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APAC

APAC COAL
Coal
Limited

Prospectus
For the offer of up to 75,000,000
Shares at an issue price of 20 cents
each to raise up to $15,000,000.
Oversubscriptions may be accepted
through the issue of up to a further
15,000,000 Shares to raise up to an
additional $3,000,000

This Prospectus is important and requires your


immediate attention. It should be read in its entirety.
If you do not understand any part of this Prospectus,
or you are in doubt as to how to deal with it, you
should consult your accountant, stockbroker,
solicitor or other professional adviser.

THE SECURITIES OFFERED BY THIS PROSPECTUS


SHOULD BE CONSIDERED SPECULATIVE

APAC COAL LIMITED A.C.N. 126 296 295

SPONSORING BROKER AND LEAD MANAGER:


NOVUS CAPITAL LTD
APAC Coal Limited A.C.N. 126 296 295

Corporate Directory Contents


Directors
Paul Piercy (Chairman and Non Executive Director) Important Notes 2
Koh Teng Kiat (Managing Director) Letter from the Chairman 3
Sam di Giacomo (Non Executive Director)
Maurice Drew (Non Executive Director) Section 1: Investment Highlights and Risk Factors 4
Shyun Kon (Non Executive Director)
Section 2: Summary of the Offer 5
Company Secretary
Darren Crawte Section 3: Company Overview 8
Sponsoring Broker and Lead Manager Section 4: Industry Overview 14
Level 24 Royal Exchange Building
56 Pitt Street Section 5: Exploration Programme 16
Sydney NSW 2000
Section 6: The Company and its Directors 17
Telephone: 61 2 9375 0100
Toll Free: 1800 450 444 Section 7: Independent Geologist’s Report 19
Facsimile: 61 2 9247 4844
Section 8: Solicitors’ Report 43
Indonesian Solicitors
Soebagjo Jatim Djarot Section 9a: Financial Information 49
Plaza DM,17th Floor
Jalan Jenderal Sudirman kav. 25 Section 9b: Investigating Accountants’ Report 59
Jakarta 12920, Indonesia
Section 10: Material Risk Factors 61
Principal Office
Level 2, 47 Colin Street Section 11: Additional Information 65
West Perth Western Australia 6005
Section 12: Material Contracts 71
Telephone +61 8 9321 3514
Facsimile +61 8 9321 3523 Section 13: Definitions 75
Website www.apaccoal.com
Directors’ Statement, Authorisation and Consent 76
Australian Solicitors
Steinepreis Paganin Application Form 77
Lawyers & Consultants
Level 4, Next Building
16 Milligan Street
Perth Western Australia 6000
Registered Office
47 Colin Street
West Perth Western Australia 6005
Telephone +61 8 9321 3514
Facsimile +61 8 9321 3523
Independent Geologist
Corvidae Pty Ltd as trustee for the Ravensgate Unit Trust
trading as “Ravensgate”
49 Ord Street
West Perth Western Australia 6005
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross Western Australia 6153
Telephone +61 8 9315 2333
Facsimile +61 9315 2233
E-mail registrar@securitytransfer.com.au
Website www.securitytransfer.com.au

Investigating Accountants and Auditor


Deloitte Touche Tohmatsu
Woodside Plaza
Level 14
240 St Georges Terrace
Perth Western Australia 6000
PROSPECTUS 2008

Important Dates

Lodgement of Prospectus with ASIC and ASX 4 April 2008

Applications Open 12 April 2008

Applications Close 15 May 2008

Intended Allotment date 21 May 2008

Despatch of Holding Statements 21 May 2008

Intended Date of Listing on ASX 5 June 2008

These dates are indicative only and subject to change. The Company reserves the right to vary all or any dates without prior notice.

IMPORTANT NOTICE
This Prospectus was lodged with the ASIC and ASX on 4 April 2008 and is dated 4 April 2008. Neither the ASIC nor ASX take
responsibility for the contents of this Prospectus. No Shares will be issued on the basis of this Prospectus later than 13 months
after the date of this Prospectus.

This Prospectus has been prepared in its entirety by APAC and is in its entirety based on the available information and facts and
circumstances known to APAC as at the date of this document. The Directors of APAC authorise the distribution of this document.
No director, employee, agent, adviser or consultant will have liability for any statement, opinion, information or matters (express or
implied) arising out of or contained in, or for omissions from, the information provided in this Prospectus.

The pictures and photographs shown within this document do not necessarily depict the actual project land in its present form
given the constant change of the land as part of the development process.

This document is important and should be read in its entirety. Your investment decision in relation to this Issue should be based
upon the information contained in this Prospectus and disclosures made to the market by the Company. If in doubt, you should
consult your stockbroker, solicitor or accountant or other professional adviser without delay. Neither the Company nor any of
its Directors or any other party associated with the preparation of this Prospectus guarantee that any specific objective of the
Company will be achieved or that any particular performance of the Company or of its Shares (including the Shares offered by this
Prospectus) will be achieved.

Up To Date Information
Information contained in this Prospectus (and any supplementary Prospectus) may change from time -to -time. If any change will
be materially adverse a supplementary Prospectus will be issued. However, if the change will not be materially adverse to the Offer,
a supplementary Prospectus may not be issued.

Investors Outside Australia


This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom it would
not be lawful to make such an offer. It is the responsibility of investors outside Australia to obtain any necessary approvals for the
allotment and issue of Shares pursuant to this Prospectus.

Currency
Unless otherwise stated, all dollar amounts in this Prospectus are stated in Australian dollars.

DISCLAIMER
No person is authorised to give any information or to make any representation in connection with this Issue, which is not contained
in this Prospectus. Any information or representation not so contained may not be relied upon as having been authorised by the
Company in connection with this Issue.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make
such an offer.

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APAC Coal Limited

Important Notes

Definitions
Certain words and terms used in this Prospectus have defined meanings which appear in Section 13 of this Prospectus.

Exposure Period
This Prospectus will be made generally available during the Exposure Period by being posted on the Company’s website at
www.apaccoal.com. In addition, copies of the Prospectus will be available on request to members of the public by contacting the
Company on +61-8 9321 3514.

The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of
funds. Potential investors should be aware that such examination may result in the identification of deficiencies in the Prospectus
and, in those circumstances, any Application and subscription money that has been received will be dealt with in accordance with
Section 724 of the Corporations Act.

Electronic / Paper Prospectus


This Prospectus is available in electronic form at the Company’s website at www.apaccoal.com or in paper form by contacting the
Company. A paper copy of the Prospectus will be sent free of charge on request during the period of the Offer.

Any person accessing the electronic version of this Prospectus for the purposes of becoming a Shareholder must be an Australian
resident and must only access the Prospectus from within Australia.

Foreign Jurisdictions
This Prospectus, whether in electronic or paper form, does not constitute an offer of Shares in any jurisdiction where, or to any
person to whom, it would not be lawful to make such an offer. Access to this Prospectus by persons outside of Australia is not
permitted.

Any recipient of this Prospectus residing outside Australia should consult their professional advisors on requisite compliance
requirements. It is the responsibility of any overseas Applicant to ensure compliance with all laws of any country relevant to their
Application. The return of a duly completed Application will be deemed to be a representation and warranty by the Applicant that
there has been no breach of such laws. The Company is entitled to refuse an Application for Shares under this Prospectus if it
believes the Applicant did not receive an Offer in Australia.

Applications
Applications for Shares can only be made by completing the Application Form in full, in accordance with the instructions in this
Prospectus. The Company will not accept Application Forms electronically or by facsimile.

The Application Form may only be distributed attached to a complete and unaltered copy of the Prospectus. The Application Form
included with this Prospectus contains a representation that the investor had personally received the complete and unaltered
Prospectus prior to completing the Application Form.

The Company will not accept a completed Application Form if it has reason to believe that the Applicant has not received a
complete paper copy or electronic copy of the Prospectus or if it has reason to believe that the Application Form or electronic copy
of the Prospectus has been altered or tampered with in any way.

Privacy
In submitting an Application Form, an Applicant will be required to provide certain personal information on the Application Form for
the purposes of enabling so that the Company to can register that Applicant as the holder of a Share, to enter relevant information
in the Company’s register of members and to enable the Company to contact that Applicant. At all times, personal information
may be required to be disclosed by the Company to the Australian Taxation Office, or other government authorities or agencies
as required by law. Such information may be disclosed to an Applicant’s accountants, financial advisors and others where the
Applicant’s authority has been received. All personal information so collected will be collected, used and stored by the Company for
the purposes required by the Corporations Act or for direct and permitted communication by the Company with the Applicant.

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PROSPECTUS 2008

Letter from the Chairman

This Prospectus contains an Offer of up to 75,000,000 Shares at 20 cents each to raise up to $15,000,000 (before costs). The
Company is prepared to accept further subscriptions of up to $3,000,000 by the issue of a further 15,000,000 Shares. This finance
will mostly fund the development of the Company’s coal assets in Indonesia.

On behalf of the Directors, I am pleased to extend an invitation to you to become a Shareholder in APAC, a company that was
incorporated and registered in Western Australia on 29 June 2007 under the Corporations Act, and will become part of Magnus
Energy, a Singapore listed group, with a market capitalisation in excess of $90 million as at 31 March 2008.

Magnus Energy will be the major shareholder in APAC subsequent to this capital-raising via the sale of its two subsidiaries, PT
Deefu and PT Batubara, to APAC. The Company will then have access to considerable resources of Indonesian coal, which is
favoured internationally for its superior environmental and production properties. Magnus Energy will be retaining its Shares for at
least two years and will be providing considerable expertise to the Company in the form of staff and other resources.

Through its two subsidiaries, APAC will hold the exploration rights and the rights to mine 68,360 ha of land in the province of East
Kalimantan, which is home to the bulk of Indonesia’s minable coal reserves. The intention is to produce thermal coal from the new
mine which is currently in pre-production phase. Coal will be sold principally in the domestic energy market with the intent to enter
the international export market very quickly. The mine keeps good company with other successful coal mines as neighbours.

This Offer is made at a time when both the Australian and Indonesian coal industries are thriving. A steady growth in demand for
coal within Indonesia itself, together with China and India, augers well for coal producers in the region generally and for APAC
specifically.

China projects its demand for coal will exceed three billion tonnes by 2010 with a possible predicted shortfall of 100 million tonnes.
There is evidence to suggest that China has become a net importer of coal and that coal prices there are set to increase. This is
good news for Australian coal producers, and for other regional coal producing countries such as Indonesia. Furthermore, there
has also been impressive growth in demand for coal resources in Indonesia, as explained in this Prospectus in more detail.

Our strategy is to be among the industry’s most efficient and cost competitive thermal coal producers with a mining operation
focused on sustainable growth in production and handling capacity while maximising the long-term potential of our coal
concessions in East Kalimantan, Indonesia. In the medium to long-term, the Company will also seek to develop a diversified
resources group of companies with the ability to explore and develop opportunities in other selected mining projects, as well as
provide integrated procurement, marketing and infrastructure services to third party resource companies.

The Board members look forward to welcoming you as a new Shareholder and we look forward to a successful and rewarding
future for the Company.

Yours sincerely

Paul Piercy
Chairman

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APAC Coal Limited

Section 1: Investment Highlights

APAC’s major shareholder will be Magnus Energy, a leading company in the energy sector with strategic holdings in oil, gas and
coal. Magnus Energy has Australian offices in Western Australia, South Australia and the Cooper Plains of Queensland. It was the
first company listed on the Singapore stock exchange to own producing oil concessions in China, and owns a subsidiary that is a
major operator in equipment supply to the oil and gas sector. Furthermore, Magnus Energy is part of a joint venture that holds a
petroleum exploration licence in South Australia. A new gas field was discovered in 2005 through exploration under the licence.

Potential investors can rest assured that APAC has sound backing from Magnus Energy which intends to remain as a principle
investor in APAC and will retain a medium to long-term holding in the interest of nurturing its investment.

Investment Highlights
• APAC’s proposed subsidiary, PT Batubara has entered into a Work Agreement for Coal Mining Enterprises (CCOW) with the
Government of Indonesia to explore, mine and extract coal from an area of approximately 68,360 ha in East Kalimantan,
Indonesia.
• The 30-year CCOW (commencing on the date that mining operations commence) has a relatively low stripping ratio of
around six.
• The Concession has the approval and support of the Minister of Mines in Jakarta, and national concessions such as this one
override local concessions approved by local district councils in Indonesia. Support on a federal level means that the mine is
also open to foreign ownership and investment.
• The Concession contains JORC compliant resources of approximately 5.1 million tonnes of coal. Of this resource, 1.4 million
tonnes is inferred and 3.7 million tonnes are indicated. The resource has been established over an area of 890ha (to a depth
of 100m), which represents approximately 1.3% of the total Concession.
• Production will begin after the fundraising phase. There are in-situ coal off-takers who may buy the coal as soon as production
commences.
• The PT Batubara Concession is located in an area with established infrastructure including access roads, stock-pile areas and
a loading jetty. The convenience of the location translates into significant savings on the cost of coal production.
• APAC’s medium to long term corporate strategy for growth following the listing on ASX and establishment of mining operations
includes, inter alia, other acquisitions of producing mines with track records of profitability.
• To ensure the Company attracts the best professionals to realise our corporate objectives and visions, APAC is committed to
developing a strong, quality and competent management team under the guidance of the Board of Directors whose members
have the relevant industry experience and come from varied backgrounds.

Risk Factors
An investment in the Company and subscription for Shares is also subject to a number of risk factors. A non-exhaustive list of
these risk factors is set out in Section 11 of this Prospectus. All potential investors should read this section carefully before making
a decision to subscribe to this Offer of Shares.

The key risks associated with making an investment in the Company include exploration and production risks, cost price risk,
environmental impact constraints and stockmarket conditions.

Typical lease areas.

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PROSPECTUS 2008

Section 2: Summary of the Offer

2.1 The Offer


By way of this Prospectus, the Company seeks to raise up to $15,000,000 by offering for subscription up to 75,000,000 Shares
at an issue price of 20 cents each, payable in full on Application.

The Directors reserve the right to accept a further $3,000,000 in oversubscriptions pursuant to the issue of a further 15,000,000
Shares at $0.20 each. The maximum amount which may be raised under this Prospectus is $18,000,000.

The Shares offered under this Prospectus will rank equally with the existing Shares on issue.

2.2 Purpose of the Offer and Use of Funds


The proceeds raised from the Offer will be used predominantly to fund the development of the Company’s coal assets in Indonesia
and to provide working capital. The proceeds from the Offer will also be used to fund the costs associated with the Offer and the
corporate overheads of the Company. The Company will also consider new project acquisitions and joint ventures as they arise.

The following table illustrates the proposed application of proceeds from the Offer, together with the Company’s existing cash
resources, over a two year calendar period based on three levels of fundraising and assuming successful exploration and
evaluation results:
Table 1: Proposed Application of Funds
Minimum Subscription Full Subscription Full Oversubscriptions
AUD’000 AUD’000 AUD’000
Sources of Funds
Funds on hand 654 654 654
Proceeds from the Offer 7,000 15,000 18,000

Total Funds Available 7,654 15,654 18,654

Uses of Funds
Mine development costs 4,000 7,650 10,000
Corporate costs 1,000 1,350 1,500
Cash costs of the offer 850 1,350 1,538
Total Application of Funds 5,850 10,350 13,038

Cash remaining for working capital 1,804 5,304 5,616


TOTAL 7,654 15,654 18,654

The above table is a statement of current intentions as of the date of this Prospectus. As with any budget, intervening events and
new circumstances have the potential to affect the ultimate way funds will be applied. The Board reserves the right to alter the way
funds are applied on this basis.

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PAGE
APAC Coal Limited

2.3 Capital Structure


The capital structure of the Company immediately following the issue of Shares under this Prospectus, based on the stated
assumptions, will be as follows1:

Table 2: Capital Structure

Minimum % Full % Full %


subscription Subscription Oversubscriptions
Current Shares on Issue 13,800,002 6 13,800,002 5 13,800,002 5
Vendor Shares 2
200,000,000 80 200,000,000 69 200,000,000 66
Shares offered under this Prospectus 3
35,175,000 14 75,375,000 26 90,450,000 30
Total Shares on Issue 248,975,002 100 289,175,002 100 304,250,002 100

Note:
1. Refer to the Financial Information section for further details.

2. Agreements have been entered into whereby 200,000,000 Shares at 20 cents each will be issued to Magnus Energy
and other vendors as consideration for acquiring all the issued share capital of PT Deefu (see Section 3 for background).
The Shares will only be issued should APAC achieve a successful ASX listing. These Shares are likely to be restricted by ASX
for two years from the date of issue.

3. This includes Shares to be issued to Novus Capital (or nominee) in accordance with the terms of the Mandate letter as
summarised in Section 12.6

2.4 Rights Issue of Options after Listing


All Shareholders registered on the share register of the Company at a date approximately twelve (12) weeks after the Company’s
Shares are quoted on ASX will be entitled to participate in a proposed non-renounceable rights issue of Options on the basis of one
(1) Option for every three (3) Shares held. The Options are to be issued at one (1) cent each with an exercise price of 20 cents and
an expiry date of 30 June 2011. Application will be made for the Options to be granted following admission to quotation on ASX.

The terms and conditions of the Options to be issued pursuant to the proposed rights issue are set out in Section 11.2 of this
Prospectus.

2.5 How to Apply


An Application for Shares can only be made on the Application Form attached to or accompanying this Prospectus. The Application
must be completed in accordance with the instructions set out in the Application Form. All Applications for Shares must be for a
minimum of 10,000 Shares ($2,000) and after that in multiples of 5,000 Shares ($1,000).

All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to “‘APAC Coal Limited
– Share Issue Account” and crossed “Not Negotiable”.

Your completed Application Form and cheque must reach the Company’s share registry no later than 5pm WST on the
Closing Date.

Successful Applicants will be advised of their holding following allotment of the Shares. The Directors reserve the right to reject
any Application or to allocate to any Applicant a lesser number of Shares than that applied for. If an Application Form is not
completed correctly, or if the amount of the accompanying payment is incorrect, it may still be accepted by the Directors. The
Directors’ decision as to whether to accept the Application, or how to construe, amend or complete the Application shall be
final, but no Application will be treated as having offered to purchase more Shares than is indicated by the amount of the cheque
accompanying the Application Form.

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PROSPECTUS 2008

2.6 Investor Enquiries


Any potential investor wishing to make an enquiry about the Issue or requiring additional copies of this Prospectus should contact
the Company at the address listed in the Corporate Directory of this Prospectus, or Novus Capital Limited, also at the address
listed in the Corporate Directory.

2.7 Minimum Subscription


The minimum subscriptions to be raised pursuant to this Prospectus is $7,000,000, comprising 35,000,000 Shares. No Shares will
be allotted under this Prospectus until the minimum subscriptions for the Shares have been reached. If the Company fails to raise
the minimum subscriptions within four months of the date of this Prospectus, the Company will refund all Application money.

2.8 Foreign Jurisdictions


This Prospectus, whether in electronic or paper form, does not constitute an offer of Shares in any jurisdiction where or to any
person to whom it would not be lawful to make such an offer. Access to this Prospectus by persons outside of Australia is not
permitted. Any recipient of this Prospectus residing outside Australia should consult their professional advisors on requisite
compliance requirements. It is the responsibility of any overseas Applicant to ensure compliance with all laws of any country
relevant to their Application. The return of a duly completed Application will be deemed to be a representation and warranty by the
Applicant that there has been no breach of such laws.

2.9 Stock Exchange Listing


The Company will apply to ASX within seven days after the date of this Prospectus to be admitted to the Official List of ASX and
for official quotation of its Shares on ASX. If the Application is not made within the seven days or the Shares are not admitted to
quotation within three months after the date of this Prospectus, any Application and the subscription money received will be dealt
with in accordance with Section 724 of the Corporations Act.

The fact that ASX may admit APAC to the Official List is not to be taken in any way as an indication of the merits of the
Company.

Escrow restrictions may be imposed on some existing Shares on issue in accordance with the Listing Rules.

2.10 CHESS
The Company will apply to participate in CHESS pursuant to the Listing Rules and the ASTC Settlement Rules. In addition to
a CHESS sub-register operated by ASX on the Company’s behalf, the Company will operate an issuer sponsored sub-register.
These two sub-registers together will make up the Company’s register of members. A successful Applicant that elects to hold its
securities on the issuer sponsored sub-register will be provided with a holding statement (similar to a bank account statement)
which sets out the number of securities allotted to the Applicant under this Prospectus.

For a successful Applicant that elects to hold its securities on the CHESS sub-register, the Company will, on allotment, issue an
advice to the Applicant that sets out the number of securities allotted to the Applicant under this Prospectus and, at the end of
the month of allotment, ASX (acting on behalf of the Company) will provide the Applicant with a holding statement that confirms
the number of securities allotted. The Company will not issue certificates to successful Applicants. A holding statement (whether
issued by the ASX or the Company) will also provide details of a successful Applicant’s Holder Identification Number (in the case
of a holding on the CHESS sub-register) or Securityholder Reference Number (in the case of a holding on the issuer sponsored
sub-register). Following distribution of these initial holding statements to all successful Applicants, a holding statement will only
routinely be provided to a securityholder at the end of any subsequent month during which the balance of the securityholder’s
holding of securities changes. Additional holding statements may be requested at any other time (although an administration fee
may be charged).

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APAC Coal Limited

Section 3: Company Overview

3.1 History and Business


The Company was incorporated on 29 June 2007 and was formed with the aim of becoming a significant coal producer in the
short term.

APAC intends to achieve its corporate objectives by commencing coal exploitation and mining on selected areas within the locale
of its proposed coal concessions. We will develop a one-stop centre for coal, encompassing crushing, blending and stockpiling
and undertake exploration activities in new areas from time-to-time.

3.2 Corporate Structure (post completion of the Offer)

APAC Coal Limited


(“APAC”)

100%1

PT Deefu Chemical Indonesia


(“PT Deefu”)

100%2

PT Batubara Selarus Sapta


(“PT Batubara”)

Figure 1: Corporate Structure

Note:
1. Magnus Energy currently owns a 72% interest in PT Deefu . As at the date of this Prospectus, APAC has entered into
agreements with Magnus Energy and the holder of the minority interest (Share Sale Agreement) whereby APAC will
acquire 100% of the issued capital of PT Deefu subject to confirmation that APAC will be admitted to the Official List of ASX.
The Share Sale Agreements are further summarised in Section 12 of this Prospectus and completion is conditional on the
successful listing of APAC on ASX.

2. PT Deefu currently owns a 95% interest in PT Batubara. The holder of the minority interest has agreed to sell its shareholding
to PT Deefu subject to confirmation that APAC will be admitted to the Official List of ASX.

3.3 Capital Structure


From the date of incorporation of the Company to the date of this Prospectus, 13,800,000 Shares have been issued to seed
capitalists.

In addition, 6,300,000 Options exercisable at 25 cents each on or before 31 October 2010 have been issued to Directors and
executives of the Company.

3.4 Overview of the Project


3.4.1 Location
The Indonesian province of East Kalimantan is situated to the east of Kalimantan Island (also known as Borneo Island). The area is
divided into nine regencies (or districts) with two major cities, namely, Samarinda and Balikpapan. The PT Batubara Concession is
located in the Pasir District and administratively belongs to three sub-districts, namely Kuaro, Batusopang and Pasir Balengkong.
The Concession is situated approximately 130km south west of the provincial capital Balikpapan. The PT Batubara Concession
area is adjacent to the PT Kendilo Coal Mining concession area. Table 1 below details the geographical position of the
PT Batubara Concession which covers a total area of 68,360ha.

