been prepared based on:

(i) the unaudited balance sheet of Blackrock Group as at 30 September 2010; and
(ii) the unaudited balance sheet of the Company as at 30 September 2010;

assuming, among other things, that Completion has occurred, the Capital Raising has been successful and the Acquisition costs and costs of the Capital Raising contemplated by the Prospectus have been paid and expensed. The assumptions are detailed in Schedule A.

The pro-forma consolidated statement of financial position set out in Schedule A to this Explanatory Statement should be read in conjunction with the risk factors set out in Section 1(o) and other information contained in this Explanatory Statement.

(l) Effect on capital structure

At Completion, the capital structure of the Company will be as follows:

Share capital	Number of Shares
Shares held by existing Shareholders (at the date of this Explanatory	131,444,138
Statement)
Shares held by existing Shareholders on a post-Consolidation basis	32,861,034
(subject to rounding up of fractional entitlements)
Shares issued to Sheng Run (on a post Consolidation basis)	8,250,000
Maximum number of Shares issued under the Prospectus (on a post-	10,000,000
Consolidation basis)
Initial Consideration Shares issued to Blackrock Vendors (on a post-	25,000,000
Consolidation basis)
Total number of Shares on issue on Completion	76,111,034

This table assumes that the Consolidation has been implemented and that a maximum of 10,000,000 Shares (on a post-Consolidation basis) are issued under the Prospectus at an issue price of $0.20 each to raise a maximum of $2,000,000. That is, the Minimum Subscription is satisfied under the Prospectus.

The table set out in Section 4(c) of this Explanatory Statement shows the changes to the options on issue following the Consolidation.

Please also refer to the tables set out in Section 4(g) of this Explanatory Statement that show the effect of the Capital Raising and Acquisition on the capital structure, with the first table showing the effect without the subsequent Performance Shares being issued to the Blackrock Vendors, and the second table showing the effect assuming the Performance Shares are all issued to the Blackrock Vendors.

(m) Advantages of Acquisition

The Directors are of the view that the following non-exhaustive list of advantages may be relevant to a Shareholder’s decision on how to vote on the proposed Resolutions:

(i) by approving the change of nature, the Company can diversify its operations beyond an exclusive focus on renewable energy to other forms of energy including conventional energy;
(ii) the Company anticipates considerable growth in demand for conventional and renewable energy over the short, medium and longer term, and the Acquisition positions the Company to better capture the opportunities this anticipated growth will bring;
(iii) the Acquisition focuses the Company’s operations on Indonesia, a country where the Company has developed significant knowledge, stakeholder relationships and partnerships, and which is experiencing sustained high growth and rapidly improving governance;
(iv) the Acquisition will enhance the Company’s ability to commercialise it assets;
(v) the mining exploration activities represent a significant opportunity for the Company;
(vi) the Board of directors will be enhanced with an experienced coal industry leader, providing an experienced and balanced set of skills to guide the growth of the Company; and

The Company believes the advantages outlined above will enhance the potential for additional valuation creation for all shareholders.

(n)

Disadvantages of Acquisition

The Directors are of the view that the following non-exhaustive list of disadvantages may be relevant to a Shareholder’s decision on how to vote on the proposed Resolutions:

(i) the Company will begin mining exploration activities, which may not be consistent with the objectives of Shareholders;
(ii) the Acquisition will result in the issue of Shares to Blackrock Vendors, which will have a dilutionary effect on the current holdings of Shareholders; and
(iii) there are many risk factors associated with the proposed projects and operations of Blackrock. Some of these risks are set out below.
(o)

Risk factors

If all the Resolutions in the Notice of Meeting are approved, the Acquisition will proceed and be implemented. The Acquisition will provide an opportunity for the Company to diversify its operations to include coal mining exploration activities in Indonesia.

An investment in the Company, before or after completion of the Acquisition, is not risk free. Shareholders should consider the various risk factors, some of which are described below, before deciding whether to vote in favour of the Resolutions.

The following summary is not intended to be an exhaustive list of the risk factors, but identifies some of the material risk factors of which Shareholders should be aware.

Operating risks

The current and future operations of the Company, including exploration, appraisal and possible production activities, may be affected by a range of factors, including:

(i) adverse geological conditions;
(ii) limitations on activities due to seasonal weather patterns and cyclone activity;
(iii) unanticipated operational and technical difficulties encountered in seismic survey, drilling and production activities;
(iv) mechanical failure of operating plant and equipment;
(v) industrial and environmental accidents, industrial disputes and other force majeure events;
(vi) unavailability of aircraft or drilling equipment to undertake airborne electromagnetic and other geological and geophysical investigations;
(vii) unexpected shortages or increases in the costs of labour, consumables, spare parts, plant and equipment; and
(viii) inability to obtain necessary consents or approvals.

Indonesia, from time to time, experiences economic, social and political volatility. As a result, the Company’s operations may be impacted by currency fluctuations, political reforms, changes in Indonesian government policies and procedures, civil unrest, social and religious conflict and deteriorating economic conditions. The likelihood of any of these changes, and their possible effects, if any, cannot be determined by the Company with any certainty at the present time, but they may include disruption, increased costs and, in some cases, total inability to establish or to continue to operate mining exploration or development activities.

Contractual risks

As at the date of this Notice of Meeting and Explanatory Statement, Blackrock (through its Indonesian subsidiary PT Barata Resources) has binding agreements over the Katingan project, and agreements in-principle in relation to Atan Bara. While the agreements in-principle contemplate that the parties will enter into binding agreements in the future, there is a risk that, after completion of the acquisition of Blackrock, the Company will not be able to secure such agreements over the projects. Failure to secure such projects may have an adverse affect on the future operations of the Company.

Economic risks

General economic conditions, and movements in interest, inflation and currency exchange rates may have an adverse effect on the Company’s exploration, development and future production activities, as well as on its ability to fund those activities.

Market conditions

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities and in particular, resources stocks. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

Also, there is no guarantee that ASX will exercise its discretion to remove the suspension on trading in the Company’s securities and admit the Shares to requotation.

Security investments

There are risks associated with any securities investment. Securities listed on the stock market, and in particular securities of mining and exploration companies, have experienced extreme price and volume fluctuations that have often been unrelated to the operating performances of such companies. These factors may materially affect the market price of the securities regardless of the Company’s performance.

Exploration in itself is a speculative endeavour, while mining operations can be hampered by force majeure circumstances and cost overruns for unforeseen events.

Exploration and production risks

The business of coal exploration, project development and production involves inherent risks. Success depends on the successful exploration appraisal, design and construction of efficient recovery and processing facilities, competent operational and managerial performance, and efficient distribution and marketing services. Exploration is a speculative endeavour and production operations can be hampered by engineering difficulties, cost overruns, inconsistent recovery rates and other unforeseen events.

The outcome of Company’s exploration, project development and production programs will affect the future performance of the Company and the price of its Shares.

If and when the Company commences production, the production may be curtailed or shut down for considerable periods of time owing to a range of factors such as disruptions to transport infrastructure, lack of market demand, government regulation, production allocations or force majeure events. These curtailments may continue for a considerable period of time resulting in a materially adverse effect on the operations and/or financial condition of the Company.

The exploration for and production of coal involves certain operating hazards, such as:

failure and/or breakdown of equipment;
adverse geological, seismic and geotechnical conditions;
industrial accidents;
labour disputes;
pollution; and
other environmental hazards and risks.

Any of these hazards could cause the Company to suffer substantial losses if they occur. The Company may also be liable for environmental damage caused by previous owners of the property to be developed. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce or eliminate funds available for acquisitions, exploration and development or cause the Company to suffer losses.

Environmental risks

The proposed exploration and mining activities of the Company in Indonesia are subject to Indonesian laws and regulation concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all applicable environmental laws.

The Company may also become liable for environmental damage caused by previous owners of any tenements the Company acquires. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce or eliminate funds available for acquisitions, exploration and development or cause the Company to suffer losses.

Greenhouse gas emissions

The coal industry is likely to be affected by government policies and international agreements that aim to reduce emissions of greenhouse gases such as carbon dioxide. These may result in the imposition of taxes or other increased costs that may adversely affect the Company in terms of the volumes of its production output and the prices it receives for the coal it produces.

Regulatory risks

Actions or policy changes by governments (particularly in Australia, Indonesia and Singapore) in relation to access to lands and infrastructure, compliance with environmental regulations, taxation, royalties and subsidies may adversely affect the Company’s operations and financial performance.

The Company’s operations will be governed by a series of Indonesian laws, regulations and decrees. These laws, regulations and decrees may be amended from time to time, which may have a material adverse impact on the financial position, financial performance, cashflows, growth prospects and share price for the Company. Breaches or non-compliance with these laws, regulations or decrees can result in penalties and other liabilities, which may also have a material adverse impact on the financial position, financial performance, cashflows, growth prospects and share price of the Company.

While the Company is reasonably familiar with the Indonesian regulatory regime and will undertake all reasonable due diligence in assessing and managing the risks associated with investing and operating in Indonesia (and other countries in which it may invest), the legal and political conditions of the country and any changes thereto are outside the control of the Company.

Coal marketing and coal prices

In the event that the Company is successful in developing its mining operations, the marketability of its coal production will depend on the quality and tonnage demand from international and domestic markets. If the Company fails to secure contracts to sell its coal or the Company does not satisfy conditions in any off-take agreements, this may adversely affect the financial conditions and performance of the Company. The prices the Company receives for its coal are subject to market forces that are beyond the control of the Company. While the Company monitors the stability and trends of market prices closely and, where possible, has and will negotiate agreements to reflect the movements in market prices and maintain underlying profit margins, should the market prices for coal fall to uneconomical levels, the financial performance of the Company will be materially adversely affected.

Customers may default on their contractual obligations with the Company. Potential

contractual defaults may include non-payment for coal or failure to take delivery of contracted volumes. Should such a default occur, the Company may experience difficulties accessing other customers.

To manage the exposure of the Company to price risks, the Company may enter into coal price and or foreign currency hedging arrangements with respect to its production. While intended to reduce the effects of volatile coal prices, these arrangements may limit potential gains if coal prices were to rise substantially over the price established by the hedge. In addition, such transactions may expose the Company to the risk of financial loss.

Future capital requirements

The Company’s ongoing activities will require substantial expenditures. There can be no guarantee that the funds raised through the Offer will be sufficient to successfully achieve all the objectives of the Company’s overall business strategy. If the Company is unable to continue to use debt or equity to fund expansion after the substantial exhaustion of the net proceeds of the Offer there can be no assurances that the Company will have sufficient capital resources for that purpose, or other purposes, or that it will be able to obtain additional fundraising on terms acceptable to the Company or at all. Any additional equity financing may be dilutive to shareholders and any debt financing if available may involve restrictive covenants, which may limit the Company’s operations and business strategy.

The Company’s failure to raise capital if and when needed could delay or suspend the Company’s business strategy and could have a material adverse effect on the Company’s activities.

Resource estimates and targets

Resource estimates and targets, including the exploration targets contained in this Explanatory Statement, are expressions of judgment based on knowledge, experience and industry practice. Often these estimates were appropriate when made but may change significantly when new information becomes available. There are risks associated with such estimates, including that coal mined may be of a different quality, tonnage or strip ratio from the estimates. Resource estimates are necessarily imprecise and depend to some extent on interpretations, which may ultimately prove to be inaccurate and require adjustment. Adjustments to the Company resources could affect the Company’s development and mining plans.

Reliance on key personnel and employees

The Company’s prospects depend in part on the ability of its executive officers, senior management and key consultants to operate effectively, both independently and as a group. To manage its growth, the Company must attract and retain additional highly qualified management, technical, sales and marketing personnel and continue to implement and improve operational, financial and management information systems. Investors must be willing to rely to a significant extent on management’s discretion and judgement, as well as the expertise and competence of outside contractors.

Insurance

The Company may, where economically practicable and available, endeavour to mitigate some project and business risks by procuring relevant insurance cover. However, any such insurance cover may not always be available or economically justifiable and the policy provisions and exclusions may render a particular claim by the Company outside the scope of the insurance cover.

While the Company will undertake all reasonable due diligence in assessing the creditworthiness of its insurance providers, there will remain the risk that an insurer defaults in payment of a legitimate claim by the Company under an insurance policy.

(p) Recommendation

Each of the Directors recommends that Shareholders approve all of the Resolutions and intends to vote his Shares in favour of all of the Resolutions, subject to any voting exclusions for particular Resolutions.

Based on the information available, including that contained in this Explanatory

Statement and the risks outlined in Section 1(n) of this Explanatory Statement, all of the Directors consider that the proposed Acquisition is in the best interests of the Company and recommend that Shareholders vote in favour of the Resolutions. The Directors have approved the proposal to put the Resolutions to Shareholders and approved the information contained in this Explanatory Statement.