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PROSPECTUS 2008

Table 1. Boundary co-ordinates of APAC’s mining concession

Longitude Latitude
116°02’56’ 1°47’00’
116°08’22’ 1°47’00’
116°08’22’ 2°00’00’
116°01’00’ 2°00’00’
115°58’00’ 2°13’36’
115°58’00’ 2°13’36’
115°49’00’ 2°17’00’
115°49’00’ 2°05’00’
115°57’24’ 2°05’00’
115°57’24’ 1°05’14’
116°02’56’ 1°05’14’
Source: Work Agreement for Coal Mining Enterprises between the Government of the Republic of Indonesia and PT Batubara Selaras Sapta

To reach the PT Batubara Concession area one can fly from Jakarta to Balikpapan, East Kalimantan followed by a ferry to Penajam
and then car to Tanah Grogot. The travel time from Balikpapan to Tanah Grogot is approximately 4 – 5 hours.

From there the trip to the proposed minesite is made by four wheel drive vehicles or motorbikes and the southern parts of the
Concession area are only accessible on foot. The nearest town to the project area is Bekoso Village.

Coal sample.

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APAC Coal Limited

3.4.2 PT Batubara Concession Area

116ϒ 118ϒ

0 100 200 km

Samarinda

KALIMANTAN Balikpapan
Penjaman

1 PT Batubara Selaras Sapta 68.360 Ha

2 2 PT Kideco Jaya Agung


2ϒ 1
3 PT Arutmin Indonesia
4
4 PT Adaro Indonesia

3 4 PT APAC Coal
APAC COAL

3.4.3 The Concession


On 20 November 1997, PT Batubara entered into a CCOW with the Government of Indonesia to explore, mine and extract coal
from the Kuaro coal formation located PT Batubara in the province of East Kalimantan.

PT Batubara will hold the Concession through the CCOW for a period of 30 years commencing on the date that mining
operations commence. The CCOW is the principal document approving and governing the exploration, mining and extraction
of coal concessions in Indonesia. It is a detailed agreement that sets out the obligations of the concession holder. These include
general survey, exploration, feasibility studies, construction and operation. The CCOW also covers such matters as marketing,
foreign currency exchange, import and re-export facilities and employment matters. At each of these stages, separate licenses
and permits may be required from the relevant authority having jurisdiction over the specific matter. This is to ensure that the
concession holder carries out all activities in an orderly manner and the relevant authorities in Indonesia are kept informed of the
progress over the concessions. The Company believes that the relevant licenses and permits necessary to carry out the different
stages of mining the Concession will be granted as long as all the necessary conditions and requirements are fulfilled.

3.4.4 Coal Quality


Exploration undertaken by contractors on behalf of PT Batubara delineated an 8.9km2 area known as the Bekoso-Lempesu block,
which comprises 1.3% of the total Concession, as having the best coal potential, based on coal quality.

The calorific value of the coal samples averaged 5,366 kcal/kg with the following coal quality:

Parameter Basis Specification


Total Moisture ar 2.77% - 17.93%
Inherent moisture adb 0.55% - 3.65%
Ash content adb 13.80% - 39.50%
Volatile matter adb 31.55% - 43.50%
Fixed carbon adb 21.98% - 40.47%
Sulphur adb 1.21% - 4.64%
Calorific value adb 4,499 - 6,887 kcal/kg
Specific gravity adb 1.30 gr/cm3

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PROSPECTUS 2008

The coal in the Concession area is sub bituminous and APAC is confident that the overall calorific value can be improved by coal
washing, which is a beneficiation process that involves crushing the coal into smaller pieces and passing it through a gravity
separation process. A further advantage of the process is that it decreases the sulphur content of the coal prior to shipping. APAC
will thus produce thermal coal with a high calorific value and a low sulphur content to be sold locally and on the international export
market.

3.5 Overview of the Indonesian Coal Mining Industry


The coal mining industry in Indonesia is dependent on the world coal market. Global economic development influences Indonesia’s
coal export as does the economic development in Japan, Korea, Taiwan, China and India, who are the main purchasers of
Indonesian coal. At an international level, globalisation and development of regional trading blocks, such as in the ASEAN and
APEC regions, is 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.

Indonesia’s coal is produced by low-cost, open-pit mining methods. Coal mining has developed over the past 25 years with
considerable growth in production and coal sales. Coal production increased from a mere two million tonnes in 1985 to over 155
million tonnes in 2005. In 2005 Indonesia exported more than 106 million tonnes of coal to Asia, Europe and America compared
with about 65 million tonnes in 2001. 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.

3.5.1 Coal Resources and Reserves in Indonesia


Kalimantan has 55.0% of the known coal deposits and Sumatra has 45%. Of these deposits 33.8 billion tonnes are inferred
resources, 12.2 billion tonnes are indicated and 10.8 billion tonnes are measured resources. Of the total 60.8 billion tonnes coal
deposits approximately seven billion tonnes have been identified as commercially exploitable or minable reserves. Assuming
an average coal production of 155 million tonnes a year, the seven billion tonnes minable deposits will last for 45 years. This is
compared to the estimate that crude oil reserves will be exhausted in 15 years.

Of the seven billion tonnes minable coal reserves in Indonesia, 4.2 billion tonnes (or 60.8%) are found in Kalimantan and 2.7 billion
tonnes (or 39.2%) are in Sumatra.

Typical coal barge loading facility.

PAGE 11
APAC Coal Limited

3.5.2 Thermal Coal


Coal is a natural resource mined in many countries around the world and is broadly classified as thermal coal or metallurgical coal.
Thermal coal is also referred to as steaming coal and is used in the combustion process to produce steam for generating electricity
and heat. Metallurgical coal or coking coal is principally used as a reductant in the blast furnace and steel-making processes.

The continuing growth in thermal coal exports from Indonesia underlines the sound market for Indonesian thermal coal. The thermal
coal produced from the East Kalimantan area tends to be high-energy coal, with a high-ash content whereas coal produced from
the South Sumatra area tends to be low to medium energy with a lower ash content. Coal produced from the South Sulawesi area
tends to be medium energy with a low-ash content.

The intrinsic value of low energy, volatile thermal coal is being realised through its use in blends with more volatile and less
expensive sub-bituminous coals. Potential exists for low volatile thermal coal to be sold domestically and/or blended at the mine
and port for export.

3.5.3 Indonesian Coal Prices


With reference to the Argus / Coalindo Indonesian Coal Index (ICI) Report as of 15 February 2008, the weekly average ICI prices
for the following grades of coal are as follows:

Table 2: Indonesian Coal Prices

Grade Calorific Value Price


(Kcal / kg) (US$ / ton)
GAR FOB
ICI - 1 6,500 116.73
ICI - 2 5,800 82.76
ICI - 3 5,000 64.11
Reference www.coalindoenergy.com retrieved on 31 March 2008

3.6 Markets
Indonesia exported around 106 million tonnes of coal in 2005 and has become the world’s largest exporter of thermal coal. Nearly
80% of coal production is rated as sub-bituminous and has a niche position in domestic and international markets where demand
for environmentally friendly, low ash, sulphur, and nitrogen thermal coal is on the rise.

3.6.1 Export
Indonesian thermal coal is widely used in power generation and industrial plants throughout Asia, Europe and the Americas. The
benefits from its use are both environmental and economic and include reduced sulphur and nitrogen oxides emission of sulphur
and nitrogen oxides and lower production of less wastes. The use of Indonesian coal also reduces equipment maintenance
and ash disposal costs, resulting in lower costs of to electricity or steam production. These benefits have been recognised by
consumers including Japan, South Korea and Taiwan.

Indonesia is the largest supplier of coal in ASEAN nations with a higher percentage of products in the overall consumption mix.
The Directors believe that market demand will increase in Asia with higher Japanese off-take and additional coal-fired power
generation in Malaysia coming on stream.

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PROSPECTUS 2008

3.6.2 Exports to Asian Nation Countries


Table 3: Coal exports per MT

Country 2001 2002 2003 2004 2005


Japan 15,216,261 16,529,755 17,992,179 19,013,413 24,237,427
Taiwan 11,506,807 13,099,985 14,144,144 16,677,881 14,524,210
South Korea 5,552,188 5,633,099 6,966,247 9,690,165 9,963,869
Thailand 2,318,199 2,154,602 4,074,869 2,217,464 4,255,737
Malaysia 2,098,277 6,239,174 3,822,644 4,3146,49 3,974,005
Philippines 1,980,466 2,018,159 2,118,120 2,351,991 2,654,936
Singapore 70,987 488,627 487,709 683,790 1,279,758
China 628,811 2,857,950 9,178,131 8,229,872 8,969,582
Hong Kong 4,661,925 5,564,020 9,178,131 8,229,872 8,969,582
India 3,129,712 4,585,997 6,699,686 5,465,264 8,747,293

A substantial factor that influences the coal market is the strong demand from China and India. Over the past 24 months, the price
of steam coal has remained at a high and stable level and is consistent with the price of oil and commodities in general.

3.6.3 Domestic
Domestic coal consumers in Indonesia can be divided into three categories: power plants, cement factories and industrial users.

Table 4: Domestic Consumption per MT

2001 2002 2003 2004 2005


Coal-Fired Power Plant 19,556,334 20,046,538 22,995,613 22,878,544 26,371,588
Cement Industry 5,142,737 4,684,969 4,773,621 5,285,690 5,635,401
Pulp Industry 822,818 499,585 1,704,498 1,160,908 1,404,986
Metallurgy 181,698 208,720 201,907 119,180 203,236
Briquette 31,265 24,708 24,976 22,552 28,216
Others 1,593063 3,792,481 957,323 6,343,119 7,600,000
Total 27,327,916 29,257,002 30,657,939 35,809,995 41,243,428

Indonesia’s domestic coal demand has grown in over the last past five years from an estimated 27.3 million tonnes in 2001 to
41.2 million tonnes in 2005. The Directors are of the view that this figure will increase further if state-owned electricity company
PT Perusahaan Listrik Negara (PLN) successfully implements its programme to develop a number of coal-fired power plants with
a total capacity of up to 10,000 MW as part of its energy diversification programme.

PAGE 13
APAC Coal Limited

Section 4: Industry Overview

The Republic of Indonesia, the archipelago state that gave the world nutmeg, has been the centre of trade with the rest of the
world – and China in particular – since around the seventh century. Today China remains a trade focus area for Indonesia and an
important market (along with India) for Indonesian coal as current reports indicate that China is a net importer of coal.

Of the 17,508 islands that make up Indonesia, about 6,000 are inhabited. The five largest of these are Java, Sumatra, Kalimantan
(the Indonesian part of Borneo Island), New Guinea (shared with Papua New Guinea), and Sulawesi. The coal rich areas are
in Sumatra, Kalimantan, Java, Sulawesi and Papua, while the largest deposits are in the provinces of South Sumatra, east
Kalimantan and South Kalimantan.

The Indonesian Ministry of Energy and Mineral Resources (2006) report states that “Indonesia is richly endowed with reserves and
is a global production leader in tin, nickel and copper. It also has significant deposits of gold, silver, bauxite and phosphates.”

“Indonesia is the world’s seventh largest producer of coal and ranks second to Australia in the amount it exports (105 million
tonnes in 2005). Barring any new discoveries, reports suggest that Indonesia’s reserves will be depleted within 35 years.”

According to the World Coal Institute, Indonesia has the fourth largest coal reserves in the Asia-Pacific behind Australia, India and
China.

200
180

160

140

120
Million Tonnes

100
80

60 Production

40

20 Consumption
0
, , , , , , , , , , River dolphins for berthing barges during coal loading.
96 97 98 99 00 01 02 03 04 05

Coal Production & Consumption (Mt) ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06e
Production 48.8 53.9 60.6 72.2 75.6 91.5 102.5 114.3 132.4 152.2 169
Consumption 10.9 13.2 15.4 19.0 22.1 27.3 29.2 30.7 37.1 41.3

Statistics from World Coal Institute (www.worldcoal.org)

The World Coal Institute states that only 27 % of Indonesia’s total coal output (which equates to approximately 41MT) is currently
consumed domestically, with the remainder exported.

Indonesia mainly produces sub-bituminous coal from open-cut mines and has approximately 35 billion tons of coal resources, of
which 23 billion tons is proven. Coal quality varies, with lower grade lignite (59%), sub bituminous (27%) and high grade bituminous
and anthracite (14%).

The Indonesian Coal Book 2006/20071 (The Coal Book) states that the development of the Indonesian coal industry is important
to the government’s efforts to diversify the country’s energy mix, and decrease dependence on oil-based fuel. Domestic demand
for coal in the country is growing at a significant rate.

The Coal Book states that the coal industry recorded an impressive performance in 2005 as output increased by 16.7 percent to
150.71 million tons from the previous year. Indonesia’s 2005 coal exports also rose by 13.7 percent to 106.38 million tons while
domestic utilisation increased by 25.4 percent to 41.24 million tons.

PAGE 14
PROSPECTUS 2008

The website of the Energy Information Administration of the US Government states that “in the international market for steam
coal, Indonesia is expected to play a growing role, surpassing Australia as the largest exporter of steam coal in most years of the
International Energy Outlook 2007 projections.”

“Indonesia has low-cost reserves of low-sulphur coal; many ports, some with the capability to take capesize ships; and a close
proximity to the expanding markets of Asia. Indonesia’s export trade grew by 125 percent (79 million tons or 1.6 quadrillion Btu)
from 2000 to 2005. In 2006, Indonesia was expected to beat its 2005 export volume by 0.7 quadrillion Btu. From 2005 to 2030,
its annual exports are projected to increase by 1.7 quadrillion Btu, depending on its investment in resource exploration and the
development of new mines over the period.”

It is important to note that while the mining industry accounts for 20% of Indonesia’s exports, a large proportion of land still remains
unexplored.

Currently, by far the majority of the Indonesia’s coal is produced by privately owned coal companies, with the only state owned
company, PT Tambang Bukit Asam, producing coal from four open cast operations.

KIDECO is a major coal producer in Indonesia, with its East Kalimantan concession located close to the APAC Coal concession.
KIDECO has a reserve base of approximately 1.25 billion tonnes of coal. In 2006, KIDECO produced 18.9 million tonnes of coal,
which accounted for more than 15% of Indonesia’s total coal production for the same year.

PT Adaro (well known for envirocoalTM – a 2 billion ton reserve of low sulphur coal), PT Berau (jointly owned by Dutch, Indonesian
and Japanese interests and with measured reserves of around 550 Mt), PT Arutmin, PT Kaltim Prima comprise the bulk of
Indonesia’s private coal producers. The latter two companies own the most significant coal mines in the country:

• Sangatta, Bengalon and Melawan mines in East Kalimantan owned by Kaltim Prima Coal (KPC)

• Senakin, Batulicin, Mulia and Satui mines in South Kalimantan owned by PT Arutmin.

Furthermore, Australian copper producer Straits Resources Ltd has an 80% operating interest in the Sebuku opencast coal mine
located on the more remote Sebuku Island, South Kalimantan. Sebuku produces approximately 1.5 Mt of high volatile bituminous
coal each year.

APAC Coal, through its subsidiary PT Batubara, has entered into a work agreement with the Government of Indonesia to explore,
mine and extract coal from an area of approximately 68,360 ha in East Kalimantan.

International mining companies such as Straits Resources Ltd, BHP Billiton and Rio Tinto all have interests in coal mining in
Indonesia. While, Clough, John Holland and Thiess are among those that enjoy significant mining contracts in the country.

Indonesian authorities are confident that a new mining law that has already been drafted will ease an uncertainty for foreign
investors once it has been enacted. Global commodity prices continue to remain at high levels which have led to record production
outputs from mines in Indonesia and have also created opportunities for Australian suppliers entering into the Indonesian mining
industry.

APAC Coal will enter a strong field of coal producers in one of the largest coal provinces in Indonesia. Although the immediate
mining area targeted by the Company following completion of the Offer is only 1.3% of a total available Concession, the prospects
for greatly extended mineable resources are exciting and represent an enviable position to be in.

(Footnotes)

1
Indonesian Coal Book 2006/2007, which is the second edition of the Indonesian Coal Book 2004/2005, is the most
comprehensive source of information on coal mining industry in Indonesia. It contains information on 83 coal mining
companies operating in Indonesia, including maps, production operations, mining methods, coal specification and business
plans. Information about the existing common-user coal terminals is also included, along with statistical data on the sector and
directories of industry and government contacts.

PAGE 15
APAC Coal Limited

Section 5: Exploration Programme

5.1 Planned Production Area


The target Concession area for the Company represents only 1.3% of the total available mining area available for future production
expansion. The area has a JORC compliant resource of 5.1 million tonnes (1.4 million inferred and 3.7 million indicated) based on
drilling and geological studies done to date.

Additional drilling will be done to assess resources around the defined production target.

Infill drilling will be undertaken to update resource definition to finalise coal delineation and minimise the stripping ratio. This may be
combined with some deeper drilling programme to assess resources below the existing target coal zones.

5.2 Total Concession Area


Limited work has been done in the balance of the 98.7% of the Concession. Previous work undertaken by PT Sucofindo revealed
they had identified 21 outcrops of coal in the area. The quality of the coal is similar to that included in the production areas of the
Company.

Previous work by PT Sucofindo included:

• A literature review

• Field work including location of coal outcropping,


examination of coal outcrop appearance, orientation,
stratigraphy and thickness of bedding

• Plotting of outcrops onto 1: 25 000 map

• Test pitting to determine local coal thickness

• Sampling and assay

This previous work is regarded as being very limited. The


Company will initially as a priority focus on the identified
outcrops to accurately define the potential associated
resource and structural ties to the production seams. Field Geologist sampling coal outcrop.

Follow up work will target a more detailed record of the Concession through extending the previous work.

The programme will include:

• Review of existing 1:25,000 maps

• Extension of geophysical exploration of the Concession

• RC and DD work to define the extent of the outcrops previously identified and subsequent discoveries

• Test pits to quantify seam thicknesses and facilitate sampling

• Sampling and assaying

• Identification of prioritized areas for future mining.

It is believed that as exploration of the total Concession proceeds it will extend the immediate production capability and ultimately
will deliver a significant JORC compliant resource from the Concession.

PAGE 16
PROSPECTUS 2008

Section 6: The Company and its Directors

6.1 Board of Directors


Paul Piercy
Independent Non Executive Chairman

Mr Piercy is a metallurgist who has held senior executive management and technical positions within the Rio Tinto Limited
group during the 1980s and 1990s, including General Manager of Hamersley Iron’s Dampier port and rail operations, General
Manager of Hamersley Iron’s Paraburdoo & Channar operations and Managing Director of Novacoal and Kembla Coal & Coke.
More recently Mr Piercy was Managing Director of WesTrac Equipment from 1997 to 2000 before playing an integral role in the
successful establishment of Westrac China, as its Chairman/CEO based in China. Mr Piercy has been a Non-Executive Director of
Australasian Resources Limited since February 2006.
Mr Piercy is a Fellow of AusIMM (Australasian Institute of Mining and Metallurgy), a Chartered Professional – Management
(AusIMM) a Fellow of the Australian Institute of Company Directors and a Fellow of Australian Institute of Management.

Koh Teng Kiat


Managing Director

Mr Koh is a skilled financial expert with skills honed over almost 20 years in business in the Asia Pacific region. He has extensive
experience in company financial system restructuring and has worked in the manufacturing sector, the construction sector and the
petroleum sector, among others. He has worked in public companies and in multi-national businesses.
Mr Koh is also the Chief Operating Officer of Magnus Energy. He joined the company in July 2004. He currently oversees Magnus
Energy’s operational aspects of crude oil production in China and coal mining activities in Indonesia. As such he addresses
compliance issues, and supervises funding arrangements.
He is also a Director of Mid-Continent Equipment Group Pty Ltd, Antig Investments Pty Ltd and Bridging Resources Ltd, all
subsidiaries of Magnus Energy.
Mr Koh holds a degree from the Chartered Institute of Management Accountants of the United Kingdom. He is a Fellow member
of both the Chartered Institute of Management Accountants of the United Kingdom and Institute of Certified Public Accountants
of Singapore.

Sam di Giacomo
Non Executive Director

Mr di Giacomo brings 17 years of experience to APAC. He has been involved in numerous capital raisings at all stages from seed
to IPO, and has been involved in a number of technology and distribution licensing deals. He is also a founder of a number of
Australian life science companies including pSimedica Ltd, Australian Cancer Technology (now Avantogen Limited), Resonance
Health Ltd, and founding director of Advance Healthcare Group Limited.
Mr di Giacomo is an Associate member of The Institute of Chartered Accountants in Australia and a Fellow of the Financial Services
Institute Australia. He is a Fellow of the Australian Institute of Management and a member of the Australian Biotech Association.
In addition, Mr di Giacomo is a Certified Public Accountant.
During the past 3 years Mr di Giacomo acted as Executive Director of Advance Healthcare Group Limited until his resignation on
29th September 2005 and for Rockeby Biomed Limited since 5th April 2006

Maurice Francis Drew


Non Executive Director

Mr Drew is an Oil and Gas Technical Consultant and joined the Board as Non Executive Director on 6th September 2007. He
holds a Bachelor of Science majoring in Geology and Physics from the University of Queensland. He has over forty years of
experience in the petroleum exploration and production industry as General Manager, Country Manager, geophysicist, exploration
manager, operations manager and acquisitions/new ventures manager in Australasia, Indonesia, China, Cambodia, Vietnam,
Malaysia, Saudi Arabia, Qatar, Oman, United Arab Emirates, Egypt, Libya, Ethiopia and Myanmar. His strengths are wide ranging
and includes hands on experience in the technical, operational, theoretical and commercial aspects of exploration and production
operations in Australia and Asia.

PAGE 17
APAC Coal Limited

Shyun Kon
Non Executive Director

Mr Shyun Kon has spent more than 25 years of his career as a consultant and director within the private sector in Singapore
and Malaysia and predominantly in the areas of Strategic Planning, Business Development and Operations Management. He has
developed extensive experience and networking in most of the ASEAN countries, China and Hong Kong and in many different
industries such as mining, manufacturing, plantations and services. He has served as an executive director on the boards of
Ipco International Ltd in Singapore and Kuantan Flour Mills in Malaysia. Currently, in addition to being a consultant to several
listed companies, he is also an executive director of Industrial Power Technology Pte Ltd, a leading EPC Contractor in Biomass
power plants in the ASEAN region. Mr Kon graduated with an Honours Degree in Economics and a Masters in Management from
England.

Darren Crawte LL.B (Hons), ACA


Company Secretary

Mr Crawte is a qualified chartered account and an Associate Director of Ord Nexia Pty Limited, a Perth based accountancy firm
with a strong background in providing services to ASX listed companies. He manages the Corporate division within the practice
which specialises in assisting start-up companies achieve a listing on the Australian Securities Exchange and ensuring ongoing
regulatory compliance.
Mr Crawte has over 8 years experience as a chartered accountant, having originally qualified in the United Kingdom as an external
auditor. Having specialised in corporate compliance work, he is able to offer a range of services that cover that cover the broad
spectrum of a newly listed entity’s compliance needs. These services include maintaining compliance with the ASX Listing Rules
and the Corporations Act, financial reporting and audit management, corporate governance and other areas of risk management.
Darren has several other appointments as Company Secretary to listed companies.

6.3 Corporate Governance


The Company will adopt comprehensive systems of control and accountability as the basis for the administration of corporate
governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true
spirit of corporate governance commensurate with the Company’s needs. The Board considers that the current composition of the
Board is adequate for the Company’s current size and operations and includes an appropriate mix of skills and expertise relevant
to the Company’s business. The current Board structure presently consists of one executive director and four non-executive
directors. The Company considers that each of the Directors possess skills and experience suitable for building the Company.

PAGE 18
PROSPECTUS 2008

Section 7: Independent Geologist’s Report

49 Ord Street West Perth


6005, Western Australia
PO Box 1923, West Perth
6872, Western Australia
Tel: +61 8 9226 3606
Fax: +61 8 9226 3607
www.ravensgate.com.au
31 March 2008

The Directors
APAC Coal Limited
c/o TK Koh
3 Phillip Street
#11-01
Commerce Point
Singapore
048693

Dear Sirs
Independent Geologist’s Report on the Coal Assets
to be acquired by APAC Coal Limited in East Kalimantan
At your request Corvidae Pty Limited as Trustee for Ravensgate Unit Trust (trading as and hereinafter referred to as Ravensgate)
has prepared an Independent Geologist’s Report on the coal assets of APAC Coal Limited (APAC) located in East Kalimantan,
Sumatra Province, Indonesia.