The Directors recommend and believe that it is in the best interests of the Company and Shareholders that Shareholders approve the Resolutions set out in the Notice of Meeting as this will enable the Company to expand and diversify its activities to include exploration and mining of semibituminous and thermal coal.

Shareholders should note that each of the Resolutions set out in the Notice of Meeting are interdependent and conditional on all the other Resolutions being passed. If any one Resolution put to Shareholders is not passed, the Acquisition will not proceed.

Having reviewed other investment proposals, the Directors are of the opinion that the Acquisition meets the Board’s criteria and represents a significant opportunity for Shareholders.

2. RESOLUTION 2: ISSUE OF INITIAL CONSIDERATION SHARES TO BLACKROCK VENDORS

(a) General comments

As outlined in Section 1 above, as part of the Acquisition, the Company proposes that it will allot and issue the Initial Consideration Shares to the Blackrock Vendors, subject to Shareholder approval.

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue during any 12 month period any equity securities, or other securities with rights to conversion to equity, if the number of those securities exceeds 15% of the number of securities in the same class on issue at the commencement of that 12 month period.

The effect of Resolution 2 will be to enable the Directors to issue the Initial Consideration Shares to the Blackrock Vendors within the period of three months after the date of the Extraordinary General Meeting or such longer period as permitted by ASX, without those Shares counting towards the 15% of the issued capital of the Company that can be issued in any 12 month period without Shareholder approval.

(b) Technical information required by ASX Listing Rule 7.3

ASX Listing Rule 7.3 requires that the following information be provided to Shareholders for the purpose of obtaining Shareholder approval pursuant to ASX Listing Rule 7.1:

(i) Maximum number of securities :

The maximum number of Initial Consideration Shares to be issued is 25,000,000 Shares (on a post-Consolidation basis).

(ii) Date of allotment and issue of the securities :

The Initial Consideration Shares will be issued no later than three months after the date of the Extraordinary General Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) but in any case, only after the conditions precedent in the Agreement have been satisfied or waived.

It is intended that allotment will occur on the same date, being the date of completion under the Agreement.

(iii) Issue price of the securities :

The Company will attribute an issue price of $0.20 for each Share (on a postConsolidation basis), comprising the Initial Consideration Shares to be issued to the Blackrock Vendors.

The Initial Consideration Shares will be issued for nil cash consideration, but rather as consideration for the Acquisition of 100% of the issued share capital of

Blackrock. Accordingly, no funds will be raised from the issue of the Initial Consideration Shares.

(iv) Names of allottees :

The Initial Consideration Shares will be issued to the Blackrock Vendors in consideration for the acquisition of their Blackrock Shares. None of the Blackrock Vendors is a related party of the Company. The allocation of the Initial Consideration Shares to the Blackrock Vendors is set out in Schedule B to this Explanatory Statement.

(v) Terms of the securities :

The Consideration Shares will be fully paid ordinary shares in the capital of the Company and will rank equally with the existing ordinary shares of the Company.

(vi) Intended use of funds :

No funds will be raised from the issue of the Initial Consideration Shares. The Shares will be issued as consideration to the Blackrock Vendors for the acquisition by the Company of all the issued shares in the capital of Blackrock.

A voting exclusion statement is included in the Notice of Meeting.

3. RESOLUTION 3: POTENTIAL ISSUE OF PERFORMANCE SHARES TO BLACKROCK VENDORS

(a) General comments

Resolution 3 seeks Shareholder approval to enable the Company to issue the Performance Shares to the Blackrock Vendors on the satisfaction of various Milestones on the terms and conditions set out in the Agreement, as outlined in Section 1 of this Explanatory Statement.

The effect of Resolution 3 will be to enable the Directors to issue the Performance Shares if the Milestones are achieved within the period of three months after the date of the Extraordinary General Meeting or such longer period as permitted by ASX, without those Shares counting towards the 15% of the issued capital of the Company that can be issued in any 12 month period without shareholder approval.

The Company does not expect that the Performance Shares, if the Milestones are achieved and the Blackrock Vendors become entitled to them, will be issued within the three month period permitted under ASX Listing Rule 7.3.2. The Company intends to seek a waiver from ASX of the three month period for the issue of the Performance Shares prior to the date of the Shareholder meeting.

Typically ASX would look to grant the waiver sought for a maximum period of three years together with any other conditions that ASX deem appropriate. If ASX does not grant the requested waiver and the Blackrock Vendors become entitled to any Performance Shares, the issue of these Performance Shares, will be subject to shareholder approval at that point in time.

Technical information required by ASX Listing Rule 7.3

ASX Listing Rule 7.3 requires that the following information be provided to Shareholders for the purpose of obtaining Shareholder approval pursuant to ASX Listing Rule 7.1:

(i) Maximum number of securities :

The maximum number of Performance Shares to be issued is 37,500,000 Shares.

(ii) Date of allotment and issue of the securities :

The Performance Shares will be allotted and issued if the relevant Milestones are achieved and not later than 24 months after completion of the Acquisition. The Milestones are outlined in Section 1(h)(iii) of this Explanatory Statement.

The Performance Shares must be issued no later than three months after the date of the Extraordinary General Meeting or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules. The Company does not expect that the Performance Shares, if the Milestones are achieved and the Blackrock Vendors become entitled to them, will be issued within the three month period permitted under ASX Listing Rule 7.3.2. The Company has sought a waiver from ASX of the three month period for the issue of the Performance Shares.

If the Blackrock Vendors become entitled to any Performance Shares and no ASX waiver has been granted to the three month period, the Company intends to issue the Performance Shares progressively within the Company’s 15% placement capacity or seek further Shareholder approval to issue the Performance Shares.

It is intended that the Performance Shares will be allotted progressively on achievement of each relevant Milestone and in accordance with the Agreement.

(iii) Issue price of the securities :

The Company will attribute an issue price of $0.20 for each Share (on a postConsolidation basis) comprising the Performance Shares that may be issued to the Blackrock Vendors.

The Performance Shares will be issued for nil cash consideration, but rather as performance-related consideration for the Acquisition of 100% of the issued share capital of Blackrock. Accordingly no funds will be raised from the issue of the Consideration Shares.

(iv) Names of allottees :

The Performance Shares will be issued to the Blackrock Vendors if the relevant Milestones are achieved.

None of the Blackrock Vendors is a related party of the Company. If the Blackrock Vendors become entitled to any Performance Shares, those Performance Shares will be allocated to the Blackrock Vendors in the proportion of their respective shareholdings in Blackrock prior to completion of the Acquisition, in the same manner as the Initial Consideration Shares.