It is intended that this report will be included in an Prospectus prepared by APAC Coal Limited (‘APAC’). The purpose of the
Prospectus is to offer for subscription up to 75,000,000 ordinary shares at an issue price of 20 cents per share to raise a total of
$15,000,000 before costs of the issue for the purposes of listing APAC on the Australian Securities Exchange.

Ravensgate has not been requested to provide an Independent Valuation of the mineral assets, nor has it been asked to comment
on fairness or reasonableness of any vendor or promoter consideration, and it has therefore not offered any opinions on these
matters.

Ravensgate has based its review of APAC’s project on information provided by APAC along with technical reports prepared by
government agencies and previous tenement holders, as well as other relevant published and unpublished data.

Ravensgate has made all reasonable enquiries to establish the authenticity and completeness of the technical data on which this
report is based.

APAC was given a final draft of this report, and thereby given an opportunity to identify any material errors or omissions. Where
appropriate, and in accordance with ASIC Practice 55 and Update 183, consent has been obtained to quote data and opinions
expressed in unpublished reports prepared by other professionals on the properties concerned.

APAC’s project consists of a coal mining concession in the Pasir district, East Kalimantan. The total area covered by the
concession is 683.6km2 of which the Bekoso–Lempesu block (8.9km2) has been the focus of previous exploration efforts including
a preliminary mining feasibility study.

The legal status associated with the tenure of APAC’s projects has not been verified by Ravensgate, and is discussed elsewhere
in the Prospectus.

PAGE 19
APAC Coal Limited

This report has been prepared in accordance with the Code and Guidelines for the Assessment and Valuation of Mineral Assets
and Mineral Securities for Independent Expert Reports (the VALMIN Code, 2005), which is binding upon members the Australian
Institute of Mining and Metallurgy (AusIMM) and members of the Australian Institute of Geoscientists (AIG), as well as the rules and
guidelines pertaining to Independent Expert Reports issued by the Australian Securities Exchange (ASX).

The 8.9km2 area is considered by Ravensgate to be an advanced or pre production exploration prospect whereas the balance of
the lease is considered to be an immature exploration prospect.

Ravensgate is of the opinion that the projects have been acquired on the basis of sound technical merit. Ravensgate considers
that the properties are sufficiently prospective to warrant further exploration and assessment of their economic potential, and that
the exploration budget proposed is adequate for this purpose.

Exploration and evaluation programmes summarised in the report involve a total expenditure of approximately $8,000,000
committed to exploration, evaluation and development. More than half the liquid assets held, or funds proposed to be raised by
APAC, are understood by Ravensgate to be committed to acquisition, exploration, development and administration of the mineral
properties.

Ravensgate also understands that APAC will have sufficient working capital to carry out its stated objectives, thereby satisfying the
requirements of ASX Listing Rule 1.3.3 (a).

Ravensgate considers that the relevant areas have sufficient technical merit to justify the proposed programmes and associated
expenditure, thereby satisfying the requirements of ASX Listing Rule 1.3.3 (a) and 1.33 (b). In addition, the proposed exploration
program is understood to exceed the anticipated minimum annual statutory expenditure commitments on the various project
tenements.

This Independent Geologist’s Report has been prepared on the basis of information available up to and including 31 December
2007. Ravensgate has provided consent for the inclusion of the report in the Prospectus, in the form and context in which the
report and these statements appear.

Yours faithfully

Mr Andre Wulfse Pr Sci Nat


Principal Resource Consultant

Author(s): Andre Wulfse Principal Resource Consultant BSc (Hons), GDE Mining Engineering, MSAIMM, Pr Sci Nat
Reviewer: John Haywood Principal Consultant BSc (Hons), MAusIMM
Date: 2008

This document has been prepared for the exclusive use of APAC Coal Limited and the information contained within it is based
on instructions, information and data supplied by them. No warranty or guarantee, whether expressed or implied, is made by
Ravensgate with respect to the completeness or accuracy of this document and no party, other than the client, is authorised to
or should place any reliance whatsoever on the whole or any part or parts of the document. Ravensgate does not undertake or
accept any responsibility or liability in any way whatsoever to any person or entity in respect of the whole or any part or parts of this
document, or any errors in or omissions from it, whether arising from negligence or any other basis in law whatsoever.

PAGE 20
PROSPECTUS 2008

TABLE OF CONTENTS
1. SUMMARY.................................................................................................................................................................... 22
2. INTRODUCTION ........................................................................................................................................................... 24
2.1 Terms of Reference ................................................................................................................................................. 24
2.2 Qualifications, Experience and Independence.......................................................................................................... 24
2.3 Principal Sources of Information .............................................................................................................................. 24
2.4 Background Information .......................................................................................................................................... 24
3. OVERVIEW ................................................................................................................................................................... 25
4. REGIONAL GEOLOGY.................................................................................................................................................. 27
5. HISTORICAL EXPLORATION......................................................................................................................................... 27
6 RAVENSGATE SITE VISIT ............................................................................................................................................. 31
7. RESOURCE ESTIMATE................................................................................................................................................. 32
8. EXPLORATION PHILOSOPHY AND BUDGET ............................................................................................................... 40
9. CONCLUSIONS AND RECOMMENDATIONS................................................................................................................ 41
10. GLOSSARY................................................................................................................................................................... 42
11. REFERENCES............................................................................................................................................................... 42

LIST OF TABLES
Table 1. Boundary co-ordinates APAC’s mining concession...................................................................................................... 26
Table 2. Boundary co-ordinates of the Bekoso-Lempesu block (“Project” area) ........................................................................ 26
Table 3. Summary of coal outcrop measurements (PTBSS) ...................................................................................................... 29
Table 4. Co-ordinates of the coal outcrops (PTBSS) ................................................................................................................. 29
Table 5. Coal quality assay results of drillcore (PTBSS).............................................................................................................. 30
Table 7. Drillhole collar positions verified by Ravensgate ........................................................................................................... 32
Table 8. Matters relating to the Resource - sampling techniques and data ................................................................................ 33
Table 9. Matters relating to the Resource - estimation and reporting of Mineral Resources........................................................ 37
Table 10. Mineral Resource statement APAC Coal Project ........................................................................................................ 40

LIST OF FIGURES

Figure 1. Map of Kalimantan showing the city of Balikpapan..................................................................................................... 25


Figure 2. Generalised stratigraphic column of the project area .................................................................................................. 27
Figure 3. Map showing Ravensgate’s validation of drillhole and outcrop positions..................................................................... 31

Figure 4. Photograph taken by Ravensgate geologist of B seam outcrop ................................................................................. 32

PAGE 21
APAC Coal Limited

1. SUMMARY
Corvidae Pty Limited as Trustee for Ravensgate Unit Trust (trading as and hereinafter referred to as Ravensgate) was requested to
prepare an Independent Geologist’s Report on the coal assets of APAC Coal Limited (APAC) located in East Kalimantan, Sumatra
Province, Indonesia.

APAC Coal Limited (APAC) intends to acquire exploration rights to a total concession area of 683.6 km2 and holds coal mining
rights by way of contract ‘PKP2B’, issued by the Indonesian government, over an area of 111 km2 (within the concession) in the
Pasir district of East Kalimantan.

It is intended that this report will be included in a Prospectus prepared by APAC Coal Limited. The purpose of the Prospectus is
to offer for subscription up to 75,000,000 ordinary shares at an issue price of 20 cents per share to raise a total of $15,000,000
before costs of the issue for the purposes of listing APAC on the Australian Securities Exchange.

Ravensgate understands that in June 2006 Magnus Energy acquired a 68.4% beneficial interest in PT Batubara Selaras Sapta
(PTBSS). PTBSS were a coal mining and marketing enterprise which held a 30-year coal mining concession in the Pasir District
in East Kalimantan.

Exploration undertaken by contractors on behalf of PTBSS delineated an 8.9km2 area known as the Bekoso-Lempesu block,
which comprises approximately 1% of the total mine concession as having the best coal potential, based on coal quality. This
report deals mainly with the exploration results within the Bekoso-Lempesu block which will hereafter be referred to as the project
area.

The project area lies in the northern part of the Barito Sub-basin and Pasir Sub-basin. These basins are underlain by Jurassic
Cretaceous ultrabasic rocks and the Jurassic Pitap Formation. These are overlain by the Tanjung-Kuaro, Berai, Pamaluan, and
Warukin Formations and covered by Quaternary alluvium. Research indicates that coal is formed mainly in the Tanjung-Kuaro,
Pamaluan and Warukin Formations within the basins.

PTBSS undertook an exploration program within the project area in 2006. The exploration work program included 32 diamond drill
holes for 2,465m at a spacing of between 200m and 500m apart. The work program is summarised in an exploration and mining
feasibility report (PT Batubara Selaras Sapta, 2006) which was supplied by APAC Coal Limited.

PTBSS identified two potentially economic and open pittable coal seams within the project area. Exploration data collected by
PTBSS indicates that the upper seam (A seam) has a thickness ranging from 2.19m to 2.88m and the lower seam (B seam) has
a thickness ranging from 3.95 to 8.13 metres.

Assay results from drillcore and outcrop samples indicate that the ash content of the coal seams is relatively high and the calorific
value is relatively low. On the basis of data collected PTBSS classified the coal seams within the project area as sub-bituminous.

Ravensgate reviewed the documentation relating to the exploration work and undertook a site visit which included the verification
of outcrop and drillhole positions initially recorded by PTBSS within the project area. Ravensgate is satisfied that the quality of work
undertaken by PTBSS is acceptable for the calculation of a mineral resource that complies with the JORC Code and that PTBSS’s
conclusions relating to the physical and chemical characteristics of the two coal seams are sound.

PTBSS estimated a non-JORC compliant Resource Estimate for the coal seams. In terms of the guidelines laid down by the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) and the ASX Listing
rule 5.6, a report which includes a statement relating to ‘mineral resources’ or ‘ore reserves’ must be prepared in accordance with
Appendix 5A (the JORC Code) of the listing rules.

Ravensgate, therefore, recommended that APAC appoint a Competent Person to calculate and classify a JORC compliant
Resource Estimate for the coal seams within the project area using the exploration data generated by PTBSS and reviewed by
Ravensgate. APAC subsequently commissioned Ravensgate to conduct this work.

The calculation of a Resource Estimate involves consideration of various factors which impact the level of confidence of the
Resource Estimate. These factors are analysed and a degree of risk is assigned to each factor; low, moderate or high risk.
The factors are broadly grouped into two sections; those pertaining to the sampling techniques used and the data itself, and those
pertaining to the estimation and reporting of Mineral Resources.

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PROSPECTUS 2008

Under sampling techniques and data, the influence of the following factors is considered, and the risk rating applied to the APAC
Coal Project noted in brackets:

Drilling techniques (moderate), drill sample recovery (moderate), logging (low), sub-sampling techniques and sample preparation
(moderate), assay data quality (moderate), verification of sampling and assay (moderate), data point location (low to moderate),
data density and distribution (moderate), and orientation of data in relation to geological structure (low).

Under estimation and reporting of Mineral Resources, the influence of the following factors is considered and the risk rating applied
to the APAC Coal Project noted in brackets:

Database integrity (low), geological interpretation (low), dimensions (low), estimation and modelling techniques (low), moisture
(low), mining factors (moderate risk), cut-off parameters (low), metallurgical factors (moderate), bulk density (moderate), and
classification (low to moderate).

These factors have been considered with due care by Ravensgate in its classification of the Mineral Resource within PTBSS’s
lease area. The Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves (2003)
prepared by the Coalfields Geology Council of New South Wales and the Queensland Mining Council is referred to in the JORC
Code, and have been adopted by Ravensgate in addition to the JORC Code guidelines.

A summary of the Resource Estimate is provided in the following table.

Mineral Resource statement APAC Coal Project

Category Volume Seam Tonnes CV FM TM IM VM FC Ash TS


width (cal/g) (%) (%) (%) (%) (%) (%) (%)
Measured - - - - - - - - - - -
Indicated A Seam 2,777,648 1.37 1,704,651 4732 5.09 7.30 2.32 36.73 23.77 37.16 1.44
Indicated B Seam 1,993,558 2.96 1,993,558 3560 5.57 8.28 2.88 26.66 22.06 39.33 2.41
Inferred 1 Seam 547,731 2.0 1,424,100 6266 7.45 14.15 NA 38.47 45.5 8.55 1.21
Note: Overall assumed density of 1.30 t/m3
Resources estimated to a vertical cut-off of 100m
Mineral Resource cut-off of minimum seam thickness of 0.5m

The Mineral Resources as stated have been estimated by Andre Wulfse BSc (Hons), Pr Sci Nat, MSAIMM; Principal Consultant of Ravensgate,
for APAC Coal Limited on September 26, 2007 and peer reviewed by Stephen Hyland. Ravensgate is an independent consultancy based in
Perth, Western Australia which specialises in geological modelling and resource estimation. This resource estimation has been carried out
to professional industry and best practice standards and is compiled by a Qualified and Competent Person, in terms of the rules of the ASX,
and the JORC Code, December 2004.

The resource estimate is based upon ‘raw’ coal analysis and it is Ravensgate’s opinion that the overall calorific value of the coal
could be improved by coal washing, which has the added advantage of decreasing the sulphur content of the coal.

Ravensgate is of the opinion that the resource could be increased and the confidence improved by additional drilling, particularly
in areas affected by interburden. Furthermore, there is potential for defining additional resources outside of the 8.9 km2 area.
Preliminary indications from outcrop samples indicate that the seam identified in this area has a relatively high calorific value.

The overall confidence in the Resource Estimate could be improved by addressing the influencing factors deemed to pose a
moderate risk. This could lead to a portion or the entire Indicated Resource within the 8.9km2 area being upgraded to Measured
Resource status.

A preliminary exploration philosophy and budget supplied by APAC Coal includes provision for further work of this nature.

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APAC Coal Limited

2. INTRODUCTION
2.1 Terms of Reference
Ravensgate was requested by APAC Coal Limited (APAC) to complete an Independent Geologist’s Report on its proposed coal
assets in East Kalimantan, Indonesia.

This report has been prepared in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves (the JORC Code, 2004) and the Code for the Technical Assessment and Valuation of Petroleum Assets and
Securities for Independent Expert Reports (the VALMIN Code, 2005).

Ravensgate has made no attempt to establish the legal status of the tenements which comprise APAC’s project area. Ravensgate
has not verified ownership and current standing of the tenements and is not qualified to make legal representations in this regard.
Details of the legal ownership of the mineral assets are dealt with in the Solicitor’s Report section of the Prospectus.

The Independent Geologist’s Report is based on information available up to and including the date of this report. Consent has
been given for the distribution of this report in the form and context in which it appears.

2.2 Qualifications, Experience and Independence


Ravensgate is an independent, privately owned consultancy which has provided exploration, mining and mineral resource
consulting services to the minerals industry since 1997.

The primary author, Mr Andre Wulfse, is a registered professional geologist with over 16 years international experience in the
minerals industry. This includes over five years as a resource consultant, where he has carried out numerous resource estimations
and independent technical reports in compliance with SAMREC, NI 43-101 and the JORC Code, on mining and exploration
properties in Africa, Canada, Indonesia and Australia on a variety of commodities including coal. Andre is a member of the South
African Institute of Mining and Metallurgy (SAIMM) which is accepted by the Australian Securities Exchange as a Recognised
Overseas Professional Organisation (ROPO). Andre is employed by Ravensgate as a Principal Resource Consultant.

The reviewer, Mr John Haywood, is a geologist and has over 17 years experience in mining geology and resource modelling, and
has worked in Australia, West Africa and Southern Africa in predominantly gold and base metals. Mr Haywood is employed by
Ravensgate as a Principal Consultant, and holds the relevant qualifications and professional associations required by the ASX,
JORC and VALMIN Codes in Australia.

Neither Ravensgate nor any of its employees or associates is an insider, associate or affiliate of APAC Coal Limited or any
associated company.

Ravensgate’s professional fees are based on time charges for work actually carried out, and are not contingent on any prior
understanding concerning the conclusions to be reached.

2.3 Principal Sources of Information


This review is based on the information provided by the current title holders, the technical reports of consultants and previous
explorers, as well as other published and unpublished data relevant to the area.

Ravensgate did not complete its own independent assessment of the quality of the geological data or the accuracy of any Mineral
Resources that may be quoted in this report. Furthermore, the status of agreements, royalties or tenement standing pertaining to
the assets was not investigated. This report is based on public information, some of which was supplied by APAC Coal Limited.

The author has endeavoured, by making all reasonable enquiries, to confirm the authenticity and completeness of the technical
data upon which this report is based. APAC Coal Limited was given a final draft of this report and requested to identify any material
errors or omissions prior to its lodgement.

2.4 Background Information


The government of Indonesia, in seeking growth and development of its economy, has recognised the need to secure energy
resources. Coal is an important energy resource, and companies in the energy industry are increasingly seeking to explore
Indonesia’s resources. Indonesia is a major coal producing and coal exporting country, with production rapidly increasing in line

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PROSPECTUS 2008

with increased global demand. Indonesia’s coal reserves are located predominantly in the provinces of Sumatra and Kalimantan,
with the latter being the major producer. Most of the production is exported to Japan, Taiwan and Korea. Domestically, the major
coal consumers are the electricity and cement industries, and to a lesser degree, the paper/pulp industry.

APAC Coal Limited’s parent company, Magnus Energy Limited, was incorporated in 1983 in Singapore, as an electrical and
mechanical engineering services group. The company was listed on SGX-Sesdaq in August 1999 and the company embarked
on major restructuring in 2003. The business focus shifted to the oil, gas and energy industry, of which it has become a significant
regional player.

In June 2006, Magnus Energy acquired a 68.4% beneficial interest in PT Batubara Selaras Sapta (PTBSS), through a 72% equity
interest in PT Deefu Chemical Indonesia, the holding company of PTBSS. PTBSS were a coal mining and marketing enterprise
which held a 30-year coal mining concession in the Pasir District in East Kalimantan. The concession is deemed to have
commenced when Batubara entered into a ‘third generation’ Coal Contract of Work (CCOW) with the Indonesian government in
1997, allowing it to explore and mine the coal reserves. This contract will remain in effect until the end of its tenure and is referred to
as the Co-operative Agreement for Coal Mining (PKP2B). These contracts are royalty-based and allow contractors to commence
mining within the exploration period.

APAC Coal Limited has expressed an intention to commence coal mining operations on the acquired concession. This report
covers the concession currently held by PTBSS, and previous exploration work undertaken by PTBSS.

3. OVERVIEW
PTBSS has exploration rights to a total area of 683.6 km2 and holds coal mining rights by way of PKP2B, issued by the Indonesian
government, over an area of 89 km2 (within the concessions) in the Pasir district of East Kalimantan.

Access to the project area is gained by boat from Balikpapan which is a seaport city on the eastern coast of Kalimantan (Figure 1)
to Penajam, and by vehicle from Penajam to Bekoso village. Outcrops can be reached by 4WD vehicle and in some cases on foot
only. The journey from Jakarta International Airport to the project area typically involves 5 to 6 hours of cumulative travel.

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APAC Coal Limited

Figure 1. Map of Kalimantan showing the city of Balikpapan

Vegetation within the project area consists predominantly of rainforest regrowth (60%). Some areas are covered by timber forests
(7%), coconut palm plantations (25%) and farms (3%). The wettest period occurs between December and May each year (158.8m
monthly rainfall) and the average temperature is 29.5°C. The area has an average relative humidity (content) of 41.3%.

Topography within the project area is largely covered by moderate to steep hills in the central part, which are comprised of Kuaro
Formation rocks. The remainder of the topography consists of gentle hills, and a small percentage of the area is flat alluvium-
covered terrain.

The mean annual temperature in the project area is 29.5°, humidity is approximately 41%, and during the wet season from
December to May the average rainfall is 158.8 millimetres.

The boundary points of the area over which APAC hold coal mining rights is shown in Table 1.

Table 1. Boundary co-ordinates of APAC’s mining concession

Longitude Latitude
116°02’56’ 1°47’00’
116°08’22’ 1°47’00’
116°08’22’ 2°00’00’
116°01’00’ 2°00’00’
115°58’00’ 2°13’36’
115°58’00’ 2°13’36’
115°49’00’ 2°17’00’
115°49’00’ 2°05’00’
115°57’24’ 2°05’00’
115°57’24’ 1°05’14’
116°02’56’ 1°05’14’
Source: Work Agreement for Coal Mining Enterprises between the Government of the Republic of Indonesia and PT Batubara Selaras Sapta

Exploration undertaken by contractors on behalf of PTBSS delineated an 8.9km2 area known as the Bekoso-Lempesu block,
which comprises 1.3% of the total concession, as having the best coal potential, based on coal quality. This report deals mainly
with the exploration results within the Bekoso-Lempesu block which will hereafter be referred to as the project area. The boundary
points of the project area are given in Table 2.

Table 2. Boundary co-ordinates of the Bekoso-Lempesu block

Longitude Latitude
116°04’27.27’ 1°55’39.8’
116°05’30.71’ 1°55’39.8’
116°05’30.71’ 1°58’07.8’
116°04’27.27’ 1°58’07.8’

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PROSPECTUS 2008

4. REGIONAL GEOLOGY
The project area lies in the northern part of the Barito Sub-basin and Pasir Sub-basin. These basins are underlain by Jurassic
Cretaceous ultrabasic rocks and the Jurassic Pitap Formation. These are overlain by the Tanjung-Kuaro, Berai, Pamaluan, and
Warukin Formations and covered by Quaternary alluvium. Research indicates that coal is formed mainly in the Tanjung-Kuaro,
Pamaluan and Warukin Formations within the basins. A generalised stratigraphic column is shown in Figure 2.

Figure 2. Generalised stratigraphic column of the project area

Three periods of tectonic activity are recognised to have taken place:


• Late Cretaceous period: faults caused displacement of ultrabasic rocks which were then intruded by granite, granodiorite and
diorite; Tanjung and Kuaro Formations are deposited, followed by the Berai and Pamaluan Formations
• Mid-Miocene: basin is uplifted becoming shallow marine or continental environment; Warukin Formation is deposited
• Plio-Pleistocene: uplifting followed by continuous folding and faulting in continental environment

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APAC Coal Limited

5. HISTORICAL EXPLORATION
PT Batubara Selaras Sapta (PTBSS) are the current owners from whom APAC are proposing to acquire the project. PTBSS
undertook an exploration program within the project area in 2006. The work program is summarised in an exploration report (PT
Batubara Selaras Sapta, 2006) obtained from APAC Coal Limited. A summary of their work program and results follows.

Work program
• A topography map at a scale of 1:5000 was constructed using a theodolite and GPS receivers.
• A geological map at a scale of 1:5000 was constructed using a tape and compass, which recorded all relevant geological data
including dip/strike, coal seam thicknesses and coal seam continuity.
• A total of 32 diamond core drillholes for 2,465m were drilled at a spacing of between 200 and 500m apart. The drillhole
depths ranged from 30 to 110 metres. The drilling aimed to determine the thickness of coal beds and the type of overburden
and interburden material. A total of 29 composite core samples each weighing 2kg underwent geochemical assay at the coal
testing laboratory operated by the Indonesian Department of Energy and Minerals in Bandung.
• A series of shallow exploration pits were sunk in areas of optimal exposure of coal beds.
• A ‘coal resources’ map at a scale of 1:5000 was constructed. This map combines the drillhole and pit positions with the
geology and topography.
• A total of 25 samples from 22 of the drillholes were selected for geotechnical analysis. These samples were sent to the Soil
Mechanical Laboratory in Bandung.
• Hydrogeological drilling which included one test well pump, one observation well with four piezometric wells all drilled to a
depth of 100 metres.
• Geological logging of the drillcore was combined with geophysical logging consisting of gamma ray, density and resistivity
techniques.
A summary of the results of the geological mapping follows.