(v) Terms of the securities :

The Performance Shares will be fully paid ordinary shares in the capital of the Company and will rank equally with the existing ordinary shares of the Company.

(vi) Intended use of funds :

No funds will be raised from any issue of the Performance Shares. The Shares will be issued to the Blackrock Vendors if the relevant Milestones are achieved.

A voting exclusion statement is included in the Notice of Meeting.

4. RESOLUTION 4: CONSOLIDATION OF CAPITAL

(a) General comments

Resolution 4 seeks Shareholder approval to consolidate the number of Shares and Options existing at 4 February 2011 on a one-for-four basis (rounded up to the nearest whole number), with the proposed consolidation to become effective on the date of, and immediately prior to, Completion of the Acquisition ( Consolidation ).

Resolution 4 is subject to Resolutions 1, 2, 3, 5 and 6 being passed. Accordingly, the Company will not proceed with the Consolidation unless Resolutions 1, 2, 3, 5 and 6 as set out in the Notice of Meeting are passed.

(b) Background and explanation

If Shareholders approve the Acquisition proposed by passing Resolutions 1, 2, 3, 5 and 6, the Company will need to requalify for and seek admission to the official list of ASX. One of the conditions to re-qualify is that the Company must have a share price equal to, or greater than, $0.20.

The proposed Consolidation is intended to position the Company so that the price of its Shares will satisfy this condition to the Company’s re-admission to the official list of ASX.

(c)

Legal requirements

Section 245H of the Corporations Act provides that a company may, by resolution passed in general meeting, convert all or any of its shares into a larger or smaller number.

In the case of a consolidation of share capital of the Company, the ASX Listing Rules also require that the number of Options on issue be consolidated in the same ratio as the ordinary capital and the exercise price be amended in inverse proportion to that ratio.

Accordingly, the Options on issue will be consolidated, and the exercise price of the Options amended, as follows (subject to adjustment for fractional calculations):

		Existing	Number of Options	Exercise price of
Existing Options and	Existing number of	exercise	on issue after	Options after
expiry date	Options on issue	price	consolidation	consolidation
		($)		($)
Director Options (expiry	2,500,000	0.20	625,000	0.80
30/11/11)
Employee Incentive Plan	1,000,000	0.20	250,000	0.80
Options (expiry 31/12/10)
Employee Incentive Plan	500,000	0.069	125,000	0.276
Options (expiry 1/07/12)
Employee Incentive Plan	5,000,000	0.10–0.20	1,250,000	0.40–0.80
Options (expiry 31/12/13)

(d) Fractional entitlements

The consolidation ratio is 4:1. Fractional entitlements may arise where Shareholders or Optionholders hold a number of Shares or Options which cannot be evenly divided by four. Where a fractional entitlement occurs, the Directors will round that fraction up to the nearest whole Share or Option (as applicable).

(e) Taxation

The Company considers that no taxation implications will arise for Shareholders or Optionholders from the Consolidation. However, Shareholders and Optionholders are advised to seek their own tax advice on the effect of the Consolidation and neither the Company, nor the Directors (nor the Company’s advisors) accept any responsibility for the individual taxation implications arising from the Consolidation.

(f) Holding statements and Option certificates

From the date of the Consolidation:

(i) all holding statements for the Shares will cease to have any effect, except as evidence of entitlement to a certain number of Shares on a post-Consolidation basis; and
(ii) all certificates for unlisted Options (if any) will cease to have any effect, except as evidence of entitlement to a number of Options on a post-Consolidation basis.

After the Consolidation becomes effective, the Company will arrange for new holding statements for Shares to be issued to holders of those securities and, to the extent required, new certificates for unlisted Options to be issued to Optionholders.

(g) Effect on Capital Structure

If Resolutions 1, 2, 3, 4, 5, 6 and 8 in the Notice of Meeting are passed and the Initial

Consideration Shares are issued in accordance with Resolution 2, the Maximum Capital Raising is successfully undertaken, the issue of Shares to Sheng Run is completed and the Consolidation is implemented but no Performance Shares are issued, the capital of the Company will change as set out below.

Capital Structure	Shares	Director	Employee	Employee	Employee
		Options	Incentive Plan	Incentive Plan	Incentive Plan
		Expiry	Options	Options	Options
		30/11/11	Expiry 31/12/10	Expiry 1/07/12	Expiry 31/12/13
Current capital structure	131,444,138	2,500,000	1,000,000	500,000	5,000,000
(at the date of the		(exercise	(exercise price	(exercise price	(exercise prices
Notice of Meeting)		price $0.20)	$0.20)	$0.069)	$0.10–0.20)
Consolidation of Shares	32,861,035	625,000	250,000	125,000	1,250,000
and Options on a 1:4
basis (subject to
rounding up fractional
entitlements)
Shares issued to Sheng
Run (post-	8,250,000
Consolidation)
Initial Consideration	25,000,000	Nil	Nil	Nil	Nil
Shares issued to
Blackrock Vendors
(post-Consolidation)
Maximum number of	10,000,000	Nil	Nil	Nil	Nil
Shares issued pursuant
to the Capital Raising
(post-Consolidation)
Capital structure post-	76,111,034	625,000	250,000	125,000	1,250,000
Consolidation and		(exercise	(exercise price	(exercise price	(exercise prices
Acquisition		price $0.80)	$0.80)	$0.276)	$0.40–0.80)

For existing Shareholders, the 131,444,138 Shares held by them will be consolidated into approximately 32,861,035 Shares.

If Resolutions 1, 2, 3, 4, 5, 6 and 8 in the Notice of Meeting are passed and the Consideration Shares are all issued in accordance with Resolutions 2 and 3 (i.e. including all the Performance Shares and assuming all Milestones achieved), the maximum Capital Raising is successfully undertaken, the issue of Shares to Sheng Run is completed and the Consolidation is implemented, the capital of the Company will change as set out below.

Capital Structure	Shares	Director	Employee	Employee	Employee
		Options	Incentive Plan	Incentive Plan	Incentive Plan
		Expiry	Options	Options	Options
		30/11/11	Expiry 31/12/10	Expiry 31/12/12	Expiry 31/12/13
Current capital structure	131,444,138	2,500,000	1,000,000	500,000	5,000,000
(at the date of the Notice of Meeting)		(exercise price $0.20)	(exercise price $0.20)	(exercise price $0.069)	(exercise prices $0.10–0.20)
Consolidation of Shares	32,861,035	625,000	250,000	125,000	1,250,000
and Options on a 1:4
basis (subject to
rounding up fractional
entitlements)
Shares issued to Sheng Run (post-	8,250,000
Consolidation)
Initial Consideration	25,000,000	Nil	Nil	Nil	Nil
Shares issued to
Blackrock Vendors
(post-Consolidation)
Maximum number of	10,000,000	Nil	Nil	Nil	Nil
Shares issued pursuant
to the Capital Raising
(post-Consolidation)
All Performance Shares	37,500,000	Nil	Nil	Nil	Nil

Capital Structure	Shares	Director	Employee	Employee	Employee
		Options	Incentive Plan	Incentive Plan	Incentive Plan
		Expiry	Options	Options	Options
		30/11/11	Expiry 31/12/10	Expiry 31/12/12	Expiry 31/12/13
issued to Blackrock
Vendors
(post-Consolidation)
Capital structure post-	113,611,035	625,000	250,000	125,000	1,250,000
Consolidation and		(exercise	(exercise price	(exercise price	(exercise prices
Acquisition		price $0.80)	$0.80)	$0.276)	$0.40–0.80)

(h) Expected timetable for consolidation

Event	Expected Date
Company advises ASX that the Shareholders have approved Resolution 4	10th February 2011
Last day for trading in ‘pre-consolidated securities’	9th February 2011
Last day for Company to register transfers on a ‘pre-consolidated’ basis	18 February 2011
First date for Company to register securities on a post-consolidation basis and first
date for issuing holding statements	21 February 2011
Dispatch of holding statements to Shareholders	24 February2011

If Shareholders approve the change in nature and scale of the Company’s activities, the subject of Resolution 1, the securities of the Company will remain suspended until the Company satisfies the requirements of Chapters 1 & 2 of the ASX listing Rules. As a result of this suspension, the last day for trading of the Company’s securities on a pre consolidation basis will be 9 February 2011.

The Company’s securities will recommence trading on a T+3 basis when the Company has re-complied with Chapters 1 & 2 of the Listing Rules and ASX confirms that it will reinstate the Company’s securities to official quotation.

(i)

Recommendation

The Directors unanimously recommend that the Shareholders approve Resolution 4.

5. RESOLUTION 5: ISSUE OF CAPITAL

(a) General comments

Resolution 5 seeks Shareholder approval for the allotment and issue of up to 10,000,000 Shares (on a post-Consolidation basis) at an issue price of $0.20 per Share to raise up to a total of $2,000,000.

The Company intends to conduct the Capital Raising through the issue of a Prospectus as part of its re-compliance with Chapters 1 and 2 of the ASX Listing Rules and to raise capital of $2,000,000. A summary of ASX Listing Rule 7.1 is set out in Section 2 and Section 3 of this Explanatory Statement.

The effect of Resolution 5 will be to enable the Directors to issue 10,000,000 Shares within a three month period after the date of the Extraordinary General Meeting or a longer period if allowed by ASX, without those Shares counting towards the 15% of the issued capital of the Company that can be issued in any 12 month period without shareholder approval.

(b) Technical information required by ASX Listing Rule 7.3

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to the Capital Raising:

(i) Maximum number of securities

The maximum number of Shares to be issued is 10,000,000 Shares.

(ii) Date of allotment and issue of the securities

The Shares will be issued no later than three months after the date of the Extraordinary General Meeting or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules.

It is intended that allotment will occur on the same date.

(iii) Issue price of the securities

The issue price of the Shares will be $0.20 each (on a post-Consolidation basis).

(iv) Names of allottees

The 2,000,000 Shares will be allocated to applicants subscribing to the capital raising pursuant to the prospectus to be issued by the Company.

(v) Terms of the securities

The Shares issued will be fully paid ordinary shares in the capital of the Company and will rank equally with the existing ordinary shares of the Company.

(vi) Intended use of funds

The Company intends to use the amounts raised from the Capital Raising (assuming a maximum of $2 million is raised) and the funds raised from Sheng Run of $1.32 million, the subject of Resolution 8, as working capital and to fund expansion of the business of the Company as follows.

Accordingly the minimum amount to be raised from the Capital Raising and the Share issue to Sheng Run is $1.32 million and the maximum amount to be raised from the Capital Raising and the Share issue to Sheng Run is $3.32 million:

	Minimum	Maximum
	subscription	Subscription
	($)	($)
Funds available
Cash reserves
(approximate)	3,000,000	3,000,000
Proceeds from offer	1,320,000	3,320,000
Total funds available	4,320,000	6,320,000
Use of funds
Exploration and Project
Evaluation costs in relation
to the Blackrock properties
(note 1)	1,735,000	1,735,000
Acquisition and
development of other
projects	500,000	750,000
Working capital in relation
to the Company’s existing
projects	500,000	1,000,000
Expenses of Acquisition
and Capital Raising	225,000	325,000
Working Capital for
Company	1,360,000	2,510,000
Totals	4,320,000	6,320,000
Note 1—Exploration and
Project Evaluation
Katingan project	1,105,000	1,105,000
Atan Bara project	630,000	630,000

Other

Total infrastructure expenditure 1,735,000

1,735,000

The above budget is indicative only. As with any budget, intervening events and changed circumstances may alter the way funds are ultimately applied.

Further details on the use of funds will be set out in the Prospectus that will be issued in respect of the Capital Raising.

(c) Recommendation

The Directors unanimously recommend that the Shareholders approve Resolution 5.

6. RESOLUTION 6: CHANGE OF NAME

(a) General comments

Resolution 6 seeks to change the Company’s name from ‘Jatoil Limited’ to ‘Jatenergy Limited’, subject to the passing of Resolutions 1, 2, 3, 4 and 5.

If all other Resolutions are passed, the Company will be diversifying its operations beyond an exclusive focus on renewable energy to other forms of energy including conventional energy. The new name retains the existing ‘Jat’ brand developed by the Company while reflecting the broadening of the Company’s focus from biofuel oils to include other forms of energy.

Section 157 of the Corporations Act provides that the Company can change its name if it:

(i) passes a special resolution adopting the new name (i.e. at least 75% of the votes cast by Shareholders entitled to vote on Resolution 6 must be in favour of that Resolution for it to be passed); and
(ii) lodges an application in the prescribed form with ASIC.

Provided that the proposed name is available and the Shareholders approve Resolution 6, ASIC will change the Company’s name by altering the details of the Company’s registration to reflect the change. The change of name takes effect when ASIC alters the details of the Company’s registration.

The proposed change in Company name will not be effective on ASX’s systems until the second business day after the conclusion of the capital consolidation

(b) Recommendation

The Directors unanimously recommend that the Shareholders approve Resolution 6.