Stratigraphy
Outcrops consist of rocks of the Kuaro Formation and alluvium. The Kuaro Formation is composed of sandstone and conglomerate
interbedded by coal, marl, limestone and clayey shale. It is similar in composition to the well known Tanjung Formation which forms
part of the Barito Sub-basin. The Kuaro Formation was deposited in the Pasir Sub-basin.

The early Eocene Kuaro Formation is about 700m thick, and was deposited in continental to swamp and shallow marine
environment over ultrabasic rocks. This is evidenced by the presence of plant fossil matter. The Quatenary alluvium consists of
cobble, pebble, sand silt and mud which were deposited along rivers, creeks, swamps and beaches.

Two major coal seams of between 1.3 and 8.3 metres, as well as minor coal lenses are contained within the Kuaro Formation.

Geological structure
Within the project area, structural control is provided by normal and horizontal faulting. This is determined from interpretation of
Landsat imagery and digital elevation models, while slickensides are present in the drill core.

The A seam mapped by the geologists strikes north to south in the northern portion of the tenement and deflects in the southern
part which is indicative of horizontal faulting, while the northwest-southeast trend of the B Seam bedding is seen to deflect
westwards and dip more steeply. This suggests normal faulting.

Coal outcrop
Coal outcropping was located in sixteen places across the project area. The thickness of the coal seams observed at the outcrops
range from 0.3 to over 2 metres. Observations recorded by the geologists are summarised in Table 3.

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PROSPECTUS 2008

Table 3. Summary of coal outcrop measurements (PTBSS)

Outcrop Strike and dip Seam thickness Description


number (degrees) (m)
AB-01 345/17 >2.1 Black, dull hard claystone
AB-02 320/15 >0.4 Black, brittle, conchoidal
AB-03 348/23 >0.3 Black, hard, blocky and bedded
AB-04 166/43 >2.14 Four layers, blackish brown and hard
AB-05 348/28 >1.20 Brown-black, bright banded
AB-06 198/53 >1.75 Three layers, between 3cm and 103cm thick
AB-07 298/25 0.3 Black, hard, brittle, blocky
AB-09 348/15 0.3 Black, hard, shaly with carbonaceous claystone
AB-10 335/24 0.97 Black, hard, brittle, blocky, 2cm claystone
AB-12 353/27 0.3 Brown-black, hard, brittle, bedded
AB-13 - >0.4 Black, brittle, contains pyrite, resins and silicified clay
AB-14 340/15 >1.1 Black, hard, woody texture, contains resins
AB-15 - >0.5 Black, opaque, brittle, coaly clay
AB-16 345/17 0.4 Black and hard

The localities of the outcrops are given in Table 4 in UTM co-ordinates.

Table 4. Co-ordinates of the coal outcrops (PTBSS)

Outcrop number Easting Northing Elevation


AB-01 397839.0 9784582.0 29.6
AB-02 398063.0 9785102.0 41.9
AB-03 398144.3 9785058.8 47.5
AB-04 397755.7 9784981.2 31.1
AB-05 397987.0 9785708.0 44.0
AB-06 397706.8 9784736.2 24.2
AB-07 397720.2 9785504.0 42.3
AB-09 397691.7 9784742.3 18.6
AB-10 398111.5 9784901.0 29.1
AB-12 398407.0 9785339.0 25.1
AB-13 397944.8 9785282.6 39.8
AB-14 397961.5 9786259.2 44.8
AB-15 397678.0 9785499.0 38.0
AB-16 398022.2 9786631.4 25.8

Continuity of coal seams


While the coal seams occur semi-continuously in the area north of the Kendilo River (1°57’00’ South), continuity of the seams in
the southern portion of the project area is complicated by complex faulting.

PTBSS have identified two coal seams in the concession area from interpolation of the coal outcrops and examination of drill hole
sections and electrical logging data. PTBSS have calculated the following seam characteristics from the exploration data:

• Upper A seam has a thickness between 2.19m and 2.88m, with a dip of between 15° and 27°
• Lower B seam has a thickness of between 3.95m and 8.13m (average 7.43m) and dips between 17° and 20°
• Both seams have a claystone roof and floor

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APAC Coal Limited

Coal quality
A total of 31 composite coal samples from the drilling program were assayed by the Geological Survey Centre (GSC), a technical
laboratory unit of the Department of Minerals and Energy, in Bandung. The samples were assayed for levels of total moisture,
inherent moisture, ash, volatile matter, fixed carbon, total sulphur and calorific value. In addition, the chemical composition of the
ash was analysed. Table 5 summarises the results of the analyses.

Table 5. Coal quality assay results of drillcore (PTBSS)

Sample ID Total Inherent Ash Volatile Fixed Total Calorific


moisture moisture matter carbon sulphur value
(%) (%) (%) (%) (%) (%) (Kcal/kg)
A1 51.18 2.23 13.8 43.50 40.47 2.43 6887
A2 5.98 2.22 24.78 38.37 34.63 1.49 5728
A4 7.61 2.47 36.95 31.66 28.92 2.27 4560
A6 8.94 2.66 49.11 26.93 21.30 1.62 3375
A7 29.64 2.42 42.58 29.12 25.88 1.71 4021
A8 6.65 2.57 59.64 22.43 15.36 1.12 2385
A9 8.12 2.94 53.51 23.98 19.57 2.13 3009
A24/A 6.82 3.52 35.63 31.55 29.30 3.48 4650
A24/B 7.65 3.21 52.19 27.67 16.93 2.77 2957
A24/C 8.68 3.52 39.67 31.32 25.49 1.85 4260
A10/A 3.99 2.23 39.50 36.29 21.98 1.21 4499
A09/A 4.66 2.73 48.38 30.96 17.98 0.92 3630
A16/A 3.63 2.16 24.35 42.84 30.65 2.07 5943
A01/A 3.44 2.11 36.67 37.45 23.77 1.48 4808
A03/A 3.83 2.00 39.03 36.71 22.26 2.33 4623
A23/A 5.43 2.45 30.90 38.11 28.54 3.51 5226
A23/B 8.75 3.34 47.55 27.61 21.50 1.76 3843
A23/C 5.57 3.07 42.69 27.84 26.40 4.40 3902
A07/A 5.87 3.00 29.25 33.44 34.31 2.31 5298
A07/B 5.11 2.90 29.86 32.60 34.64 3.36 5270
A14/A 12.19 4.61 64.75 18.89 11.75 0.56 1590
A14/B 8.94 4.12 50.33 25.24 20.31 1.53 3148
A17/A 6.78 4.07 50.47 24.59 20.87 1.06 3215
A17/B 6.57 3.03 35.61 31.55 29.81 4.64 4639
A17/C 9.53 4.23 62.61 20.95 12.21 1.65 1883
A02 3.58 2.43 33.46 38.36 25.75 1.58 5060
A15 3.58 2.36 37.01 36.26 24.37 1.60 4798
A22/A 5.00 3.16 26.50 36.08 34.26 2.14 5520
A22/B 6.25 3.91 43.64 28.34 24.11 1.84 3875
A22/C 5.74 3.56 29.29 33.95 33.20 2.56 5221
A18 17.93 2.31 32.84 38.62 26.23 1.28 5119

PTBSS concluded that the overall calorific value of coal was relatively low, possibly due to the high ash contents. As a general
rule, high ash coal is coal with a mean ash content greater than 15% and high sulphur coal is coal with a mean sulphur content
of greater than 3%.

In the B Seam there is a general increase in calorific value from south to north. The upper part of the B Seam is generally of a higher
calorific grade than the middle and lower portions. PTBSS concluded from the analytical results that the coal in the concession

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PROSPECTUS 2008

area ranks as sub-bituminous coal, and that the overall calorific value would be improved by coal washing. This is a process
involving grinding the coal into smaller pieces and passing it through a gravity separation process. A further advantage of the
process is that the sulphur content of the coal is decreased prior to shipping.

6. RAVENSGATE SITE VISIT


A Ravensgate geologist (Binson Purba) visited the project during June 2007. One of the purposes of the site visit was to verify
the positions of the tenement boundary, drillhole positions and outcrop positions as reported by PTBSS within the project area.
Figure 3 shows the positions of the outcrops and drillholes recorded by Ravensgate using a hand held GPS unit. Ravensgate
determined that all of the readings are within acceptable tolerances of the original co-ordinates measured by PTBSS.

Figure 3. Map showing Ravensgate’s validation of drillhole and outcrop positions


Note: Numbers in red indicate points (collars and outcrops) that were verified by Ravensgate

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APAC Coal Limited

Ravensgate verified three of the coal outcrops and nine of the drillholes during a two day site visit. Ravensgate’s findings are
summarised as follows:

Position 1: Coal B Seam outcrops with a strike and dip of 310/09° over a strike length of 10m with a thickness of approximately
0.9 metres. The coal is brownish black and brittle with a 9cm dark clay parting. Soil cover is approximately 1.5m thick.

Position 2: Coal B Seam outcrops at Rumah Furgon test pit. A strike length of 1m is exposed with an average thickness of 0.5
metre. A strike and dip of 153/33° was recorded by Ravensgate. The coal is brownish black, brittle with 3.0m thick soil cover as
shown in Figure 4.

Figure 4. Photograph taken by Ravensgate geologist of B seam outcrop

Position 3: Coal outcrop of 15m strike length, exposed by a trench. Coal thickness is 0.4m with a strike and dip of 358/22°. The
coal was observed to be black, hard, shaly and brittle.

Table 6 gives the locations of the PTBSS drill collars verified by Ravensgate.

Table 6. Drillhole collar positions verified by Ravensgate

Drillhole Ravensgate locality


A-01 10
A-02 9
A-07 4
A-14 6
A-15 11
A-23 3
A-24 5

There is good correlation between outcrop and drillhole positions recorded by Ravensgate and the original PTBSS co-ordinates
supplied by APAC Coal Limited.

7. RESOURCE ESTIMATE
Ravensgate were commissioned by APAC Coal Limited to conduct an Independent Resource Estimate in September 2007. This
involved an analysis of several influencing factors, and an assessment by Ravensgate of the risk associated with each of these
factors. The factors are broadly grouped into those pertaining to sampling techniques and the data itself, provided in Table 7 and
those pertaining to estimation and reporting of Mineral Resources, provided in Table 8.

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PROSPECTUS 2008

Table 7. Matters relating to the Resource - sampling techniques and data

Criteria Explanation

Drilling techniques All holes drilled in 2005 using conventional triple tube core barrels
mounted on man-portable diamond drill rigs with a core diameter
of 47.6mm (NQ size core). Ravensgate was not supplied with
documentation detailing the drilling techniques. The drill logs
indicate that the holes were cored from surface to end of hole. The
rigs allow a maximum depth of approximately 100m. Ravensgate
considers this depth limitation of the portable rigs as constituting
a moderate risk to the resource estimate, since down-dip drilling
intercepts are scarce.

Moderate risk

Drill sample recovery Ravensgate inspected the drill logs of all 32 holes for drill sample
recovery. The results of the inspection are as follows:

6 of the holes have a recorded recovery of 100%


1 hole has a recorded recovery of 93%
1 hole has a recorded recovery of 60%
11 of the holes did not intersect coal
13 holes had no recorded core recovery

Ravensgate considers the lack of recovery measurements to pose


a moderate risk to the overall estimate.

Moderate risk

Logging The cored samples have been geologically logged to a centimetre


scale of detail. Coal intercepts are logged in general descriptive
terms such as dull, shiny, black, brown, carbonaceous, soft, hard
etc. The recording of dip angles is not consistent and several of the
coal intercepts do not have associated dip angles.

Ravensgate considers the scale and descriptions recorded in the


geological logs to be appropriate given the style and nature of
mineralisation.

Ravensgate was supplied with geophysical logs describing the


electrical properties of the coal samples. The confidence of seam
correlation from one borehole to the next at the logging stage is
greatly improved by comparing downhole geophysical techniques
such as gamma ray or resistivity with that of the recorded physical
characteristics of the coal seams. Inspection of the geophysical
logs showed good correlation between the observed geology and
the geophysics.

Low risk

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APAC Coal Limited

Table 7. Matters relating to the Resource - sampling techniques and data (continued)

Criteria Explanation

Sub-sampling techniques and sample preparation None of the coal outcrops logged were sampled.

Geochemical samples were collected by quartering drill core


samples. A minimum sample mass of 2kg was collected. Samples
were composited to make up the required mass and sent to the
Geology Resource Centre laboratory in Bandung.

Approximately 25 geotechnical samples were collected from 22


drill holes and sent to the Soil Mechanical Laboratory, Geology
Environment Centre in Bandung.

Ravensgate was not supplied with documentation relating to quality


control procedures that may have been adopted during the sub-
sampling stages and assumes that no quality control procedures
were implemented. Ravensgate considers this to be a moderate
risk to the resource estimate.

Moderate risk

Quality of assay data and laboratory tests Ravensgate was supplied with electronic assay certificates for a
total of 30 samples. According to the certificates, the samples were
assayed by the Department of Minerals and Energy in Bandung
Indonesia in 2005, and the following standard ISO and ASTM assay
techniques were used:

Parameter Standard Method


Total and free moisture ASTM D.3302-02a
Moisture ASTM D.5142-04
Ash content ASTM D. 5142-04
Volatile matter ASTM D.5142-4
Total sulphur ISO 351
Fixed carbon ASTM D. 5142-04
Calorific value ASTM D 5865-04

Apart from the 30 assays, Ravensgate was not supplied with


any other analytical results. No samples were assayed for relative
density. No internal (laboratory) or external (field) QAQC data was
supplied and Ravensgate is unable to comment on the accuracy
and precision of the analytical data.

The lack of QAQC data constitutes a moderate to high risk to the


accuracy and precision of the analytical data which in turn has an
effect on the accuracy and precision of the resource estimate for
the coal properties.

Moderate risk

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PROSPECTUS 2008

Table 7. Matters relating to the Resource - sampling techniques and data (continued)

Criteria Explanation

Verification of sampling and assaying Ravensgate did not carry out any verification of sampling tests.
Ravensgate understands that drill core was not retained and that
the sample pulps and coarse rejects from the laboratory were
neither retained nor returned. It is therefore not possible to test
the accuracy or precision of the assay results without the drilling of
twin holes. Ravensgate recommends the drilling of at least two twin
holes for verification and validation purposes.

Moderate risk

Location of data points Drill collar positions are recorded in a UTM co-ordinate system in
the drill logs as eastings, northings and relative levels. Drill collar
positions were determined using a Wild T2 Theodolite.

No downhole surveys were undertaken which is consistent with


relatively shallow (and vertical) drillholes such as were used here.

Ravensgate verified the collar positions of nine of the 32 holes


during a site visit and found them to be consistent with the readings
on the log sheets.

Ravensgate verified the positions of the drill collars with the


topographical data by wireframing the drill collars and performing a
sectional analysis of the topographical wireframe against that of the
‘collar’ wireframe. A few minor discrepancies (less than 1m) were
encountered. Ravensgate is satisfied that these discrepancies do
not constitute a significant risk to the overall estimate.

Topographical data was supplied for the 8.9 km2 area at a scale of
1:1000.

Ravensgate was not supplied with any topographical data for the
area outside of the 8.9 km2 area.

Ravensgate is satisfied with the adequacy of the drillhole and


topographic control within the 8.9 km2 area.

The lack of topographic control outside of the 8.9 km2 area


constitutes a high risk for any resource that may be calculated
within that area.

Low to moderate risk

Data density and distribution APAC have identified the main area of interest as a rectangular
block measuring 8.9 km2. This area forms part of a much larger
(approximately 890 km2) lease area held by APAC. The 8.9 km2 area
has been drill tested whereas the 890 km2 “external area” has not.

Nine coal outcrop positions have been recorded by the geologists


for the 890 km2 area. These outcrops have been logged but not
sampled. Ravensgate is of the opinion that there is insufficient data

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APAC Coal Limited

Table 7. Matters relating to the Resource - sampling techniques and data (continued)

Criteria Explanation

to calculate a mineral resource for this area (with the exception of


the inclusive 8.9km2 area).

Data within the 8.9 km2 area consists of 17 coal outcrop positions
that have been logged but not sampled and 32 diamond drill holes.
These holes define the extent of Ravensgate’s resource model. The
data density of these drillholes when superimposed on the area
defined by the model is approximately 1 per 150m2. The seam
intercepts are a 250m apart. According to the guidelines accepted
and advocated by JORC, a Measured Coal Resource may be
estimated using data obtained from points of observation normally
less than 500 metres apart. Ravensgate is satisfied that there are
sufficient points of observation to determine the strike continuity
of thickness and quality for the two seams with a high level of
confidence. However, the same cannot be said for the points of
observation along (down) dip. Ravensgate recommends that further
down-dip drilling be undertaken to improve the level of confidence
in the seam continuity with depth.

Moderate risk

Orientation of data in relation to geological structure Drillholes were oriented perpendicular to the overall dip direction of
the coal seams.

Low risk

Audits or reviews A previous (non-JORC compliant) Resource Estimate and Mining


Feasibility Study was carried out by PT Batubara Selaras Sapta.
Tonnages and qualities were calculated using a polygonal method
according to the Indonesian Standard of Resource Reporting. A
preliminary mining feasibility study was completed based on the
resource calculated by PTBSS.

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PROSPECTUS 2008

Table 8. Matters relating to the Resource - estimation and reporting of Mineral Resources

Criteria Explanation

Database integrity A relatively small database was stored and supplied to Ravensgate
in Excel format. Validation and verification tests run by Ravensgate
revealed a few minor errors that were subsequently corrected.

Low risk

Geological interpretation Ravensgate was supplied with a 1:5000 scale structural plan of
the 8.9 km2 area showing plan positions of thrusts, faults and
seam outcrops. These features were digitised by Ravensgate and
incorporated into the resource modelling process. These geological
and structural features appear consistent with the observations
made by Ravensgate during the resource modelling process and
Ravensgate is satisfied that the level of detail with respect to the
geological interpretation is consistent with the level of confidence
apportioned to the resource estimate as expressed in the resource
classification.

Low risk

Dimensions Interpretation of the seam boundaries and the proposal of a


conceptual model for the mineralisation are supported by sufficient
drilling for the delineation of a mineral resource. Geological continuity
is based upon nominal 250m (strike) drill spacing and the down-
dip continuity of the seams is based upon surface observations
(outcrops) as well as associated down-dip drilling intersections.

Two seams were identified by the exploration geologists, and


Ravensgate modelled both of the seams after applying a nominal
0.5m lower seam width cut-off.

The seams were modelled in three dimensions over a strike length


of approximately 2km (as defined by the drilling) for the A seam and
an overall strike length of 700m for the B seam. The up-dip extent
of the seams is defined and limited by the topographical surface
and the down-dip extent is defined by a maximum vertical depth of
-50m and then again by -100 metres.

The surface areas of the seams as modelled by Ravensgate to -


50m vertical depth is approximately 500,000m2 and 151,000m2 for
the A and B seams respectively.

The average seam thickness was calculated from the drill


intercepts.

Ravensgate did not encounter any major structural offsets other


than those identified by the geologists at the scale defined by the
current drilling density during the modelling process.

Low risk

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APAC Coal Limited

Table 8. Matters relating to the Resource - estimation and reporting of Mineral Resources (continued)

Criteria Explanation

Estimation and modelling techniques The resource estimations presented here were generated using
standard 3D wireframing techniques for each of the seams within
the defined structural and geological domains. This process
resulted in three wireframes for the A seam and one for the B seam
down to a vertical depth of -50m. The process was then repeated
for the seams from -50m to -100m, resulting in a total of eight seam
wireframes for the resource area.

The wireframes were then ‘filled’ with 3D blocks having X=75m,


Y=50m, Z=1m dimensions. The block dimensions were determined
by Ravensgate after consideration of the drill spacing and seam
statistics. Only parent cells were used in the X and Y direction.

However a sub-celling routine was applied in the Z direction in order


for cells to better represent the seam boundaries in areas where the
seam width narrows.

The coal quality grade data was then interpolated into the blocks
from the drillhole data using the Inverse Distance (IPD) to the
power of three algorithm. While Ravensgate considers the use
of a more sophisticated algorithm such as Ordinary Kriging to be
better suited and optimal especially for the ancillary elements, there
was insufficient coal quality assay data for use in variography. IPD
is a standard interpolation method often applied by coal resource
estimators and Ravensgate is confident that its use in this case is
adequate.

This series of calculations required a review of the local deposit


geostatistics. No higher grade outlier samples which were
inconsistent with the mineralised model were identified and no top-
cuts were applied.

Low risk

Moisture Tonnage calculations were carried out on a dry basis to conform to


reported assay results.

Low risk

Mining factors and assumptions An open pit mining method was assumed with a minimum mineable
seam thickness of 0.5 metres. A probable mining depth of 50m and
a maximum depth of 100m were assumed.

Moderate risk

Cut-off parameters A minimum seam width cut-off of 0.5m was applied by Ravensgate
in its selection of seams for modelling.

Low risk

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PROSPECTUS 2008

Table 8. Matters relating to the Resource - estimation and reporting of Mineral Resources (continued)

Criteria Explanation

Metallurgical factors No metallurgical factors were assumed. Average coal qualities are
based upon a proximate analysis at a single relative density.

Moderate risk

Bulk Density No density determinations were made available to Ravensgate.


The lack of density determinations constitutes a risk to the
resource estimate in terms of the precision and accuracy of the
final conversion calculation of estimated coal volume to estimated
coal mass. It is not uncommon, however, for estimators to
assume a constant value for bulk density in the absence of these
determinations. Coal density is variable and dependant on coal
type. In general, bituminous coal has a density in the order of 1.35.
Ravensgate has applied a coal density of 1.30 to its estimate. This
value has been derived from discussions between APAC Coal
and operators of adjacent coal operation. Ravensgate considers
that the coal density applied represents a somewhat conservative
approach to the final tonnage calculations.

Moderate risk

Classification Coal resources outside of the 8.9km2 lease area = Inferred

Coal Resources within the 8.9 km2 lease area = Indicated

Coal classification based upon guidelines as laid out in the JORC


Code 2004 and The Australian Guidelines for Estimating and
Reporting of Inventory Coal, Coal Resources and Coal Reserves
(2003).

Low to moderate risk

Audits or reviews No independent audits or reviews, other than Ravensgate’s internal


peer review, have been carried out on this estimate.

Low risk

Discussion of relative accuracy / confidence The reported grades, tonnages and contained ounces may
be rounded to two significant figures in accordance with
recommendations of the JORC Code.

The factors discussed in the preceding tables were carefully considered by Ravensgate in its classification of the Mineral Resource
within APAC’s lease area. The Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal
Reserves (2003) prepared by the Coalfields Geology Council of New South Wales and the Queensland Mining Council is referred
to in the JORC Code, and has been used by Ravensgate in addition to the JORC Code guidelines. The statement outlining the
Mineral Resource calculated by Ravensgate is provided in Table 9.

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APAC Coal Limited

Table 9. Mineral Resource Statement APAC Coal Project

Category Volume Seam Tonnes CV FM TM IM VM FC Ash TS


width (cal/g) (%) (%) (%) (%) (%) (%) (%)
Measured - - - - - - - - - - -
Indicated 2,777,648 1.37 1,704,651 4732 5.09 7.30 2.32 36.73 23.77 37.16 1.44
A Seam
Indicated 1,993,558 2.96 1,993,558 3560 5.57 8.28 2.88 26.66 22.06 39.33 2.41
B Seam
Inferred 547,731 2.0 1,424,100 6266 7.45 14.15 NA 38.47 45.5 8.55 1.21
1 Seam
Note: Overall assumed density of 1.30 t/m3
Resources estimated to a vertical cut-off of 100m
Mineral Resource cut-off of minimum seam thickness of 0.5m

The Mineral Resources as stated have been estimated by Andre Wulfse BSc (Hons), Pr Sci Nat, MSAIMM; Principal Consultant of
Ravensgate, for APAC Coal Limited on September 26, 2007 and peer reviewed by Stephen Hyland. Ravensgate is an independent
consultancy based in Perth, Western Australia which specialises in geological modelling and resource estimation. This resource
estimation has been carried out to professional industry and best practice standards and is compiled by a Qualified and Competent
Person, in terms of the rules of the ASX, and the JORC Code, December 2004.