7. RESOLUTION 7: RATIFY PREVIOUS ISSUE OF SHARES TO SHENG RUN

(a) General comments

On 13 December 2010 the Company announced to the ASX that it had issued a total of 17,144,888 Shares at $0.04 per Share. The issued Shares raised gross funds of approximately $685,800.

Subject to certain exceptions, none of which are relevant here, the Directors are restricted by ASX Listing Rule 7.1 from issuing or agreeing to issue new securities in the Company in any 12 month period which amount to more than 15% of the company’s ordinary securities on issue without Shareholder approval ( 15% Limit ). A summary of ASX Listing Rule 7.1 is set out in Section 2 and Section 3 of this Explanatory Statement.

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior shareholder approval, provided the issue did not breach the 15% Limit. The effect of such ratification is to restore a company’s maximum discretionary power to issue further securities up to 15% of the issued capital of the company without requiring shareholder approval.

Pursuant to section 708 of the Corporations Act, the offer of the Shares did not require the issue of a prospectus as they were made under a placement to a [sophisticated investor under section 708(8) of the Corporations Act].

The Company wishes to ratify the issues pursuant to ASX Listing Rule 7.4, in order to allow the Company to have the right to place up to a further 15% of its issued capital at any time during the next 12 months.

The number of Shares issued represents approximately 13.04% of the Company’s share capital on issue in the 12 months up to and immediately prior to the issue of those Shares. This issue did not breach the 15% Limit.

(b)

Technical information required by ASX Listing Rule 7.5

ASX Listing Rule 7.5 requires that the following information be provided to Shareholders for the purpose of obtaining Shareholder approval pursuant to ASX Listing Rule 7.4:

(i) Number of securities :

A total of 17,144,888 Shares were allotted.

(ii) Issue price of the securities :

The Shares were issued for $0.04 per Share.

(iii) Terms of the securities :

The Shares are fully paid ordinary shares that rank equally in all respects with existing Shares.

(iv) Names of allottees :

The Shares were allotted to Sheng Run.

(v) Intended use of funds :

The funds raised by the issue of the Shares will be used for working capital and to fund continued business development purposes.

A voting exclusion statement is included in the Notice of Meeting.

(c) Recommendation

The Directors unanimously recommend that the Shareholders approve Resolution 7.

8. RESOLUTION 8: ISSUE OF SHARES TO SHENG RUN

(a) General comments

Resolution 8 is subject to Resolutions 1, 2, 3, 4, 5 and 6 being passed. Resolution 8 seeks Shareholder approval for the allotment and issue of 8,250,000 Shares (on a postConsolidation basis) at an issue price of $0.16 per Share to raise approximately $1,320,000.

A summary of ASX Listing Rule 7.1 is set out in Section 2 and Section 3 of this Explanatory Statement. Pursuant to section 708 of the Corporations Act, the offer of the Shares will not require the issue of a prospectus as they are to be made under a placement to a sophisticated investor under section 708(8) of the Corporations Act.

The effect of Resolution 8 will be to enable the Directors to issue 8,250,000 Shares within a three month period after the date of the Extraordinary General Meeting or a longer period if allowed by ASX, without those Shares counting towards the 15% of the issued capital of the Company that can be issued in any 12 month period without shareholder approval.

(b) Technical information required by ASX Listing Rule 7.3

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to the Capital Raising:

(i) Maximum number of securities

The maximum number of Shares to be issued is 8,250,000 Shares (on a postConsolidation basis).

(ii) Date of allotment and issue of the securities

It is intended that allotment will occur on the same date.

(iii) Issue price of the securities

The issue price of the Shares will be $0.16 each (on a post-Consolidation basis).

(iv) Names of allottees

The 8,250,000 Shares (on a post-Consolidation basis) will be allocated to Sheng Run.

(v) Terms of the securities

The Shares issued will be fully paid ordinary shares in the capital of the Company and will rank equally with the existing ordinary shares of the Company.

(vi) Intended use of funds

The Company intends to use the amounts raised as working capital and to fund expansion of the business of the Company.

A voting exclusion statement is included in the Notice of Meeting.

(c) Recommendation

The Directors unanimously recommend that the Shareholders approve Resolution 8.

9. ENQUIRIES

Shareholders are required to contact the Company Secretary on +61 2 8823 3100 if they have any queries in respect of the matters set out in these documents.

GLOSSARY

Unless otherwise defined in the Explanatory Statement, defined terms in the Explanatory Statement have the following meaning:

$ means Australian dollars.

Heads of Agreement means a conditional agreement between the Company and Blackrock relating to the sale of all the issued share capital in Blackrock to the Company on the terms outlined in Section 1 of the Explanatory Statement.

Acquisition means the acquisition by the Company of 100% of the issued share capital in Blackrock.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited (ACN 008 624 691).

ASX Listing Rules means the Listing Rules of ASX.

Blackrock means Blackrock Resources Pty Ltd (ACN 138 468 489).

Blackrock Shares means all the issued shares in the capital of Blackrock.

Blackrock Vendors means those persons listed in the 1[st] column in the table set out in Schedule B to this Explanatory Statement.

Board means the board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Tuesday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Capital Raising means the offer by the Company to allot and issue up to 10,000,000 Shares (on a post-Consolidation basis) at an issue price of $0.20 per Share to raise up to a total of $2,000,000, as proposed by Resolution 5.

Company means Jatoil Limited (ACN 122 826 242).

Combined Group means the Company.

Completion means completion of the Acquisition following satisfaction (or waiver, if applicable) of the conditions precedent to the Acquisition.

Consideration Shares means Initial Consideration Shares and the Performance Shares.

Consolidation means the consolidation of the issued securities of the Company, existing at 4th February 2011 on a 1 for 4 basis (rounded up to the nearest whole number), which consolidation is proposed to become effective on the date Resolution 4 is passed.

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company.

AEDST means Australian Eastern Daylight Saving Time as observed in Sydney, New South Wales between early October and late March.

Extraordinary General Meeting means the meeting convened by the Notice of Meeting.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

Initial Consideration Shares means 25,000,000 Shares (on a post-Consolidation basis).

kT means one thousand metric tonnes.

Memorandum of Understanding means the memorandum of understanding between the Company and Blackrock dated [6 September 2010].

Milestones means the milestones that are required to be achieved by Blackrock before the Blackrock Vendors become entitled to a proportion of the Performance Shares, as summarised in Section 1(h)(iii) of this Explanatory Statement and detailed in the Agreement.

Mt means one million metric tonnes.

Notice of Meeting or Notice of Extraordinary General Meeting means this notice of Extraordinary General Meeting including the Explanatory Statement.