8. EXPLORATION PHILOSOPHY AND BUDGET


Current Resource Area (8.9km2 )
Additional drilling will be done to assess resources around the defined production target. Infill drilling will be undertaken
within the currently defined resource area. The aim of the drilling is to improve the overall confidence in the mineral resource
with a view to upgrading the resource classification. Deeper drilling is also planned in order to assess the coal continuity
below the existing target zones. Further drilling will facilitate the proper and correct conversion of the mineral resources to
ore reserves. The current resource area represents approximately 1% of the total available mining area available for future
production expansion.

Total Concession Area


APAC plan further exploration work in the area outside of the current resource area.

Preliminary planning includes:


Review of existing 1:25,000 geological maps
Geological mapping and sampling of coal outcrops associated trenching and pitting
Reverse Circulation and Diamond drilling accompanied by downhole geophysical logging of diamond holes
Mineral Resource and Ore Reserve estimation

APAC believe that as exploration of the total Concession proceeds it will extend the production capability and ultimately will
deliver a significantly larger resource than is the subject of the IPO.

APAC provided Ravensgate with a preliminary exploration and development philosophy and budget. The proposed two
year budget makes provision for the following:
Further geological surveys, Resource Upgrades, feasibility study and Reserve Estimates – US$600,000
Land Compensation for mining the current resource area – US$800,000
Office, Base Camp and workshop construction – US$750,000
Road Construction – US$2,500,000
Purchase of heavy duty equipment and construction of Crusher, Conveyor Belt and Jetty – US$3,000,000
The total preliminary capital expenditure proposed by APAC amounts to US$7,650,000.

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PROSPECTUS 2008

9. CONCLUSIONS AND RECOMMENDATIONS


Exploration work carried out by PTBSS has identified two potentially economic coal seams within the project area. Assay results
from drillcore and outcrop samples indicate that the ash content of the coal seams is relatively high and the calorific value is
relatively low. On the basis of data collected PTBSS classified the coal seams within the project area as sub-bituminous.

Ravensgate reviewed the documentation relating to the exploration work and undertook a site visit which included the verification
of outcrop and drillhole positions initially recorded by PTBSS within the project area. Ravensgate is satisfied that the quality of
work undertaken by PTBSS is acceptable and their conclusions relating to the physical and chemical characteristics of the two
coal seams within the project are sound.

PTBSS estimated a non-JORC compliant resource estimate for the coal seams. To comply with the requirements of the JORC
Code, Ravensgate were commissioned to undertake an Independent Resource Estimate for the coal seams within the project
area in September 2007.

Based on this work, Ravensgate concluded that the proposed APAC leases contain coal resources that rank as sub-bituminous.
Ravensgate is of the opinion that the confidence and reliability of the resource within the 8.9 km2 project area is high enough for
the resource to be classified as Indicated in accordance with JORC guidelines. Following a preliminary feasibility study and the
application of technical and financial factors, this classification could be converted to an Ore Reserve. The preliminary feasibility
study by PTBSS which was based upon the Non-JORC compliant Resource should be updated in the light of the findings of the
Resource Estimate report.

While the geological structure is well understood and Ravensgate considers the geological loss factors to be relatively low,
it considers that further drilling in the vicinity of Drillholes A-14 and A-22, where interburden within the B seam is evident, is
required.

The resource estimate is based upon ‘raw’ coal analysis and it is Ravensgate’s opinion that the overall calorific value of the coal
could be improved by coal washing, which has the added advantage of decreasing the sulphur content of the coal.

Ravensgate is of the opinion that the resource could be increased and the confidence improved by additional drilling, particularly
in areas affected by interburden. Furthermore, there is potential for defining significant additional coal resources outside of the
8.9 km2 area.

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APAC Coal Limited

10. GLOSSARY
ash content percentage of a coal sample remaining after incineration to a constant weight under standard
conditions
calorie quantity of heat required to raise 1 gram of water from 15° to 16° Celsius
calorific value heat of combustion of a unit quantity of a substance
coal readily combustible rock containing carbonaceous material formed from plant remains that have
been compacted, indurated, chemically altered, and metamorphosed by heat and pressure during
geologic time
conchoidal having elevations and depressions
density mass of coal per unit volume
dry-air basis calculations done on the basis that a sample has no moisture
fixed carbon matter remaining after determination of moisture, volatile matter and ash
floor rock immediately underlying a coal bed
high-ash coal coal containing more than 15% total ash on an as-received basis
high-sulphur coal coal containing 3% or more total sulphur on an as-received basis
kilogram-calorie (kcal) metric unit of heat equal to 1,000 gram-calories
low-ash coal coal containing less than 8% total ash on an as-received basis
low-sulphur coal coal containing 1% or less total sulphur on an as-received basis
inherent moisture moisture entrapped in the coal and removed by heating to 220°F
moisture content percentage of moisture (water) in coal
parting layer or stratum of non-coal material in a coal bed which does not exceed the thickness of coal in
either the directly underlying or overlying benches
quality aspect of coal relating to its suitability for use for a particular purpose
roof the rock immediately overlying a coal bed
seam a bed of coal lying between a roof and floor
specific gravity ratio of the mass of a unit column of coal to the mass of an equal volume of water at 4°C
sub-bituminous coal whose properties range from those of lignite to those of bituminous coal, used primarily for
fuel and steam-electric power generation
sulphur content the quantity of sulphur in coal expressed in percent or parts per million
total moisture all moisture present in coal, sum of moisture lost in drying and residual moisture of a sample
volatile matter non-moisture products which are given off as gas and vapour during heating

11. REFERENCES
Report on Coal Exploration Bekoso and Lempesu Prospects, Pasir Belengkong sub district, Pasir District, East Kalimantan PKB
2 B no. 717/20.01/DJB/1999 11th October 1999. Prepared for PT Batubara Selaras Sapta Coal and Mining Industry, Jakarta
2006
www.magnusenergy.com.sg retrieved on 7th June 2007
Preliminary Feasibility Study on Railway Coal Transportation in Kalimantan, Indonesia. March 2002. Report prepared by Institute
of Energy Economics, Japan
Laporan Eksplorasi Batubara PK2B No 7177/20.01/DJB/1999. 11 Oktober 1999, PT Batubara Selaras Sapta. Jakarta 2006
Laporan Studi Kelayakan Pertambangan Batu Bara PK2B No 717/20.01/DJB/1999. 11 Oktober 1999, PT Batubara Selaras
Sapta. Jakarta 2006
Independent Resource Review on the APAC Coal Project, East Kalimantan for APAC Coal Limited. Report prepared by
Ravensgate, September 2007

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PROSPECTUS 2008

Section 8: Solicitors’ Report

Soebagjo, Jatim, Djarot


Attorneys at law
Plaza DM, 17th Floor In association with
Jalan Jenderal Sudirman kav. 25
Jakarta 12920, Indonesia Blake Dawson Waldron, Australia
Phone: +62-21-5704074, 5704075, 5229765
Fax: +62-21-5704071, 5229752

19 March 2008

Our ref: 00026/70355.002/FFF-ta

The Board of Directors


APAC Coal Limited
Level 2, 47 Colin Street
WEST PERTH WA 6005

Dear Sirs,

RE : LAWYERS’ REPORT ON TENEMENTS

This report has been prepared by Soebagjo, Jatim, Djarot (“SJD”) at the request of APAC Coal Limited (“APAC”) in relation to the
proposed initial public offering (“IPO”) and proposed listing on ASX Limited (“ASX”) of the shares in APAC.

1. General
1.1 Background

In Indonesia, mining rights may be in the form of:

(1) Contracts of Work (Kontrak Karya) between the Government of the Republic of Indonesia and an Indonesian incorporated
company owned by the foreign investor(s) (Penanaman Modal Asing), or an Indonesian incorporated company wholly
owned by Indonesians and Indonesian companies (Penanaman Modal Dalam Negeri); or an Indonesian incorporated
company wholly owned by the Government of Indonesia (Badan Usaha Milik Negara) or an Indonesian incorporated
cooperatives (Koperasi).

(2) Mining Rights (Kuasa Pertambangan - KP), which are issued to a Cooperative Economic Enterprises (Koperasi),
Indonesian-incorporated companies which are 100% Indonesian-owned (Perseroan Terbatas Biasa) as well as limited
partnerships where the partners are all Indonesian entities (Commanditaire Vennootschap) (“General Indonesian
Entities”).

APAC identified PT Batubara Selaras Sapta (“PT BSS”) a company holding a Perjanjian Karya Pengusahaan Pertambangan
Batu Bara - Coal Contract of Works (the “CCOW”) and will acquire an indirect 100% interest in PT BSS through what will
be its wholly owned subsidiary in Indonesia, PT Deefu Chemical Indonesia (“PT DCI”).

1.2 Scope of Report

SJD was instructed by APAC to conduct the following legal due diligence review:

(1) licensing, with a view to confirming the current status of the CCOW and key licenses of PT BSS;

(2) litigation, with a view to confirming that no proceedings had been commenced against PT BSS and PT DCI which could
jeopardize PT BSS’ ownership of the CCOW and PTDCI’s ownership/control over PT BSS respectively; and

(3) corporate, with a view to confirming the due incorporation and current corporate status of PT DCI and PT BSS.

PAGE 43
APAC Coal Limited

2. Mining Rights
2.1 Legal Background

The principal legislation regulating coal mining activities in Indonesia are: (a) Law No. 11 of 1967 regarding Mining Main
Provisions (“Law No. 11/1967”) and (b) Government Regulation No. 32 of 1969 as subsequently amended by Government
Regulation No. 75 of 2001 regarding The Implementation of Law No. 11 of 1967 (“Mining Implementation Regulations”)
and Government Regulation No. 27 of 1980 concerning Classification of Minerals (“Minerals Classification Regulations”)
and Decree of the President of the Republic of Indonesia No. 75 of 1996 regarding Material Provisions of Coal Contract of
Works (“Presidential Decree No. 75/1996”).

Law No. 11/1967 regulates mining activities in several key ways. These include the definition of minerals into three
classifications, describing who is eligible to mine minerals in each classification and providing a system for how this mining
can be carried out. Pursuant to the Minerals Classification Regulation, Coal classified as one of strategic minerals that can be
mined and traded by a private party by way of:

a. the awarding of mining concession by the Government of the Republic of Indonesia (“GOI”) in the form of Mining Rights
(Kuasa Pertambangan – “KP Rights”); and

b. the hiring by the GOI of a private party as the contractor for coal mining operations pursuant to a Coal Contract of Works
(“CCOW Rights”) signed between the GOI and the private party.

In general, KP Rights are exclusively reserved for Indonesians and Indonesian companies. The Board of Directors, Board of
Commissioners and formal management of a company which holds KP Rights must be Indonesian nationals.

CCOW Rights are reserved for:

(a) Indonesian incorporated companies owned by the foreign investor(s);

(b) Indonesian incorporated companies wholly owned by Indonesians and Indonesian companies;

(c) Indonesian incorporated companies wholly owned by the GOI; and

(d) Indonesian incorporated cooperatives.

Under the CCOW scheme, coal mining operations comprise of 5 (five) main stages/periods (General Survey Period,
Exploration Period, Feasibility Study Period, Construction Period and Operating Period). The term for coal mining operations
under a CCOW scheme is 30 (thirty) years after the commencement date of the Operating Period which is the date of
commencement of the first mining operation. The Operating Period, and therefore, the Concession term has not commenced
in respect of PT BSS.

2.2 Mining Rights issued to PT BSS and the Status of the CCOW

On the 20 November 1997, a CCOW was executed and signed by and between the GOI and PT BSS (the “PT BSS CCOW”).
PT BSS in the CCOW was legally awarded a Concession (as Contractor) to conduct coal mining operations in the area
designated located in the Districts of Batusopang, Pasir Belengkong and Tanah Grogot, Pasir Regency, East Kalimantan
Province.

(1) The current status of the PT BSS CCOW can be summarized as follows:

a. PT BSS is now in the Exploration Period (while the CCOW provides for completion of the Exploration Period on 24
December 2005, pursuant to the Decision of the Minister of Energy and Mineral Resources No. 45.K/30/DJB/2008
dated 13 March 2008, the Exploration Period has been extended until 4 February 2009).

b. To the best of our knowledge except as otherwise stated herein, PT BSS has complied with the required obligations
under the CCOW to date except for payment of the Land and Building Tax which we are informed (by PT BSS) is
currently being settled.

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PROSPECTUS 2008

(2) PT BSS has complied with its obligation to pay Deadrent/Fixed Retribution to the GOI for the years 2004, 2005, 2006
and 2007 in accordance with the terms and conditions of the CCOW.

(3) Pursuant to the CCOW and to the said Decision of 45.K/30/DJB/2008, PT BSS has been and is still a valid and legal
holder of the Concession (as Contractor) to conduct coal mining operations in the area designated in the CCOW located
in the Districts of Batusopang, Pasir Belengkong and Tanah Grogot, Pasir Regency, East Kalimantan Province.

3. Court Searches
3.1 Basis of inquiries

This section 3 is based upon inquiries made (only) to the district courts with jurisdiction over the domicile of PT BSS and PT
DCI as stated in their respective Articles of Association.

3.2 Search Results

In 2005, PT BSS and PT DCI were involved in litigation/legal proceedings at the Central Jakarta District Court being essentially
a claim by the Plaintiffs (1st Plaintiff and 2nd Plaintiff, Roosanawati and Happy Nugroho Priyadi respectively) against the
Defendants (the Defendants for this purpose being the then shareholders of PT BSS) in respect to a payment claimed by the
Plaintiffs as due to them from the Defendants.

Pursuant to a Settlement Agreement dated 12 July 2007, the 1st Plaintiff and the Defendants agreed to settle the matter and
confirmed that there shall be no execution arising post settlement. The Settlement Agreement also provides a waiver by the 1st
Plaintiff of its rights to file legal suits either in the present or in the future regarding the legal dispute. The said settlement was
reported to and acknowledged by the Central Jakarta District Court and the High Court of DKI Jakarta Province pursuant to
the Letter dated 12 July 2007.

The above dispute has not effected the licenses/permits of PT BSS.

Other than documents related to the aforementioned legal proceedings, we have not seen any documents evidencing other
litigation/legal proceedings.

4. Corporate
4.1 PT DCI

(1) PT DCI’s Status of Incorporation & Current Legal Entity Status

By virtue of the Decree of the Ministry of Justice of the Republic of Indonesia (presently renamed to the Ministry of Law
and Human Rights of the Republic of Indonesia – “MOJ”) No. C-01338.HT.01.01.TH.2001 dated 29 May 2001 regarding
Ratification by the MOJ on the establishment of the Company, the Company was validly incorporated as a Limited Liability
Company as of 29 May 2001 in accordance with the provisions of Article 7 of the Indonesian Company Law.

As stipulated by Letter of Approval No. 123/V/PMA/2006 dated 5 July 2006 issued by the Chairman of the Indonesian
Investment Coordinating Board (Badan Koordinasi Penanaman Modal - “BKPM”), the Company currently has the
status of Limited Liability Company operating within the framework of Indonesia’s Foreign Capital Investment regime
(Perusahaan Penanaman Modal Asing - “PT PMA”) in accordance with the provisions of the Indonesian Company Law
and the Indonesian Foreign Investment Law.

(2) PT DCI’s Current Capital Structure and Shareholding

Pursuant to: (a) Deed No. 01 dated 12 July 2006 made before Arman Lany, S.H., Notary in Jakarta which has been
approved by the Ministry of Law and Human Rights of the Republic of Indonesia by virtue of its Decree No. C-23490
HT.01.04.TH.2006 dated 10 August 2006 and registered on 21 June 2007 in the Registry of Companies at PT DCI’s
Registration Office of the Central Jakarta Municipality with PT DCI’s Registration Certificate No. 090515440796 and
Registration Agenda No. 7048/RUB.09.05/X/2006 and (b) Deed No. 16 dated 21 August 2007 made before Ny. Djumini
Setyoadi, S.H., Mkn, Notary in Jakarta which has been reported to MOJ pursuant to MOJ Letter of Report Receipt No.
W7-HT.01.10-12467 dated 7 September 2007, PT DCI’s current capital structure and shareholding are as follows:

PAGE 45
APAC Coal Limited

Authorized, Issued & Paid-Up Capital : IDR 3,000,000,000 (three billion Indonesian Rupiah) divided into 3,000
(three thousand) shares, each with a nominal value of IDR1,000,000 (one
million Indonesian Rupiah).

Shareholder’s Name Number of Shares Nominal Value %


(Indonesian Rupiah)
ANTIG INVESTMENTS PTE LTD 2,160 2,160,000,000 72
ADVANCE ASSETS MANAGEMENT LTD 840 840,000,000 28
TOTAL 3,000 3,000,000,000 100

(3) PT DCI’s Board of Directors (“BOD”) & Board of Commissioners (“BOC”)

Pursuant to resolution adopted by PT DCI’s shareholders by way of circular resolution dated 21 May 2007 as stipulated in
the Deed No. 39 dated 31 May 2007 made by Djumini Setyoadi, S.H., Notary in Jakarta), PT DCI’s BOD and BOC since
21 May 2007 are as follows:

BOD:
President Director : ALWIE HANDOYO
Director : RUDY SANTOSO

BOC:
President Commissioner : ZULKIFLI HAZALI
Commissioner : YUSMAN

In accordance with the provisions of Articles 10 and 13 of PT DCI’s Articles of Association, the tenure of the
aforementioned members of PT DCI’s BOD & BOC is 5 (five) years from 21 May 2007 as the date of their appointment
by the Shareholders as detailed above, without prejudice to the rights of the Shareholders to terminate them from time to
time.

4.2 PT BSS

(1) PT BSS’ Status of Incorporation & Current Legal Entity Status

By virtue of the MOJ Decree No. C2-17.409.HT.01.01.TH.95 dated 29 December 1995 regarding Ratification by the MOJ
on the Establishment of the Company, the Company has been validly incorporated and consequently obtained the status
of a Limited Liability Company as of 29 December 1995 in accordance with the provisions concerning limited liability
Companies regulated in the Indonesian Commercial Code being the prevailing regulations at the time of incorporation of
the Company.

Based on the above, the Company is and has been, since its incorporation, a limited liability legal entity in Indonesia.

(2) PT BSS’ Capital Structure & Shareholding

Pursuant to:

(a) Deed No. 11 dated 4 January 1993 made by Rizam Fadilah Tajudin, S.H., substitute of Mohamad Said Tadjoedin,
S.H., Notary in Jakarta as subsequently amended by: (i) Deed No. 163 dated 23 August 1993 made by Mohamad
Said Tadjoedin, S.H., Notary in Jakarta, (ii) Deed No. 3 dated 1 November 1993 made by Mohamad Said Tadjoedin,
S.H., substitute of Haji Abdul Kadir Usman, S.H., Notary in Jakarta, (iii) Deed No. 91 dated 13 June 1994 made by
Rizam Fadilah Tajudin, S.H., substitute of Haji Abdul Kadir Usman, S.H., Notary in Jakarta, (iv) Deed No. 28 dated
5 December 1995, made by Purbandari, S.H., substitute of Haji Abdul Kadir Usman, S.H., Notary in Jakarta, all of
which have been: (1) ratified by the MOJ by virtue of its Decree No. C2-17.409.HT.01.01.TH.95, dated 29 December
1995; and (2) published in the Supplement No. 10030 of the State Gazette of the Republic of Indonesia (“State
Gazette”) No. 80 dated 5 October 2004;

PAGE 46
PROSPECTUS 2008

(b) Deed No. 1 dated 1 May 2006 made by Mohamad Rifat Tadjoedin, S.H., Notary in Jakarta which has been reported
to the MOJ as stipulated by MOJ Letter of Report Receipt No. C-22342.HT.01.04.TH.2006 dated 31 July 2006
and Deed No. 13 dated 7 March 2007 made by Mohamad Rifat Tadjoedin, S.H., Notary in Jakarta which has been
reported to MOJ as stipulated by MOJ Letter of Report Receipt No. W7-HT.01.10-3707 dated 26 March 2007;
and

(c) Deed No. 3 dated 3 August 2007 made before Ny. Djumini Setyoadi, S.H., Mkn, Notary in Jakarta which has been
reported to MOJ pursuant to MOJ Letter of Report Receipt No. W7-HT.01.10-12267 dated 31 August 2007;

PT BSS’s current capital structure and shareholding are as follows:

Authorized, Issued & Paid-Up Capital : IDR 3,500,000,000 (three billion and five hundred million Indonesian
Rupiah) divided into 3,500 (three thousand and five hundred) shares, each
with a nominal value of IDR1,000,000 (one million Indonesian Rupiah).

Shareholder’s Name Number of Shares Nominal Value %


(Indonesian Rupiah)
PT DEEFU CHEMICAL INDONESIA 3,325 3,325,000,000 95
JAKE PISON HAWILA 175 175,000,000 5
TOTAL 3,500 3,500,000,000 100

The above capital structure and shareholding have been approved by the GOI pursuant to Letter No. 6307/30/DJB/2007
dated 10 October 2007 issued by Directorate General of Mineral, Coal & Geothermal – Department of Energy and Mineral
Sources of the Republic of Indonesia in accordance with the terms and conditions of PT BSS’ Coal Mining Concession as
stipulated in the CCOW, but has not been registered at the Registry of Companies as the administrative process required
by Law No. 1 of 1995 regarding Limited Liability Companies (“Law No. 1/1995”) being the prevailing law at that time.

On 16 August 2007, Law No. 1/1995 was replaced entirely with Law No. 40 of 2007 (“Law No. 40/2007”), which
stipulates that changes in capital structure and shareholding are deemed to be legally effective at the time of notification
of such changes to the MOJ. Accordingly, PT BSS’ capital structure and shareholding as described above may now
be deemed legally effective. Under Law No. 1/1995, however, these changes would require registration at the Registry
of Companies. Therefore for added certainty, PT BSS could nevertheless still effect the aforementioned registration at
the Registry of Companies. It is our understanding that procedures are currently underway to effect the aforementioned
changes in capital structure and shareholding by registration.

(4) PT BSS’ Board of Directors (“BOD”) & Board of Commissioners (“BOC”)

Pursuant to resolution adopted by PT BSS’ shareholders by way of circular resolution dated 21 May 2007 as stipulated
in the Deed No. 47 dated 31 May 2007 made by Djumini Setyoadi, S.H., Notary in Jakarta, PT BSS’ BOD and BOC since
21 May 2007 is comprised of:

BOD:
President Director : RUDY SANTOSO
Director : YUSMAN

BOC:
Commissioner : ZULKIFLI HAZALI

In accordance with the provisions of Articles 10 and 13 of PT BSS’ AOA, the tenure of the aforementioned members of
PT BSS’ BOD & BOC is 5 (five) years from 21 May 2007 being the date of their appointment by the Shareholders detailed
above, without prejudice to the rights of the Shareholders to terminate them from time to time.

PAGE 47
APAC Coal Limited

5. Assumptions
This report has been prepared with the following assumptions:

(1) that where we have been provided with copies of documents, that copy is an exact and complete reproduction of, and
conforms with, the original of the document and the original of the document still exists;

(2) that no document provided to us has been varied, cancelled or superseded by some other document or agreement or
action of which we are not aware;

(3) that all signatories, dates of and any stamp duty or other marking on all documents provided to us (whether copies or
originals) are authentic;

(4) that where a document was provided to us in draft form, it was executed or will be executed in the form of that draft;

(5) except as specifically stated in this Report, all documents provided to us are within the capacity and power of, and
have been or will be validly authorized, executed and delivered by each party to them, and constitute valid and binding
obligations of those parties under all applicable laws;

(6) except as specifically stated in this Report, each document provided to us, which is a contract or agreement, is
enforceable in accordance with its terms;

(7) the details revealed by searches of public registers maintained by governmental or other regulatory authorities (and/or
information provided to us by such authorities) are up to date at the date of such search/information provided and (as
applicable) have been properly and accurately recorded in those registers by those authorities; and

(8) all material information and documentation have been provided to us and is true and complete not misleading in any
way.

(9) where APAC / PT BSS has advised us of a matter, such advise is accurate (the phrase ‘to the best of our knowledge’ as
used herein indicates, information provided to us, inter-alia, by APAC / PT BSS).

6. Consent
This Report is based on the laws of the Republic of Indonesia. Any opinions expressed with respect to matters which may be
subject to or governed by the law of any other jurisdiction should be verified and confirmed by lawyers competent to advise
in those jurisdictions.

This report may not be disclosed to any party outside of APAC without the prior written consent of Soebagjo, Jatim, Djarot.

Yours faithfully,

Soebagjo, Jatim, Djarot

PAGE 48
PROSPECTUS 2008

Section 9a: Financial Information


THERE ARE TWO SECTIONS WITHIN SECTION 9

Introduction
This section provides an overview of the Historical Balance Sheet of APAC Coal Limited at 31 December 2007 and the Pro Forma
Historical Consolidated Balance Sheet as at that date to show the effect on APAC’s financial position of the proposed equity raising
and certain other transactions expected to occur on or around the date of the Prospectus.

The Historical Balance Sheet as at 31 December 2007 and the Pro Forma Historical Consolidated Balance Sheet as at that
date have been prepared in accordance with the recognition and measurement principles prescribed in Australian Accounting
Standards and the basis of preparation and the accounting policies adopted by APAC as set out in Note 1.

APAC was incorporated on 29 June 2007.

HISTORICAL BALANCE SHEET AND PRO FORMA HISTORICAL CONSOLIDATED BALANCE SHEETS
AS AT 31 DECEMBER 2007
Pro Forma
Historical Historical
Notes Company Consolidated
$ $

Current assets
Cash assets 3 269,981 14,228,134
Trade and other receivables 17,470 26,533
Other assets 4 170,199 -

Total current assets 457,650 14,254,667

Non –current assets


Exploration expenditure 5 - 378,484
Property, plant and equipment 6 - 24,766

Total non current assets - 403,250

Total assets 457,650 14,657,917

Current liabilities
Trade and other payables 7 89,740 40,690

Total current liabilities 237,043 40,690

Non current liabilities


Borrowings 8 - 367,949

Total non current liabilities - 367,949

Total liabilities 237,043 408,639

Net assets 220,607 14,249,278

Equity
Issued capital 9 2 14,274,023
Other contributed equity 270,000 -
Reserves 10 11,088 35,738
Accumulated losses (60,483) (60,483)

Total equity 220,607 14,249,278

PAGE 49
APAC Coal Limited

1. Significant accounting policies


The significant policies which have been adopted in the preparation of the Historical Balance Sheet and Pro Forma Historical
Consolidated Balance Sheet (Historical Financial Information) are shown below:

(a) Basis of preparation

The Historical Financial Information has been prepared in accordance with the recognition and measurement, but not all of the
disclosure requirements of applicable Australian Accounting Standards. The Pro Forma Historical Consolidated Balance Sheet
has been prepared based on the Historical Balance Sheet at 31 December 2007 and the assumption that the Pro Forma
transactions set out in Note 2 had occurred at that date.

The Historical Financial Information has been prepared on the basis of historical cost. Cost is based on the fair values of the
consideration given in exchange for assets.

(b) Basis of consolidation

The Historical Balance Sheet incorporates the balance sheets of the Company and entities controlled by the Company (its
subsidiaries) (referred to as ‘the Group’). Control is achieved where the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from
the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line
with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. In the separate financial
statements of the Company, intra-group transactions (‘common control transactions’) are generally accounted for by
reference to the existing (consolidated) book value of the items. Where the transaction value of common control transactions
differ from their consolidated book value, the difference is recognised as a contribution by or distribution to equity participants
by the transacting entities.

Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Group’s
equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and
the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of
the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the
minority has a binding obligation and is able to make an additional investment to cover the losses.

(c) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business
combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred
or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly
attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under AASB 3 ‘Business Combinations’ are recognised at their fair values at the acquisition date,
except for non-current assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current
Assets Held for Sale and Discontinued Operations’, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the
business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and
contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the
assets, liabilities and contingent liabilities recognised.

PAGE 50
PROSPECTUS 2008

The restructure of APAC and PTDCI was deemed to be a transaction of no economic substance and accordingly, the
provisions of AASB 3 Business Combinations did not apply. The Company has determined to account for the restructure and
combination based on the existing book values of the entities involved in the combination as the Company considers that the
combination does not have economic substance. The assets, liabilities and contingent liabilities of the combining entities were
therefore stated at the book value at the deemed date of the restructure and combination for the preparation of the Pro Forma
Historical Consolidated Balance Sheet, being 31 December 2007.

(d) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(e) Employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave,
and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal
values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as
the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees
up to reporting date.

Defined contribution plans


Contributions to defined contribution superannuation plans are expensed when incurred.

(f) Financial assets

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially
measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss
which are initially measured at fair value.

Subsequent to initial recognition, investments in subsidiaries are measured at cost in the company financial statements.
Subsequent to initial recognition, investments in associates are accounted for under the equity method in the consolidated
financial statements and the cost method in the company financial statements.

Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’,
‘held-to-maturity investments’, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on
the nature and purpose of the financial assets and is determined at the time of initial recognition.

Loans and receivables


Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective
interest method less impairment.

Interest is recognised by applying the effective interest rate.

Effective interest method


The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value
through profit or loss’.

PAGE 51
APAC Coal Limited

Impairment of financial assets


Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance
sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred
after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For
financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception
of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable
is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

(g) Financial instruments issued by the company

Debt and equity instruments


Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual
arrangement.

Transaction costs on issue of equity instruments


Transaction costs arising on the issue of equity instruments, including new shares and options, are recognised directly in
equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that
are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had
those equity instruments not been issued.

(h) Foreign currency

The individual balance sheets of each entity in the Group are presented in the currency of the primary economic environment
in which the entity operates (its functional currency). For the purpose of the Historical Financial Information, the results and
financial position of each entity are expressed in Australian dollars, which is the functional currency of APAC.

In preparing the financial information of the individual entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance
sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for:

• exchange differences which relate to assets under construction for future productive use, which are included in the cost
of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings;

• exchange differences on transactions entered into in order to hedge certain foreign currency risks; and

• exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned or likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the
foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

On consolidation, the assets and liabilities of the Group’s foreign operations are translated into Australian dollars at exchange
rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the
period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation
reserve. Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed.

Goodwill and fair value adjustments arising on the acquisition of a foreign are treated as assets and liabilities of the foreign
entity and translated at exchange rates prevailing at the reporting date.

PAGE 52
PROSPECTUS 2008

(i) Impairment of other tangible and intangible assets

At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for
which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually
and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or
loss immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating
unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately.

(j) Income tax

Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit
or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by
reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or
refundable).

Deferred tax
Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences between the tax
base of an asset or liability and its carrying amount in the balance sheet. The tax base of an asset or liability is the amount
attributed to that asset or liability for tax purposes.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to
the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences
or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a
business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, branches
and associates, and interests in joint ventures except where the Group is able to control the reversal of the temporary
differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with these investments and interests are only recognised to the
extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and
liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively

PAGE 53
APAC Coal Limited

enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets
and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
company/Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period


Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items
credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises
from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill
or excess.

(k) Exploration expenditure

Exploration, evaluation and development expenditure incurred may be accumulated in respect of each identifiable area of
interest. These costs are carried forward only if they relate to an area of interest for which rights of tenure are current and in
respect of which:

(i) such costs are expected to be recouped through successful development and exploitation or from sale of the area; or

(ii) exploration and evaluation activities in the area have not, at balance date, reached a stage which permit a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active operations in, or relating to,
the area are continuing.

Accumulated costs in respect of areas of interest which are abandoned are written off in full against profit or loss in the year
in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area of interest.

Notwithstanding the fact that a decision not to abandon an area of interest has been made, based on the above, the
exploration and evaluation expenditure in relation to an area may still be written off if considered appropriate to do so.

(l) Property, plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is
directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration
is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of
acquisition.

Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over
its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease
or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised on
a prospective basis.

(m) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using
the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable
can be measured reliably.

PAGE 54
PROSPECTUS 2008

(n) Revenue

Dividend and interest revenue


Dividend revenue from investments is recognised when the shareholder’s right to receive payment has been established.

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount.

(o) Share-based payments

Equity-settled share-based payments with employees and others providing similar services are measured at the fair value
of the equity instrument at the grant date. Fair value is measured by use of a binomial model. The expected life used in the
model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions,
and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of shares that will eventually vest.

Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services
received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the
current fair value determined at each reporting date.

(p) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or

ii. for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

2. ASSUMPTIONS USED IN THE PREPARATION OF THE PRO FORMA HISTORICAL CONSOLIDATED


BALANCE SHEET
The Pro Forma Historical Consolidated Balance Sheet as at 31 December 2007 has been prepared to show the financial
effects on APAC as if the following transactions had taken place at 31 December 2007:

(a) The issue of 13,800,000 shares at an issue price of 5 cents per share to raise $690,000 before costs of $86,951. As at 31
December 2007, $270,000 had been received and recorded as other contributed equity, costs of $86,951 were included
in other assets of which $35,839 of costs remained unpaid and were included in trade payables;

(b) The issue of 75,000,000 shares at an issue price of 20 cents per share to raise $15,000,000 before costs of the issue of
$1,450,000. As at 31 December 2007, $83,248 of costs were included in other assets and $30,187 of costs remained
unpaid and were included in trade payables;

(c) The payments and recognition in equity as a reduction of the proceeds received of the total costs of the offer via cash
payment ($1,300,436), issue of shares ($75,000) and issue of options ($24,650);

(d) The issue of 200,000,000 shares to effect the restructure and combination of APAC and PTDCI (refer Note 11); and

(e) Repayment of amounts owed to Magnus Energy at 31 December 2007 of $147,303.

PAGE 55
APAC Coal Limited

Minimum Subscription
As set out in Section 2.7 of the Prospectus, the minimum subscriptions to be raised pursuant to the Prospectus is $7,000,000.
The Pro Forma Historical Consolidated Balance Sheet has been prepared based on the assumption that the full $15,000,000 of
subscriptions will be achieved. If the minimum subscription is achieved, the cash and issued capital disclosed in the Pro Forma
Historical Consolidated Balance Sheet would be reduced by $7,000,000 and $7,640,000 respectively.
Pro Forma
Historical Historical
Company Consolidated
31/12/2007 31/12/2007
$ $

3 CASH 269,981 14,228,134

Reconciliation of movements in cash


Balance at 31 December 2007 269,981
Proceeds from issue of seed capital on 25 March 2008 420,000
Payment of seed capital share issue expenses (35,839)
Proceeds from issue of shares pursuant to the Prospectus 15,000,000
Repayment of loans from Magnus Energy (147,303)
Payment of share issue expenses pursuant to the Prospectus (1,300,436)
Acquisition of cash from subsidiary 21,731
14,228,134

4 PREPAYMENTS 170,199 -

Balance at 31 December 2007 170,199


Seed capital share issue expenses transferred to equity (86,951)
IPO share issue expenses transferred to equity (83,248)
-

5 EXPLORATION EXPENDITURE
Exploration expenditure, at cost - 378,484

The ultimate recoupment of exploration costs carried forward in relation to mining tenements acquired and subsequent
exploration and evaluation expenditure is dependent on the successful development and commercial exploitation or sale
of the area of interest at an amount at least equal to the carrying value.

6 PROPERTY, PLANT & EQUIPMENT


Plant and equipment at cost - 24,766

7 TRADE AND OTHER PAYABLES 237,043 40,690

Balance at 31 December 2007 237,043


Payment of seed capital share issue expenses (35,839)
Payment of IPO share issue expenses (30,187)
Repayment of loans from Magnus Energy (147,303)
Payables acquired from subsidiary 16,975
40,690

Payments to Magnus Energy represent temporary working capital advances from Magnus Energy to fund the IPO.
The advances are interest free and will be repaid from the proceeds of the IPO.

PAGE 56
PROSPECTUS 2008

Pro Forma
Historical Historical
Company Consolidated
31/12/2007 31/12/2007
$ $

8 BORROWINGS
Non Current
Long term loan from parent entity - 367,949

Long terms loans represent loans from Magnus Energy to PTDCI group which will accrue interest at a rate of 5.33% per
annum from the date of listing until 30 June 2011 when the balance will become repayable.
9 ISSUED CAPITAL
Ordinary shares 2 14,274,023

Reconciliation of movement in issued and paid up capital


No. $

Incorporation shares at $1 each 2 2


Issue of shares to seed capital investors at 5 cents each on 25/03/08 (i) 13,800,000 690,000
Seed capital share issue expenses - (86,951)
Issue of shares to effect the restructure of APAC and PTDCI 200,000,000 49,119
Issue of IPO shares pursuant to this Prospectus at 20 cents each 75,000,000 15,000,000
Issue of broker shares at 20 cents each 375,000 75,000
Share issue expenses (ii) - (1,453,147)
289,175,002 14,274,023

(i) $270,000 of seed capital was received prior to 31 December 2007 and was classified as other contributed equity
(ii) The deferred tax asset attributable to the above issue expenses has not been recognised as it does meet the
recognition requirements of AASB 112 Income Taxes.
Pro Forma
Historical Historical
Company Consolidated
31/12/2007 31/12/2007
$ $

10 RESERVES 11,088 35,738

Balance at 31 December 2007 11,088


Issue of broker options 24,650
35,738

11 ACQUISITION OF SUBSIDIARIES
The restructure of APAC and PTDCI was deemed to be a transaction of no economic substance and accordingly, the
provisions of AASB 3 Business Combinations did not apply. The Company has determined to account for the restructure
and combination based on the existing book values of the entities involved in the combination as the Company considers
that the combination does not have economic substance. The assets, liabilities and contingent liabilities of the combining
entities were therefore stated at the book value at the deemed date of the restructure and combination for the preparation
of the Pro Forma Historical Consolidated Balance Sheet, being 31 December 2007.
The book values of the assets and liabilities of PTDCI as at 31 December 2007were as follows:
$
Cash assets 21,731
Other receivables 9,063
Exploration expenditure 378,484
Plant and equipment 24,766
Deferred tax asset -
Trade and other payables (16,975)
Borrowings (367,950)
Net assets 49,119

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APAC Coal Limited

12 RELATED PARTY TRANSACTIONS AND INTERESTS


A Directors
The directors of the Company since the date of incorporation (29 June 2007) to the date of this Prospectus and the interests
those Directors held, directly or indirectly, in the Company’s shares and options as at the date of this Prospectus are as
follows:
Shares Options
No. No.
Paul Piercy - 2,000,000
TK Koh - 1,300,000
Sam di Giacomo - 1,000,000
Maurice Drew - 1,000,000
Shyun Kon (appointed 19 March 2008) - 1,000,000
Umar bin Abdul Hamid (resigned 30 January 2008) - -
Ian Macpherson (resigned 6 September 2007) - -
- 6,300,000

5,300,000 options were issued on 31 October 2007 and 1,000,000 were issued on 19 March 2008 and are exercisable at
25 cents each on or before 31 October 2010. The options vest immediately and the fair value of the options of $11,080 has
been recorded in Accumulated Losses and Reserves as at 31 December 2007.
The directors may also elect to subscribe for shares pursuant to this Prospectus.
B Transactions with Directors and Director Related Entities
Directors were granted the options in Note 12a as part of their conditions of employment.
TK Koh, is also a director of Magnus Energy.
C Directors’ Remuneration
As at the date of the Prospectus, the Company has agreed to pay the following annual remuneration to Directors as follows:
$
Paul Piercy 50,000
TK Koh 120,000
Sam di Giacomo 30,000
Maurice Drew 30,000
Shyun Kon 30,000
The fees as disclosed above will only accrue from the date the Company achieves a listing on ASX.
TK Koh’s remuneration is the subject of an agreement with Magnus Energy, a company of which Mr Koh is also a director.
This agreement is discussed further in Note 11D. The fees are payable directly to Magnus Energy.

As at the date of this Prospectus, Messrs Piercy and di Giacomo are contracted to provide services in relation to the
management of the listing of the Company on ASX. Each have a monthly retainer of $4,500 per month to manage the
initial public offering. Upon listing, the fees as disclosed above will replace the current arrangements for Messrs Piercy and
di Giacomo.
D Transactions with Ultimate Parent
On 19 March 2008, the Company entered into a Management Agreement with Magnus Energy pursuant to which Magnus
Energy agreed to provide the services of TK Koh as Managing Directors and Adeline Wong as Chief Financial Officer in
addition to general administrative services.

The initial term of the agreement is for 12 months with either party being able to terminate with 3 months written notice.
Under the agreement, the Company will pay Magnus $10,000 per month for the services of TK Koh and $5,000 per month
for general financial and administrative services.

13 COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES


The Directors are not aware of any commitments, contingent assets or liabilities.

14 EVENTS SUBSEQUENT TO REPORTING DATE


The Directors are not aware of any circumstances or matter that has arisen since 31 December 2007 which has significantly
affected , or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group, in future financial years, other than those set out in Note 2 with regard to Pro Forma transactions.

PAGE 58
PROSPECTUS 2008

Section 9b: Investigating Accountants’ Report


THERE ARE TWO SECTIONS WITHIN SECTION 9
Deloitte Touche Tohmatsu
ABN 74 490 121 060

Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia

DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
The Directors www.deloitte.com.au
APAC Coal Limited
Level 2
41-47 Colin Street
West Perth
WA 6005

4 April 2008

Dear Sirs
Investigating Accountants’ Report on Historical Financial Information
We have prepared this Investigating Accountants’ Report (“Report”) for inclusion in a Prospectus to be dated on or about 4 April
2008 relating to the initial public offering (“Offer”) of up to 75,000,000 ordinary shares at an issue price of 20 cents per share in
APAC Coal Limited ( “APAC”) to raise $15,000,000 before costs associated with the Offer.
References to APAC and other terminology used in this Report have the same meaning as defined in Section 13 ‘Definitions’ of
the Prospectus in which this Report appears.
Scope
You have requested that Deloitte Touche Tohmatsu prepare a Report covering the following financial information:

(i) the Historical Balance Sheet of APAC as at 31 December 2007 as set out in Section 9 of the Prospectus;

(ii) the Pro Forma Historical Consolidated Balance Sheet of APAC as at 31 December 2007 as set out in Section 9a of the
Prospectus which assumes completion of the proposed Pro Forma transactions as set out in Note 2 of Section 9a of the
Prospectus as at that date;

(iii) notes to and forming part of the Historical Balance Sheet and Pro Forma Historical Consolidated Balance Sheet of APAC as at
31 December 2007 as set out in Section 9a of the Prospectus
together we refer to the above hereafter as the “Historical Financial Information”.
The Historical Financial Information has been extracted from the unaudited 31 December 2007 management accounts of APAC
and PT Deefu Chemical Indonesia.
The Directors of APAC are responsible for the preparation of the Historical Financial Information which has been prepared in
accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and the basis of
preparation and the accounting policies adopted by APAC as described in Note 1 of Section 9a of the Prospectus. This includes
responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect
fraud and error, and for the accounting policies and accounting estimates inherent in the Historical Financial Information.
For the purposes of this Report, we have reviewed the Historical Financial Information of APAC in order to state whether, on the
basis of the procedures described, anything has come to our attention that would indicate that the Historical Financial Information
is not presented fairly in accordance with the recognition and measurement principles prescribed in Australian Accounting
Standards and the basis of preparation and the accounting policies adopted by APAC as described in Note 1 of Section 9a of the
Prospectus.
Our review of the Historical Financial Information has been conducted in accordance with Australian Auditing Standard AUS 902
“Review of Financial Reports”. We made such enquiries and performed such procedures as we, in our professional judgement,
considered reasonable in the circumstances including:

Liability limited by a scheme approved under Professional Standards Legislation.

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APAC Coal Limited

• Analytical procedures applied to the Historical Financial Information;

• Review of workpapers, accounting records and other documents;

• Review of the Pro Forma transactions reflected in the Pro Forma Historical Consolidated Balance Sheet of APAC as at 31
December 2007 as set out in Note 2 of Section 9a of the Prospectus;

• Comparison of consistency in the application of the recognition and measurement principles in Australian Accounting
Standards and the accounting policies adopted by APAC as set out in Note 1 of Section 9a of the Prospectus; and

• Interviews with and enquiries of the management and the Directors of APAC and its advisors.
These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less
than given in an audit. We have not performed an audit and accordingly, we do not express an audit opinion.
Statement
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that:

• the Historical Balance Sheet and notes thereto of APAC as set out in Section 9a of the Prospectus do not present fairly the
historical financial position of APAC as at 31 December 2007;

• the Pro Forma Historical Consolidated Balance Sheet and notes thereto of APAC as set out in Section 9a of the Prospectus
which assumes completion of the proposed Pro Forma transactions as set out in Note 2 of Section 9a of the Prospectus as at
that date, do not present fairly the Pro Forma financial position of APAC as at 31 December 2007

in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and the basis of
preparation and the accounting policies adopted by the APAC as described in Note 1 of Section 9a of the Prospectus.
Subsequent events
Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the best of our knowledge and
belief no material transactions or events outside of the ordinary course of business of APAC arising after 31 December 2007 have
come to our attention that would require comment on, or adjustment to, the information in our Report or that would cause such
information to be misleading or deceptive.
Independence or Disclosure of interest
Deloitte Touche Tohmatsu does not have any interest in the outcome of this issue other than in the preparation of this report and
other services in relation to the offer for which normal professional fees will be received.

Yours faithfully

DELOITTE TOUCHE TOHMATSU

AT Richards
Partner
Chartered Accountants

'Deloitte' refers to the Australian partnership of Deloitte Touche Tohmatsu and its subsidiaries. Deloitte, one of Australia s leading professional
services firms, provides audit, tax, consulting, and financial advisory services through around 3000 people across the country. Focused on the
creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our
clients and our people excel. For more information, please visit Deloitte s web site at www.deloitte.com.au.
Deloitte refers to one or more of Deloitte Touche Tohmatsu (a Swiss Verein), its member firms or their respective subsidiaries and affiliates. As a
Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other s acts or omissions. Each
of the member firms is a separate and independent legal entity operating under the names Deloitte, Deloitte & Touche, Deloitte Touche Tohmatsu,
or other, related names. Services are provided by the member firms or their subsidiaries and affiliates and not by the Deloitte Touche Tohmatsu
Verein.
Liability limited by a scheme approved under Professional Standards Legislation.
Confidential - this document and the information contained in it are confidential and should not be used or disclosed in any way without our prior
consent.
© Deloitte Touche Tohmatsu. April, 2008. All rights reserved.

PAGE 60
PROSPECTUS 2008

Section 10: Material Risk Factors

The Shares offered under this Prospectus should be considered speculative due to the inherent risks associated with coal
exploration, appraisal, development, production distribution and marketing. In addition, there are risks inherent in investing in the
share market in general.

The Directors have considered and identified in this section of the Prospectus the critical areas of risk associated with investing in
the Shares. The risks identified by the Directors are not exhaustive and potential investors should read this Prospectus in full and
seek professional advice if they require further information on material risks in deciding whether to subscribe for shares.