Official List means the official list of ASX.

Option means an option to acquire a Share in the Company.

Optionholder means the holder of an Option.

Performance Shares means 37,500,000 Shares (on a post-Consolidation basis).

Prospectus means a prospectus to be issued by the Company and lodged in respect of the Capital Raising and the offer of the Consideration Shares to the Blackrock Vendors.

Proxy Form means the proxy form included with the Notice of Meeting and Explanatory Statement.

Resolutions means the resolutions set out in the Notice of Meeting, or any one of them, as the context requires.

Secured Projects means the Katingan and Atan Bara projects, as described in Section 1(a) of the Explanatory Statement.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

Sheng Run means Sheng Run Holdings Group (Australia) Pty Ltd ACN 122 062 211.

SCHEDULE A – PRO-FORMA FINANCIAL INFORMATION

To illustrate the financial impact of the Company acquiring 100% of Blackrock, an unaudited pro-forma balance sheet has been prepared based on the unaudited balance sheet of Blackrock as at 30 September 2010 and the unaudited balance sheet of the Company as at 30 September 2010.

The unaudited pro-forma balance sheet has been prepared in accordance with [principles of International Financial Reporting Standards]. The unaudited pro-forma balance sheet is illustrative only.

The following assumptions and adjustments have been used in preparing the unaudited proforma balance sheet:

(a) The acquisition of Blackrock Pty Limited via the issue of 25,000,000 fully paid Shares in the Company at a deemed price of $0.20;
(b) An amount of $1,320,000 is raised via the issue of 8,350,000 Shares to Sheng Run
(c) A maximum amount of $2,000,000 million is raised via the Capital Raising to be undertaken by the Company as part of its application for re-admission to the official list of ASX, in compliance with ASX Listing Rule 1;
(d) The Company will incur transaction costs as a result of the Acquisition. These transaction costs have been estimated at a combined $325,000 and assumed to be paid and expensed immediately.

PRO-FORMA CONSOLIDATED BALANCE SHEET

	Jatoil	Unaudited
	Unaudited	Consolidated
		Pro-forma
	30-Sep-10	30-Sep-10
	$	$
CURRENT ASSETS Cash and cash equivalents Other current assets Mining assets Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Investments accounted for using equity method Loan GEJSC Investment PT Jatenergy Waterlands/GEJSC Goodwill on Blackrock acquisition Plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Accounts Payable Payroll Liabilities Other Creditors Short Term Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Financial Liabilities Loan - Capital Gold Loan - Jatoil TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed Equity Reserves Accumulated losses TOTAL EQUITY	2,835,719 493,069	6,715,328 1,079,101
	3,328,788	7,794,429
	513,325 - 22,224	513,325 4,388,648 22,224
	535,549	4,924,197
	3,864,337	12,718,626
	88,382 20,857 109,239	155,599 20,857 176,456
	-	106,072
	-	106,072
	109,239	282,528
	3,755,098	12,436,098
	16,881,950 328,066 (13,454,918)	25,562,950 328,066 (13,454,918)
	3,755,098	12,436,098

SCHEDULE B – PARTICULARS OF BLACKROCK VENDORS

	Blackrock Vendor	Number of Blackrock Shares Held by Vendor	%	Number of Initial Consideration Shares (on a post- Consolidation basis)
			Interest

1	Iceland Nominees Ltd	22,500,000	24.46	6,115,000
2	George Calder Sim atf Elm Super Fund	17,500,000	19.02	4,755,000
3	HSBC Portfolio Nominees Pty Ltd	10,000,000	10.88	2,720,000
4	Fourthplan Investments Pty Ltd	9,200,000	10	2,500,000
5	Tony Crimmins	6,000,000	6.53	1,632,500
6	Joseph Camuglia and Kirsten Camuglia aft Joseph Camuglia Super Fund	3,360,000	3.65	912,500
7	Anthony Camuglia atf Anthony Camuglia Super Fund	3,320,000	3.61	902,500
8	John Camuglia atf John Camuglia Super Fund	3,320,000	3.61	902,500
9	Winning Corporate Services Pty Ltd	2,300,000	2.5	625,000
10	Paul Pesik	2,000,000	2.17	542,500
11	Shane Reid	1,200,000	1.3	325,000
12	Millbrook Finance Pty Ltd	1,000,000	1.09	272,500
13	Geba Pty Ltd	1,000,000	1.09	272,500
14	Tyche Investments Pty Ltd	1,000,000	1.09	272,500
15	Michael Desmond Gallagher	800,000	0.87	217,500
16	Dr Alistair R Brown	600,000	0.65	162,500
17	Campbell MacArthur	600,000	0.65	162,500
18	Dominic Barbaro and Susan Barbaro aft Barbaro Superannuation Fund	400,000	0.43	107,500

19	Alan Bruce Kennedy and Derek Ward	400,000	0.43	107,500
20	Goldin Management Pty Ltd	400,000	0.43	107,500
21	Jeremy William Lyons King	400,000	0.43	107,500
22	Anthony Joseph Kirwan	400,000	0.43	107,500
23	Lapin Trading Pty Ltd	400,000	0.43	107,500
24	Dee Pitt	400,000	0.43	107,500
25	Ox Enterprises Retirement Fund	400,000	0.43	107,500
26	Galactic Fitness Pty Ltd	400,000	0.43	107,500
27	Paynefull Super Pty Ltd	400,000	0.43	107,500
28	Katrina Timothy	200,000	0.22	55,000
29	Samuel Wagner	200,000	0.22	55,000
30	Cameron McInture Fisher	200,000	0.22	55,000
31	Nadia Margaret McCrohon	200,000	0.22	55,000
32	Graham R Pouard and Barbara E Sims	200,000	0.22	55,000
33	Todd Hutchings	200,000	0.22	55,000
34	G&R Martin Pty Ltd	200,000	0.22	55,000
35	Chris Taylor	200,000	0.22	55,000
36	Nubey Trading Pty Limited	180,000	0.2	50,000
37	Chiropractic Plus (NSW) Pty Ltd	160,000	0.17	42,500
38	MLP1 Pty Ltd	160,000	0.17	42,500
39	Glenys Mitchell and Derek Ward	100,000	0.11	27,500
40	RJ and JM Howard Super Fund	100,000	0.12	30,000
	TOTAL	92,000,000	100%	25,000,000

PROXY FORM APPOINTMENT OF PROXY Jatoil limited ABN 31 122 826 242

2011 EXTRAORDINARY GENERAL MEETING

I/We

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being a member of Jatoil Limited entitled to attend and vote at the Extraordinary General Meeting, hereby

Appoint

Name of proxy

OR the Chair of the Extraordinary General Meeting as your proxy

or failing the person so named or, if no person is named, the Chair of the Extraordinary General Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, as the proxy sees fit, at the Extraordinary General Meeting to be held at 10.00am (AEDST), on Thursday 10th February 2011at Level 5, 56 Pitt Street, Sydney, NSW, 2000 and at any adjournment thereof.