The principal activities of the Company to date have been limited to organisational activities, project acquisition and funding
project exploration. Accordingly, the Company does not have a record of any revenue-producing operations and there is a limited
operating history upon which to base an assumption that the Company will be able to successfully implement its business plans
and it may not achieve its business goals.

10.1 Exploration and Production Risks


The business of coal exploration, project development and production involves risks by its very nature. Success depends on
the successful exploration appraisal and development of economic coal reserves. Operations such as design, and construction,
of efficient recovery and processing facilities, competent operational and managerial performance and efficient distribution and
marketing services are required for success. In particular, exploration is a speculative endeavour whilst production operations
can be hampered by force majeure circumstances, engineering difficulties, cost overruns, inconsistent recovery rates and other
unforeseen events.

The outcome of the exploration programs outlined in this Prospectus will affect the future performance of the Company and the
Shares.

If and when the Company commences production, the production may be curtailed or shut down for considerable periods of time
due to any of the following factors:

• disruptions to the transport chain being road, rail, port infrastructure and ocean freight;
• a lack of market demand;
• government regulation;
• production allocations; or
• force majeure.

These curtailments may continue for a considerable period of time resulting in a materially adverse effect on the results of
operations and 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.

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APAC Coal Limited

Exploration involves numerous risks, including the risk that the Company will not find any commercially productive coal reserves.
The cost of exploration is often uncertain, and a number of factors can delay or prevent drilling operations, including:

• unexpected drilling conditions;


• equipment failures or accidents;
• adverse weather conditions;
• compliance with governmental requirements;
• shortages or delays in the availability of drilling rigs and the delivery of equipment; and
• availability of specialised personnel.

Even though a good relationship has been formed, the Company may find that it is unable to negotiate suitable access or
compensation arrangements with the local Indonesian community. (e.g. land owners, local authorities, traditional land users) These
agreements are required to be completed prior to the commencement of any mining activity.

The future exploration activities of the Company may not be successful as expected. Unsuccessful exploration activities could
have a materially adverse effect on the results of operations and financial position. Although the Company has identified numerous
potential drilling locations, the Company cannot be sure that it will drill them all or that drilling or other exploration techniques will
locate economically mineable coal or that the Company will be able to commence production.

10.2 Coal Marketing and Coal Prices


In the event that the Company’s exploration is successful and the Company proceeds to develop a coal mine, the marketability of
the coal production depends upon the quality and tonnage demand from the international and domestic marketplace.

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 find it difficult to access
other customers.

Depressed coal prices would affect the business. Future revenues, operating results, profitability, future rate of growth and the
carrying value of the properties of the Company depend heavily on prevailing market prices for coal. Any substantial or extended
decline in the price of coal would have a material adverse effect on the financial condition and results of operations. Various factors
beyond the control of the Company will affect prices of coal, including:

• exchange rates for coal is typically sold in US dollars and a strengthening of the Australian dollar relative to the US dollar
will adversely impact upon Australian dollar returns;
• domestic supplies of coal;
• economic conditions;
• marketability and quality of production;
• consumer demand;
• price trends for coal product types; the price, availability and acceptance of alternative fuels;
• weather conditions; and
• actions of federal, state, local and foreign government authorities.

Hedging transactions may limit potential gains. To manage the exposure of the Company to price risks in the marketing of coal, 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.

10.3 Title to Mining Rights


At the date of this Prospectus, the Company does not have title to the Concession. The principal terms of the acquisition of the
mining rights have been agreed with Magnus Energy and the other vendors. Further details on these agreements are contained
in Sections 12.2 and 12.3.

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PROSPECTUS 2008

Magnus Energy’s rights in relation to the Concession are contractual in nature only. Accordingly, if the CCOW or other associated
agreements regulating Magnus Energy’s interest in any of the Projects were unenforceable in whole or in part, the Company
would be adversely affected to the extent of any such unenforceability. In practical terms, the enforcement of contractual rights in
Indonesia can be very difficult.

Accordingly, if any party breaches its obligations under the CCOW or other associated contracts it may be difficult for the Company
to achieve specific performance or receive satisfactory compensation. Even if the Company is able to enforce its rights, it may only
be able to do so over an extended period of time and at a potentially high cost.

10.4 Environmental Impact Constraints


The Company’s exploration and appraisal programs will, in general, be subject to approval by government authorities. Development
of any coal resources will be dependent on the project meeting environmental guidelines and gaining approvals by government
authorities.

10.5 Exploration and Appraisal Expenditure


Exploration and appraisal is a process subject to unforeseeable contingencies. The exploration program must be flexible enough
to respond to results obtained. The actual scope and cost of the exploration program may differ substantially from the proposals
set out in this Prospectus. Financial failure or default by any future alliance or joint venture partner of the Company may require the
Company to face unplanned expenditure or risk forfeiting interests in relevant areas.

10.6 General Economic Climate


Factors such as inflation, currency fluctuation, interest rates, changes to legislation, political decisions, cost escalation and
industrial disruption may have an impact on operating costs and on domestic coal prices. The Company’s future income, asset
values and Share price can be affected by these factors and, in particular, by the market price for any coal that the Company may
produce and sell.

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 clarity 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.

10.7 Stockmarket Conditions


The market price of the Shares if quoted on ASX will be influenced by international and domestic factors affecting conditions in
equity and financial markets. These factors may affect the prices of listed securities and the prices for the securities of solid fuel
exploration companies quoted on ASX, including the Company.

10.8 Funding
Unless, and until, the Company develops or acquires income producing assets, it will be dependent upon the funds raised by the
Offer and its ability to obtain future equity or debt funding to support exploration, evaluation and development of the properties in
which it has an interest.

The Company’s ability to raise further equity, or debt, or to divest part of its interest in a project, and the terms of such transactions
will vary according to a number of factors, including the success of exploration and the future development of the project, stock
market conditions and prices for coal.

10.9 Kyoto Protocol


The Kyoto Protocol to the United Nations Framework Convention on Climate Change was negotiated in December 1997 and aims
to reduce emissions of greenhouse gases.

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APAC Coal Limited

Whilst these restrictions have not yet been ratified by the member nations, their possible future ratification and implementation
could adversely impact on the price and demand for coal or may result in the imposition of additional taxes or levies or other
increased costs.

The recent UN Climate Change Conference ended with a road map agreement with 190 countries signing the Agreement. What
the ultimate impact of this agreement will be is unknown until details are clarified.

Future Company exports could be adversely impacted in terms of volumes and price with the implementation of emissions
targets.

10.10 Resource Estimates


Resource estimates, including those contained in this Prospectus 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 upon 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.

10.11 Country Risks


While Indonesian coal production is highly competitive by international standards, Indonesia’s export potential over the next ten
years will depend to some extent on the perceived risks attached to investment in the coal mining sector. The coal industry in
Indonesia is facing a range of legal, governance and human capacity building and challenges in the transition to regional autonomy.
To the extent that these risk factors continue to affect the mining sector, they can be expected to have an adverse impact on
mining exploration and coal production and exports in Indonesia.

Changes to the mining law or to the other government legislation and regulations in Indonesia, or to the division of regulatory powers
between the Central Government in Jakarta and local and provisional bodies, may materially impact on the ability of the Company
to operate in Indonesia, and on the ultimate profitability of the projects to be developed in Indonesia. In the event that an economic
resource is identified in a project there can be no assurance that all or any of the relevant approvals and permits necessary to
conduct mining operations will be granted by the Indonesian government and other appropriate regulatory authorities.

The risk of terrorism activities in Indonesia and the resulting impact upon the projects is also a relevant risk factor.

A number of local villages and some small scale mining operations are located within the PT Batubara Concession area. The
Company may be required to pay compensation to land owners, local authorities, traditional land users and others who may have
an interest in the PT Batubara Concession area. The Company’s ability to resolve compensation issues and compensation costs
involved will have an impact on the future success and financial performance of the Company’s mining operations. If the Company
is unable to resolve such compensation claims on economic terms, this could have a material adverse effect on the business,
results or operations and financial condition of the Company.

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PROSPECTUS 2008

Section 11: Additional Information

11.1 Rights Relating to Shares


For details of the rights attaching to the Shares, potential investors should refer to the Company’s Constitution. A copy of the
Constitution is available for inspection at the Company’s registered office. The rights attaching to the Shares are summarised
below.

This summary does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of
Shareholders.

Voting Rights
Members are entitled to notice of and to attend and vote at general meetings. Subject to any Shares which may in the future be
issued with special or preferential rights (at present there are none), every Shareholder present in person or by proxy, attorney or
representative has one vote on a show of hands, and, on a poll, has one vote for each fully paid Share.

Dividends
The Directors may declare a dividend to be paid to the Shareholders entitled to that dividend out of the profits of the Company.

Capitalisation of Profits
Subject to the Listing Rules, the Directors may capitalise and distribute any undistributed profits of the Company.

Issue of Shares
Without prejudice to any special rights conferred on the holders of any Shares or class of Shares (at present there are none) and
subject to the Constitution, the Corporations Act and the Listing Rules, the Directors may issue Shares and other securities on
such terms and conditions as the Directors think fit.

Transfer of Shares
A member may transfer Shares by a market transfer in accordance with any system recognised by the Listing Rules and effected
in accordance with the SCH Business Rules or an instrument in writing in any usual form or in any other form approved by the
Directors or recognised by the Corporations Act or the Listing Rules.

The Directors may decline to register a transfer in the circumstances so required or permitted under the Listing Rules or the SCH
Business Rule or, if the transfer is not in a registrable form, by giving written notice of refusal to the transferee and lodging broker.

Rights on Winding Up
The liquidator in a winding up may, with the sanction of a special resolution of members, divide among the members the whole or
any part of the property of the Company and determine how the division is to be carried out as between the members or different
classes of members.

Subject to any Shares which may in the future be issued with special or preferential rights (at present there are none), the surplus
assets of the Company after winding up will be divided among the members in proportion to the number of Shares held by them
subject to any amounts unpaid on the Shares.

11.2 Terms and Conditions of Options to be Offered for Subscription under the Proposed Non
Renounceable Rights Issue
As detailed in Section 2.4 of this Prospectus, it is proposed that all Shareholders registered on the share register of the Company
at a date approximately twelve (12) weeks after the Company’s Shares are granted Quotation will be entitled to participate in a
non-renounceable rights issue of Options on the basis of 1 Option for every 3 Shares then held.

A summary of the terms and conditions of the Options is as follows:

1. Each Option entitles the holder to acquire one fully paid ordinary share in the Company.
2. The Options may be exercised at any time until 30 June 2011. Each Option may be exercised by forwarding to the Company
at its principal office the exercise notice, duly completed together with payment of the sum of twenty cents ($0.20) per Option
exercised. The Options will lapse at 5.00pm WST on 30 June 2011.

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APAC Coal Limited

3. The Options may be transferred by an instrument (duly stamped where necessary) in the form commonly used for transfer of
Options at any time until 30 June 2011. This right is subject to any restrictions on the transfer of an Option that may be imposed
by ASX in circumstances where the Company is listed on ASX.
4. The Options will be listed for Official Quotation on ASX.
5. Optionholders shall be permitted to participate in new issues of securities on the prior exercise of Options in which case the
Optionholders shall be afforded the period of at least six (6) business days prior to and inclusive of the record date (to determine
entitlements to the issue) to exercise the Option.
6. Shares issued on the exercise of Options will be issued not more than fourteen (14) days after receipt of a properly executed
exercise notice and application moneys. Shares allotted pursuant to the exercise of an Option will rank equally with the then
issued ordinary shares of the Company in all respects. If the Company is listed on ASX it will, pursuant to the exercise of an
Option, apply to ASX for Quotation of the Shares issued as a result of the exercise, in accordance with the Corporations Act
and the Listing Rules.
7. In the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the
Company, all rights of the Optionholder will be changed to the extent necessary to comply with the Listing Rules applying to
the reconstruction of capital at the time of the reconstruction.
8. If there is a bonus issue to Shareholders, the number of Shares over which the Option is exercisable may be increased by the
number of Shares which the holder of the Option would have received if the Option had been exercised before the record date
for the bonus issue.
9. In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlying securities in the Company, the
exercise price of the Options may be reduced in accordance with Listing Rule 6.22.

11.3 Terms and Conditions of Director Options


As at the date of this Prospectus, the Company has issued a total of 6,300,000 options to directors of the Company or their
nominees (Director Options):

Set out below is a summary of the rights attaching to the Director Options:

1. The Director Options have been issued with an exercise price of 25 cents each (Exercise Price) and an expiry date being
31 October 2010 (Expiry Date). The Director Options have been issued for no consideration and each Director Option entitles
the holder to subscribe for one Share.
2. The Director Options may be exercised at any time prior to the Expiry Date subject to any restriction agreements entered into
with ASX (Exercise Conditions).
3. The Director Options may be exercised into Shares to be held in the name of the Option holder’s nominee.
4. Directors Options may be exercised:
- during a bid period in the event of a takeover bid in respect of the Shares in the Company;
- at any time after a change in the controlling Shareholder of the Company has occurred; or on an application under Section
411 of the Corporations Act, if a court orders a meeting to be held concerning a proposed compromise or arrangement for
the purposes of or in connection with a scheme for the reconstruction of the company or its amalgamation with any other
company.
6. The Director Options will not be listed for official quotation on the ASX.
7. The Optionholder is not entitled to participate in any new issue of securities to existing holders of Shares in the Company unless:
- the Optionholder has become entitled to exercise the Director Options pursuant to the Exercise Conditions; and
- the Optionholder exercises the Director Options before the record date for the determination of entitlements to the new
issue of securities and participates as a result of being holders of Shares.
8. The Company must give the Optionholder, in accordance with the Listing Rules, notice of any new issue of securities before
the record date for determining entitlements to the new issue.
9. If there is a bonus share issue (Bonus Issue) to the holders of Shares, the number of Shares over which a Director Option

PAGE 66
PROSPECTUS 2008

is exercisable will be increased by the number of Shares which the Option holder would have received if the Director Option
had been exercised before the record date for the Bonus Issue (Bonus Shares). The Bonus Shares must be paid up by the
Company out of the profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue and upon
issue rank pari passu in all respects with the other shares of that class on issue at the date of issue of the Bonus Shares.
10. If there is a pro rata issue (other than a Bonus Issue) to the holders of Shares during the currency of, and prior to the exercise
of any Director Options, the Exercise Price of a Director Option will be adjusted in the manner provided for in the Listing Rules.
If, prior to the expiry of any Director Options, there is a reorganisation of the issued capital of the Company, then the rights
of an Option holder (including the number of Director Options to which each Optionholder is entitled and the Exercise Price)
is changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the
reorganisation (whether or not the Company is listed on the ASX at the time).
11. The Director Options will not give any right to participate in dividends until Shares are allotted pursuant to the exercise of the
relevant Director Options.
12. Director Options not validly exercised on or before the Expiry Date will automatically lapse. Unless otherwise determined by
the Board, if the Director ceases to be either a Director or employee of the Company (whether full-time or part-time) (Eligible
Person) for any reason other than where the Director retires, dies, becomes totally or permanently disabled or is made
redundant (Specified Reason), all options held by the Optionholder, whether they have become exercisable pursuant to the
Exercise Conditions or not, will automatically lapse on a date 3 months after the Option holder ceases to be a director.
13. Subject to the Board in its absolute discretion, reducing, waiving or varying the Exercise Conditions so that the Director Options
may be exercised and unless otherwise determined by the Board, if the Director ceases to be an Eligible Person for a Specified
Reason, the Optionholder may exercise the Director Options within 3 months of the date of (as the case may be) of the
Director’s retirement, redundancy, death or total and permanent disablement; or such longer period as the Board determines,
provided that any such Director Options not exercised within those 3 months or the longer period determined by the Board,
will automatically lapse.

11.4 Terms and Conditions of Broker Options to Novus Capital Limited


The Company proposes to grant a number of unlisted options to Novus (or nominee), who are assisting with the Offer, dependent
on the level of fundraising achieved. The number of Options to be issued is unknown but will be calculated on the basis of 1 Option
for every $40.00 raised (Broker Options). Based on raising of $15,000,000, Novus (or nominee) would be entitled to 375,000
Broker Options.

Set out below is a summary of the rights attaching to the Broker Options:

1. The Broker Options will be granted for no consideration and with an exercise price of 25 cents and an expiry date being 3 years
after the Company is admitted to the Official List. The Broker Options will be issued to the Broker upon ASX granting approval
to the Company to be admitted to the Official List.
2. Each Broker Option entitles the Optionholder to subscribe for one Share. The Optionholder may exercise the Broker Options
any time prior to the expiry date.
3. Shares allotted pursuant to an exercise of the Broker Options shall rank, from the date of allotment, equally with existing Shares
of the Company in all respects.
4. The Broker Options will be not listed for official quotation on ASX.
5. In the event of any reorganisation of the issued capital of the Company (including consolidation, subdivisions, reduction or
return), the rights of an optionholder will be changed to the extent necessary to comply with the Listing Rules applying to a
reorganisation of capital at the time of the reorganisation.
6. The Broker Options will not give any right to participate in dividends, bonus issues or entitlement issues until Shares are allotted
pursuant to the exercise of the relevant Broker Options.
7. There is no right to change the exercise price of the Broker Options nor the number of underlying Shares over which the Broker
Options can be exercised, if the Company completes a bonus or entitlements issue in the Company under the Constitution of
the Company.

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APAC Coal Limited

11.5 Directors
Pursuant to the Company’s Constitution, the minimum number of Directors is three and the maximum is ten unless the Company,
in a general meeting, determines otherwise. A Director is not required to hold any Shares. At the Annual General Meeting one third
of all Directors will retire from office and Director (excluding a Managing Director) must retire at least every three years.

The Directors may exercise all powers of the Company as are required or permitted by the Corporations Act, the Listing Rules or
the Constitution, to be exercised by the Company.

As at the date of this Prospectus no new Directors are proposed to be appointed.

Directors Indemnity
To the extent permitted by law and without limiting the powers of the Company, the Company must indemnify each person who
is and has been an officer of the Company against any liability which results from facts or circumstances relating to the person
serving or having served in that capacity provided that it does not arise out of conduct involving a lack of good faith, for costs and
expenses incurred by the person defending proceedings in which judgment is given in favour of the person or in which the person
is acquitted or in connection with an application in which the Court grants relief to the person under the law.

11.6 Litigation
As at the date of this Prospectus, there is no litigation of any nature pending or threatened against or which may significantly affect
the operations of the Company.

11.7 Taxation Obligations


The taxation obligations and the effects of participating in the Issue may vary depending on the circumstances of each individual
Shareholder, the particular circumstances relating to their holdings of Shares and the taxation laws applicable to Shareholders as
residents of different jurisdictions. Shareholders who are in doubt as to their taxation position should seek professional advice. It is
the responsibility of individual Applicants to inform themselves of their taxation position resulting from participation in the Issue.

11.8 Cash Costs of the Issue


The total expenses of the Issue and associated costs payable by the Company are estimated to be approximately $1,450,000
made up as follows:
Expenses and Costs of the Issue

Broker commissions $750,000


Lead broker fees $ 362,000
ASX/ASIC fees $70,000
Legal fees $40,000
Independent Geologist fees $35,000
Investigating Accountant fees $45,000
Prospectus preparation $50,000
Printing and associated costs $20,000
Miscellaneous $78,000

Commissions to Brokers
The Company will pay commissions at the rate of 5% for Applications bearing a stamp of any holder of an Australian Financial
Services Licence and accepted by the Company. An amount of $750,000 has been allowed for in the budget (based upon
$15,000,000 being raised).

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PROSPECTUS 2008

11.9 Interests of Directors


At the date of this Prospectus, the Directors’ interests in the Company’s Shares and Options are as follows:

Director Directors’ Interest

Shares Options

Paul Piercy - 2,000,000

Koh Teng Kiat - 1,300,000

Maurice Drew - 1,000,000

Sam di Giacomo - 1,000,000

Shyun Kon - 1,000,000

Options granted to Directors are exercisable at 25 cents each on or before 31 October 2010 and will expire on the earlier of the
expiry date or a date no later than 3 months after the holder ceases to be a Director of the Company.

11.10 Directors’ Remuneration


The Company has entered into an agreement with Magnus Energy for the provision of the services of Mr TK Koh as Managing
Director. In addition, other corporate services as required will be covered by the agreement. A detailed summary of these
agreements is provided at Section 12.3.

Under the Company’s Constitution, the Directors are entitled to be paid such remuneration as is authorized by an ordinary
resolution of the Company in general meeting (excluding remuneration of Managing or Executive Directors). The Directors are
currently entitled to receive a maximum of $250,000 to be divided between them as Directors’ fees.

If a Director undertakes any work additional to that usually required of Directors of a company similar to the Company, the Directors
may decide to pay that Director additional remuneration which is not included in the above limits. Directors are also entitled to
traveling expenses for, or in connection with, the Company’s business. The remuneration of any Managing Director or Executive
Director for his services shall be determined by the Directors, subject to the terms of the agreement between Magnus Energy and
APAC for the services of TK Koh which is discussed in Section 12.

11.11 Interests of Experts


Other than as stated in the Prospectus, none of the persons named in this Prospectus as performing a function in a professional
or other capacity in connection with the preparation or distribution of this Prospectus holds, or has at any time during the last two
years held, any interest in:

• the formation or promotion of the Company;


• property acquired or proposed to be acquired by the Company;
• the formation or promotion of the Company; or
• the offer of Shares under this Prospectus.

11.12 Payments or Benefits to Experts


Corvidae Pty Ltd as trustee for the Ravensgate Unit Trust trading as Ravensgate has prepared the Independent Geologist’s Report
set out in Section 7 of this Prospectus. The Company has agreed to pay Ravensgate approximately $35,000 for these services.

Steinepreis Paganin has acted as the Australian legal advisers to the Company and has advised the Company in relation to
Australian legal due diligence matters. The Company has agreed to pay Steinepreis Paganin approximately $25,000 for these
services.

Deloitte Touche Tohmatsus has prepared the Investigating Accountants’ Report set out in Section 9b of this Prospectus.
The Company has agreed to pay Deloitte Touche Tohmatsu approximately $45,000 for these services.

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APAC Coal Limited

Soebagjo Jatim Djarot, Attorneys at Law, have prepared the Solicitors’ Report set out in Section 8 of this Prospectus. The
Company has agreed to pay Soebagjo Jatim Djarot approximately $15,000 for these services.

11.13 Restricted Securities


ASX has indicated that certain existing security holders maybe required to enter into agreements that restrict dealings in Shares
and Options held by them. These agreements will be entered into in accordance with the Listing Rules.

11.14 Consents
The Directors have given their consent to the issue of this Prospectus and have not withdrawn this consent prior to lodgement. The
following persons have given, and have not before the lodgement of this Prospectus, withdrawn consents in the terms specified:

Corvidae Pty Ltd as trustee for the Ravensgate Unit Trust trading as Ravensgate has given consent to the inclusion of the
Independent Geologist’s Report and statements based on this report in this Prospectus in the form and context in which they are
included.

Soebagjo Jatim Djarot have given consent to the inclusion of its Solicitor’s Report and statements based on this report in this
Prospectus in the form and context in which they are included.

Deloitte Touche Tohmatsu has consented to be named in this Prospectus as the Auditor of the Company and to the inclusion in
the Section 9b of the Investigating Accountants’ Report in the form and context in which it is included.

Steinepreis Paganin has consented to be named in this Prospectus as the Australian Solicitors to the Company in the form and
context in which it is named.

Security Transfer Registrars Pty Ltd has given consent to be named in this Prospectus as Registry to the Offer in the form and
context it is named.

Magnus Energy Group Limited has consented to the inclusion of the statement contained in paragraph 2 on page 4 of this
Prospectus in the form and context in which it is included.