If no directions are given, the Chair will vote in favour of all the Resolutions.

If the Chair of the Extraordinary General Meeting is appointed as your proxy, or may be appointed by default, and you do not wish to direct your proxy how to vote as your proxy in respect of the Resolutions please place a mark in this box.

By marking this box, you acknowledge that the Chair of the Extraordinary General Meeting may exercise your proxy even if he has an interest in the outcome of the Resolutions and that votes cast by the Chair of the Extraordinary General Meeting for the Resolutions 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 will not cast your votes on the Resolutions and your votes will not be counted in calculating the required majority if a poll is called on the Resolutions.

Voting on Business of the Extraordinary General Meeting

FOR AGAINST ABSTAIN

		F
Resolution	1	Change in Nature and Scale of Activities
Resolution	2	Issue of Initial Consideration Shares to Blackrock Vendors
Resolution	3	Potential Issue of Performance Shares to Blackrock Vendors
Resolution	4	Consolidation of Capital
Resolution	5	Issue of Capital
Resolution	6	Change of Name
Resolution	7	Ratify Previous issue of Shares to Sheng Run
Resolution	8	Issue of Shares to Sheng Run

Please note : If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not to be counted in computing the required majority on a poll.

Signature of Member(s): Date: ______

Individual or Member 1 Sole Director/Company Secretary	Member 2 Director	Member 3
		Director/Company Secretary

Contact Ph (daytime): ____

Contact Name:

JATOIL LIMITED

ABN 31 122 826 242

Instructions for Completing ‘Appointment of Proxy’ Form

( Appointing a Proxy ): A member entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint not more than two proxies to attend and vote on a poll on their behalf. The appointment of a second proxy must be done on a separate copy of the Proxy Form. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member’s voting rights. If a member appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. A duly appointed proxy need not be a member of the Company.
( Direction to Vote ): A member may direct a proxy how to vote by marking one of the boxes opposite each item of business. Where a box is not marked the proxy may vote as they choose. Where more than one box is marked on an item the vote will be invalid on that item.
( Signing Instructions ):
( Individual ): Where the holding is in one name, the member must sign.
( Joint Holding ): Where the holding is in more than one name, all of the members must sign.
( Power of Attorney ): If you have not already provided the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.
( Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held.
( Attending the Meeting ): Completion of a Proxy Form will not prevent individual members from attending the Extraordinary General Meeting in person if they wish. Where a member completes and lodges a valid proxy form and attends the Extraordinary General Meeting in person, then the proxy’s authority to speak and vote for that member is suspended while the member is present at the Extraordinary General Meeting.
( Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form and return by:
hand to Jatoil Limited, Level 6, Suite 8, 55 Miller Street, Pyrmont, NSW, 2010; or
post to Jatoil Limited, Level 6, Suite 8, 55 Miller Street, Pyrmont, NSW, 2010; or
facsimile to the Company on facsimile number (+61 2) 9571 8200,

so that it is received not later than 10.00am (AEDST) on 8th February 2011.

AI assistant

JATCORP LIMITED — Proxy Solicitation & Information Statement 2011

65154_rns_2011-01-06_3d5ddf05-a273-4025-b485-a960de840a2b.pdf

JATOIL LIMITED

Key Dates

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

YOUR VOTE IS IMPORTANT

VOTING IN PERSON

VOTING BY PROXY

NOTICE OF EXTRAORDINARY GENERAL MEETING

AGENDA

Ordinary Business

1. RESOLUTION 1: CHANGE IN NATURE AND SCALE OF ACTIVITIES

2. RESOLUTION 2: ISSUE OF INITIAL CONSIDERATION SHARES TO BLACKROCK VENDORS

3. RESOLUTION 3: POTENTIAL ISSUE OF PERFORMANCE SHARES TO BLACKROCK VENDORS

4. RESOLUTION 4: CONSOLIDATION OF CAPITAL

5. RESOLUTION 5: ISSUE OF CAPITAL

6. RESOLUTION 6: CHANGE OF NAME

7. RESOLUTION 7: RATIFY PREVIOUS ISSUE OF SHARES TO SHENG RUN

8. RESOLUTION 8: ISSUE OF SHARES TO SHENG RUN

PROXY APPOINTMENT AND VOTING INSTRUCTIONS

Proxies

Lodgement of Proxy Forms

Voting Entitlement

EXPLANATORY STATEMENT

1. RESOLUTION 1: CHANGE IN NATURE AND SCALE OF ACTIVITIES

(a) General comments

(b) Background and explanation

(c)

Acquisition highlights

(i) Katingan project

Highlights of the Katingan project are as follows:

(ii) Atan Bara project

Competent Persons Statements

(d) Overview of coal market

Indonesian coal industry

Indonesian coal

Industry size, growth and trends

(e)

Indonesian mining laws

(f) Indonesian coal prices

(g) Strategy

(i) Development of current projects

(ii) New projects

(iii) Marketing

(h) Heads of Agreement—Material terms of the Acquisition

Convertible Note Deed

(j) Regulatory requirements – Change in nature of activities

(l) Effect on capital structure

(m) Advantages of Acquisition

(n)

Disadvantages of Acquisition

Risk factors

Operating risks

Contractual risks

Economic risks

Market conditions

Security investments

Exploration and production risks

Environmental risks

Greenhouse gas emissions

Regulatory risks

Coal marketing and coal prices

Future capital requirements

Resource estimates and targets

Reliance on key personnel and employees

Insurance

(p) Recommendation

2. RESOLUTION 2: ISSUE OF INITIAL CONSIDERATION SHARES TO BLACKROCK VENDORS

(a) General comments

(b) Technical information required by ASX Listing Rule 7.3

(i) Maximum number of securities :

(ii) Date of allotment and issue of the securities :

(iii) Issue price of the securities :

(iv) Names of allottees :

(v) Terms of the securities :

(vi) Intended use of funds :

3. RESOLUTION 3: POTENTIAL ISSUE OF PERFORMANCE SHARES TO BLACKROCK VENDORS

(a) General comments

JATCORP LIMITED Proxy Solicitation & Information Statement 2011