11.15 Current Shareholders


The current top ten (10) Shareholders of the Company are as follows:

Table 13: Top 10 Shareholders of the Company

Shareholder No. of Shares No. of Options


Cora Orient Holding Limited 3,000,000 -
Ong Kok Wah 2,000,000 -
HSBC Custody Nominees (Australia) Limited 1,800,000 -
Pawzen Chong 1,700,000 -
Techsana Capital Pty Ltd 1,000,000 -
Wong Ho Lan 1,000,000 -
Fobbing Hall Pty Ltd 1,000,000 -
Millcrest Pty Ltd 900,000 -
Gee Ho James Hong 400,000 -
Katherine Amy Buck 200,000 -
Total 13,000,000 -

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PROSPECTUS 2008

Section 12: Material Contracts

In the opinion of the Directors, the following contracts to which the Company is a party are or may be material to a potential
investor in the Company.

12.1 Work Agreement for Coal Mining Enterprises (CCOW)


As detailed in the Solicitors’ Report contained in Section 8, the Company has agreed the principal terms to acquire a 30 year right
to mine the PT Batubara Concession. The CCOW is dated 20 November 1997 and commences on the day mining activities start.
Refer to the Solicitors’ Report in Section 8 for further information in respect of the CCOW.

12.2 Share Sale Agreement – PT Batubara


As at the date of this Prospectus, PT Deefu holds 95% of the issued share capital of PT Batubara.

The Company, PT Deefu and the holder of the remaining 5% of the issued share capital of PT Batubara (Minority Shareholder)
have entered into a Share Sale Agreement pursuant to which the Minority Shareholder agrees to sell and PT Deefu agrees to
acquire the remaining 5% of the issued share capital of PT Batubara (Minority Interest).

The sale and purchase of the Minority Interest is conditional upon the satisfaction or waiver of the following conditions precedent:

(a) PT Deefu completing a financial and legal due diligence on PT Batubara;

(b) the agreements outlined in Section 12.3 becoming unconditional;

(c) the Company raising the minimum subscription pursuant to the Offer and obtaining conditional approval from ASX to having
its securities admitted to the Official List; and

(d) PT Deefu obtaining all necessary regulatory and shareholder approvals to purchase the Minority Interest (together, the
Conditions Precedent).

As consideration for the acquisition of the Minority Interest, the Company (on behalf of PT Deefu) has agreed to issue 10,000,000
Shares to the Minority Shareholder. Settlement of the sale and purchase of the Minority Interest will occur 5 Business Days after
the satisfaction of the Conditions Precedent and will take place contemporaneously with completion of the agreements outlined
in Section 12.3.

The Share Sale Agreement contains standard warranties and representations on behalf of the Vendors for an agreement of this
nature.

12.3 Share Sale Agreements – PT Deefu


As at the date of this Prospectus, Antig Investments Pte Ltd (a wholly owned subsidiary of Magnus Energy) holds 72% of the
issued share capital of PT Deefu and the remaining 28% is held by Advance Assets Management Ltd (together, the Vendors);

The Company has entered into Share Sale Agreements with the Vendors pursuant to which the Vendors have agreed to sell and
the Company has agreed to acquire 100% of the issued share capital of PT Deefu (PT Deefu Acquisition).

The PT Deefu Acquisition is conditional upon the satisfaction or waiver of the following conditions precedent:

(a) the Company completing a financial and legal due diligence on PT Deefu;

(b) the agreement outlined in Section 12.2 becoming unconditional;

(c) the Company raising the minimum subscription pursuant to the Offer and obtaining conditional approval from ASX to having
its securities admitted to the Official List; and

(d) the Company obtaining all necessary regulatory and shareholder approvals to complete the Acquisition (together, the
Conditions Precedent).

As consideration for the PT Deefu Acquisition, the Company has agreed to issue 190,000,000 Shares to the Vendors. Settlement
of the PT Deefu Acquisition will occur 5 Business Days after the satisfaction of the Conditions Precedent and will take place
contemporaneously with completion of the agreement outlined in Section 12.2.

The Share Sale Agreements contain standard warranties and representations on behalf of the Vendors for agreements of this nature.

PAGE 71
APAC Coal Limited

12.4 Management and Consultancy Agreement


On 19 March 2008, the Company entered into a Management and Consultancy Agreement with Magnus Energy pursuant to which
Magnus Energy agreed to provide the services of Koh Teng Kiat as Managing Director (MD Services), and general administrative
services (together, the Administrative Services).

The initial term of the agreement is 12 months and the Company will pay Magnus Energy a fee of $10,000 per month for the MD
Services and $5,000 per month for the Administrative Services (together the Services Fee). The Services Fee will be reviewed
every 6 months.

The Company may at its sole discretion terminate the Management and Consultancy Agreement in the following manner:

(a) by giving not less than three months’ written notice and payment to Magnus Energy of the equivalent fee payable over a 3
month period as if the agreement had not been terminated (or the equivalent fee payable over a 6 month period if no notice
period);

(b) by giving one month’s written notice if at any time:

(i) Magnus Energy goes into liquidation; or

(ii) Magnus Energy and/or a Mr T. K. Koh commits any serious or persistent breach of the agreement or demonstrates
incompetence with regard to the performance of their duties under the agreement, is of unsound mind commits or
becomes guilty of any gross misconduct or refuses or neglects to comply with any lawful, reasonable direction or order
given to him by the Company; or

(c) summarily without notice if at any time Magnus Energy or a Mr TK Koh is convicted of any major criminal offence, by giving
notice effective immediately and without payment of any fees other than any fees accrued to the date of that termination.

The Company or Magnus Energy may terminate the Management and Consultancy Agreement if at any time the Company
commits any serious or persistent breach of any of the provisions contained in the agreement or by giving three months’ written
notice to the Company.

The Management and Consultancy Agreement otherwise contains clauses that are considered to be on ordinary commercial
terms.

12.5 Loan Agreement


As at 31 December 2007, Magnus Energy had advanced 3,047,365,089 Indonesian Rupiah to PT Deefu (Advance Funds).
PT Deefu, Magnus Energy and the Company (acting as guarantor) have entered into a Loan Agreement on 19 March 2008
(Execution Date) in relation to the repayment of the Advance Funds and any further funds provided by Magnus Energy to PT
Deefu during the term of the Loan Agreement (together, the Outstanding Monies).

Interest on the Outstanding Monies accrues daily from the Execution Date at a rate of 5.33% per annum and these amounts shall
be capitalised into the loan until such time as all Outstanding Monies are repaid by PT Deefu to Magnus Energy.

PT Deefu must repay all Outstanding Monies (together with any interest) on or before 30 June 2011. As guarantor, the Company
guarantees to Magnus Energy the performance and observance by PT Deefu of all of its obligations under the Loan Agreement.

12.6 Mandate Letter with Novus Capital


On 25 January 2008, the Company appointed Novus Capital as Lead Manager and Sponsoring Broker to the Offer to assist the
Company, on a best endeavours basis, to arrange and co-ordinate the capital raising process pursuant to the Offer.

Novus Capital will also act as corporate advisor to the Company following the listing of the Company on ASX.

The remuneration payable by the Company pursuant to the terms of the Mandate Letter is as follows:

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PROSPECTUS 2008

(a) a commission equal to 5% of the total funds raised pursuant to the Offer;

(b) an issue management fee of $15,000 per month until the Company is listed on ASX; and

(c) an IPO management fee of 1.25% of the total funds raise pursuant to the Offer.

In addition to the above remuneration, the Company will also issue one (1) Share and one (1) Option for every $40 raised under
the Offer to Novus Capital (or nominee). The Options will be unlisted and have an exercise price of $0.25 each and expire 3 years
after the Company is admitted to the Official List.

12.7 Employee Incentive Scheme


As an incentive to the Company’s employees and its subsidiaries, the Company has adopted a scheme called the APAC Coal
Employee Incentive Scheme (Employee Incentive Scheme). At the date of this Prospectus 6,300,000 Options have been
granted under the Employee Incentive Scheme to Directors of the Company.

The purpose of the Employee Incentive Scheme is to give employees, Directors, executive officers and consultants of the
Company and its subsidiaries an opportunity, in the form of Options, to subscribe for Shares (Employee Options). The Directors
consider the Employee Incentive Scheme will enable the Company to retain and attract skilled and experienced employees, board
members and executive officers and provide them with the motivation to make the Company more successful.

12.7.1 Brief Overview of the Employee Incentive Scheme


A summary of the terms and conditions of the Employee Incentive Scheme is set out below:

(a) Participants
Those eligible to participate in the Employee Incentive Scheme include:

• full-time or part-time employees of the Company;


• Directors; or
• consultants and any persons who are concerned, or take part in the management, of the Company or any subsidiary,
(together, Eligible Persons).

An Eligible Person may nominate an associate acceptable to the Board to be issued with the Employee Options.

(b) Terms of Options


There is no issue price for the Employee Options. The exercise price for the Employee Options will be determined by the Directors
in their absolute discretion.

Shares issued on exercise of Employee Options will rank equally with the Shares on issue.

Employee Options may not be transferred without the approval of the Board. Quotation of Employee Options on ASX will not be
sought. However, in the event that the Company is listed on ASX, it will apply for Quotation of Shares issued on the exercise of
Employee Options.

(c) Restrictions on Issue of Employee Options


The Board may not offer Employee Options under the Employee Incentive Scheme if the total number of Shares which would
be issued were each Employee Option accepted, together with the number of Shares in the same class or Options to acquire
such Shares issued pursuant to all employee or executive share schemes during the previous five years, exceeds 5% of the total
number of issued shares in that class as at the date of the offer. Employee Options may only be issued or exercised within the
limitations imposed by the Corporations Act and the Listing Rules.

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APAC Coal Limited

(d) Exercise of Employee Options


Employee Options may be exercised at any time after two years from the date of grant of the Employee Options.

If an Eligible Person leaves the employment of the Company:

i) 2 years or more after the Employee Options are issued; or

ii) because of retirement at or after 55 years of age, disablement, retrenchment, death or any other circumstances approved
by the Board,

(together, the Ceasing Date), the Employee Options may be exercised within 30 days (or 3 months in the case of death) of the
Ceasing Date, or any longer period permitted by the Board. If not exercised in that time, the Employee Options will lapse. If an
Eligible Person leaves the employment of the Company or its subsidiaries earlier than 2 years after the Employee Options are
issued and (ii) above does not apply, the Employee Options will immediately lapse unless the directors in their absolute discretion
agree otherwise.

If an Eligible Person acts fraudulently, dishonestly or in breach of obligations to the Company or any subsidiary then, at the Board’s
discretion, Employee Options issued for that person will lapse. Unexercised Employee Options will automatically lapse five years
after they are issued.

(e) Participation in Future Issues


The holders of Employee Options may only participate in new issues, including bonus issues, if they have exercised the Employee
Options at that time and provided such exercise is permitted by the terms of the Employee Option.

If there is a bonus issue to Shareholders, the number of shares over which the Employee Option is exercisable may be increased by the
number of shares which the holder of the Employee Option would have received if the Employee Option had been exercised before
the record date for the bonus issue. In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlying
securities in the Company, the exercise price of the Employee Options may be reduced in accordance with Listing Rule 6.22.

(f) Capital Reconstruction


In the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company,
all rights of the Employee Option holder will be changed to the extent necessary to comply with the Listing Rules applying to the
reconstruction of capital, at the time of the reconstruction.

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PROSPECTUS 2008

Section 13: Definitions

Definitions
A$ or $ means the currency of Australia.
APEC means Asia-Pacific Economic Cooperation.
Applicant means a person making an Application.
Application means a valid application made to subscribe for a specified number of Shares.
Application Form means an application form attached to or accompanying this Prospectus.
ASEAN means the Association of Southeast Asian Nations.
ASIC means the Australian Securities & Investments Commission.
ASTC means ASX Settlement and Transfer Corporation Limited (ACN 008 504 532), being
the Securities Clearing House of ASX.
ASX means ASX Limited (ACN 008 624 691).
Board means the board of Directors of the Company.
CCOW means a Work Agreement for Coal Mining Enterprise.
CHESS means Clearing House Electronic Sub-register System.
Closing Date means 15 May 2008 (or such other date as determined by the Directors).
Company or APAC means APAC Coal Limited (ACN 126 296 295).
Constitution means the constitution of the Company.
Corporations Act means the Corporations Act 2001 (Commonwealth).
Director means a director of the Company.
Director Options means Options granted to Directors as detailed in Section 11.3.
Employee Option means an Option granted to persons pursuant to the Employee Incentive Scheme
on the terms and conditions set out in Section 12.7.
Employee Incentive Scheme means the APAC Coal Employee Incentive Scheme as detailed in Section 12.7.
Exposure period means the period of 7 days (or longer as ASIC may direct) from the date of
lodgement of the Prospectus with ASIC.
Indicated resources means that part of a coal deposit for which quality can be estimated with a
reasonable level of confidence, as defined in the JORC Code.
Inferred resources means that part of a coal deposit for which quality can only be estimated with a low
level of confidence, as defined in the JORC Code.
Issue means the issue of Shares under this Prospectus.
JORC means the Joint Ore Reserves Committee of The Australasian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
JORC Code means a code prepared by the Joint Ore Reserves Committee of The Australasian
Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals
Council of Australia which defines criteria for public reporting of ore and coal
resources and reserves.
KP means Kuasa Pertambangan (or Mining Rights).
Listing Rules means the listing rules of ASX.
Magnus Energy means Magnus Energy Group Limited, a company incorporated in Singapore.
Novus Capital, or Novus means Novus Capital Limited, the sponsoring broker and lead manager to the Offer,
set out in Section 2.1.
Offer means the offer of Shares pursuant to this Prospectus.
Official List means the official list of ASX.
Option means an option to acquire a Share.
Optionholder means the holder of an Option.
Prospectus means this Prospectus dated 4 April 2008
PT Batubara means PT Batubara Selaras Sapta.
PT Batubara Concession, or Concession means the concession over which PT Batubara has the right to mine.
PT Deefu or PTDCI means PT Deefu Chemical Indonesia.
Quotation means official quotation by ASX in accordance with the Listing Rules.
Share means a fully paid ordinary share in the capital of the Company.
Shareholder means a holder of a Share.
US$ means the currency of the United States of America.
WST means Western Standard Time, Perth Western Australia.

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APAC Coal Limited

Directors Statement, Authorisation and Consent

The Directors state that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any
statements made by the Directors in this Prospectus are not misleading or deceptive. With respect to any statements made in the
Prospectus other than by Directors, the Directors have made reasonable enquiries and on that basis have reasonable grounds to
believe that persons making those statements were competent to make such statements, those persons have given their consent
to the statements being included in this Prospectus in the form and context in which they are included and have not withdrawn
their consent before lodgement of this Prospectus.

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

This Prospectus has been signed on behalf of the Directors in accordance with a resolution of the Directors.

Dated: 4 April 2008

Paul Piercy
Chairman

PAGE 76
PROSPECTUS 2008

Application Form Share Registrar’s use

APAC COAL
Before completing this Application Form, you should read the Prospectus dated 4 April 2008
and the instructions overleaf. No Shares will be issued pursuant to the Prospectus later than Broker reference
- stamp only
13 months after the date of the Prospectus.

PLEASE READ CAREFULLY ALL INSTRUCTIONS ON THE REVERSE OF THIS FORM


I/We apply for:

Shares at $0.20 per Share = A$


(Minimum 10,000 Shares and thereafter in multiples of 5,000 Shares)
in APAC Coal Limited or such lesser number of Shares which may be allocated to me/us by the
Directors. Broker code Adviser code
I/We lodge full application monies of:
A$ For the above Shares

Full name (PLEASE PRINT)

Joint Applicant #2 or <designated account>

Joint Applicant #3 or <designated account>

Postal Address (PLEASE PRINT)


Street Number Street

Suburb/Town State Post code


Contact Name Telephone number – Business hours

Telephone number – After hours

CHESS HIN (where applicable)

Tax File Number, ABN or Exemption Applicant #2 Applicant #3

CHEQUE DETAILS
Drawer Bank BSB Amount of cheque

Declaration and Statements:


By lodging this Application Form:
I/We declare that all details and statements made by me/us are complete and accurate;
I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company;
I/We acknowledge that the Company will send me/us a paper copy of the Prospectus and any Supplementary Prospectus (if applicable) free
of charge if I/we request so during the currency of the Prospectus;
I/We authorise the Company to complete and execute any documentation necessary to effect the issue of Shares to me/us; and
I/We have received personally a copy of the Prospectus accompanied by or attached to this Application Form or a copy of the Application Form
or a direct derivative of the Application Form before applying for Shares.
I/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for Shares in APAC
Coal Limited and that no notice of acceptance of the application will be provided.
TO MEET THE REQUIREMENTS OF THE CORPORATIONS ACT, THIS FORM MUST NOT BE HANDED TO ANY PERSON UNLESS IT IS
ATTACHED TO OR ACCOMPANIED BY THE PROSPECTUS DATED 4 APRIL 2008 AND ANY RELEVANT SUPPLEMENTARY PROSPECTUS.
(See application instructions overleaf). This Application Form relates to the Offer of Shares in APAC Coal Limited pursuant to the Prospectus
dated 4 April 2008.
TEAR HERE

PAGE 77
APAC Coal Limited

Instructions to Applicants

APPLICATION FORMS
Please complete all parts of the Application Form using BLOCK LETTERS. Use correct forms of registrable name (see below). Applications
using the wrong form of name may be rejected. Current CHESS participants should complete their name and address in the same format as
they are presently registered in the CHESS system.
Insert the number of Shares you wish to apply for. The application must be for a minimum of 10,000 Shares and thereafter in multiples of
5,000 Shares. The applicant(s) agree(s) upon and subject to the terms of the Prospectus to take any number of Shares equal to or less than
the number of Shares indicated on the Application Form that may be allotted to the applicants pursuant to the Prospectus and declare(s) that all
details of statements made are complete and accurate.
No notice of acceptance of the application will be provided by the Company prior to the allotment of Shares. Applicants agree to be bound upon
acceptance by the Company of the application.
Please provide us with a telephone contact number (including the person responsible in the case of an application by a company) so that we
can contact you promptly if there is a query in your Application Form. If your Application Form is not completed correctly, it may still be treated as
valid. There is no requirement to sign the Application Form. The Company’s decision as to whether to treat your application as valid, and how to
construe, amend or complete it, shall be final.
PAYMENT
Applications for Shares must be accompanied by the application money of 20 cents per Share (in Australian currency). Cheques should be made
payable to “APAC Coal Limited – Share Issue Account” and crossed “Not Negotiable”.
LODGING OF APPLICATIONS
Completed Application Forms and cheques must be:
Posted to: APAC Coal Limited
c/- Security Transfer Registrars
770 Canning Highway, Applecross WA 6153
Applications must be received by no later than 5.00pm WST on the Closing Date 15 May 2008.
BROKER SPONSORED APPLICANTS
The Company intends to become an Issuer Sponsored participant in the ASX CHESS System. This enables a holder to receive a statement
of holding rather than a certificate. If you are already a Broker Sponsored participant in this system, you may complete this section or forward
a signed Application Form to your sponsoring broker for completion prior to lodgement. Otherwise, leave this box blank and your Shares will
automatically be Issuer Sponsored on allotment.
TAX FILE NUMBERS
The collection of tax file number (“TFN”) information is authorised and the tax laws and the Privacy Act strictly regulate its use and disclosure.
Please note that it is not against the law not to provide your TFN or claim an exemption, however, if you do not provide your TFN or claim an
exemption, you should be aware that tax will be taken out of any unfranked dividend distribution at the maximum tax rate.
If you are completing the application with one or more joint applicants, and you do not wish to disclose your TFN or claim an exemption, a separate
form may be obtained from the Australian Taxation Office to be used by you to provide this information to the Company. Certain persons are
exempt from providing a TFN. For further information, please contact your taxation adviser or any Taxation Office.
CORRECT FORM OF REGISTRABLE TITLE
Note that only legal entities are allowed to hold securities. Applications must be in the name(s) of a natural person(s), companies or other legal
entities acceptable to NAME OF COMPANY. At least one full given name and the surname are required for each natural person. The name of the
beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the example
of the correct forms of registrable names below:

TYPE OF INVESTOR CORRECT FORM INCORRECT FORM


OF REGISTRATION OF REGISTRATION
Individual Mr John Alfred Smith J A Smith
Use given names in full, not initials
Company ABC Pty Ltd ABC P/L or ABC Co
Use the company’s full title, not abbreviations
Joint holdings Mr Peter Robert Williams & Peter Robert &
Use full and complete names Ms Louise Susan Williams Louise S Williams
Trusts Mrs Susan Jane Smith Sue Smith Family Trust
Use trustee(s) personal name(s), Do not use the name of the trust <Sue Smith Family A/C>
Deceased Estates Ms Jane Mary Smith & Mr Frank William Estate of Late John Smith, or
Use the executor(s) personal name(s) Smith <Estate John Smith A/C> John Smith Deceased
Minor (a person under the age of 18) Mr John Alfred Smith Master Peter Smith
Use the name of a responsible adult with an appropriate <Peter Smith A/C>
designation
Partnerships Mr John Robert Smith & Mr Michael John Smith and Son
Use the partners’ personal names. Do not use the name of the John Smith <John Smith and Son A/C
partnership

PAGE 78
PROSPECTUS 2008

Application Form Share Registrar’s use

APAC COAL
Before completing this Application Form, you should read the Prospectus dated 4 April 2008
and the instructions overleaf. No Shares will be issued pursuant to the Prospectus later than Broker reference
- stamp only
13 months after the date of the Prospectus.

PLEASE READ CAREFULLY ALL INSTRUCTIONS ON THE REVERSE OF THIS FORM


I/We apply for:

Shares at $0.20 per Share = A$


(Minimum 10,000 Shares and thereafter in multiples of 5,000 Shares)
in APAC Coal Limited or such lesser number of Shares which may be allocated to me/us by the
Directors. Broker code Adviser code
I/We lodge full application monies of:
A$ For the above Shares

Full name (PLEASE PRINT)

Joint Applicant #2 or <designated account>

Joint Applicant #3 or <designated account>

Postal Address (PLEASE PRINT)


Street Number Street

Suburb/Town State Post code


Contact Name Telephone number – Business hours

Telephone number – After hours

CHESS HIN (where applicable)

Tax File Number, ABN or Exemption Applicant #2 Applicant #3

CHEQUE DETAILS
Drawer Bank BSB Amount of cheque

Declaration and Statements:


By lodging this Application Form:
I/We declare that all details and statements made by me/us are complete and accurate;
I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company;
I/We acknowledge that the Company will send me/us a paper copy of the Prospectus and any Supplementary Prospectus (if applicable) free
of charge if I/we request so during the currency of the Prospectus;
I/We authorise the Company to complete and execute any documentation necessary to effect the issue of Shares to me/us; and
I/We have received personally a copy of the Prospectus accompanied by or attached to this Application Form or a copy of the Application Form
or a direct derivative of the Application Form before applying for Shares.
I/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for Shares in APAC
Coal Limited and that no notice of acceptance of the application will be provided.
TO MEET THE REQUIREMENTS OF THE CORPORATIONS ACT, THIS FORM MUST NOT BE HANDED TO ANY PERSON UNLESS IT IS
ATTACHED TO OR ACCOMPANIED BY THE PROSPECTUS DATED 4 APRIL 2008 AND ANY RELEVANT SUPPLEMENTARY PROSPECTUS.
(See application instructions overleaf). This Application Form relates to the Offer of Shares in APAC Coal Limited pursuant to the Prospectus
dated 4 April 2008.
TEAR HERE

PAGE 79
APAC Coal Limited

Instructions to Applicants

APPLICATION FORMS
Please complete all parts of the Application Form using BLOCK LETTERS. Use correct forms of registrable name (see below). Applications
using the wrong form of name may be rejected. Current CHESS participants should complete their name and address in the same format as
they are presently registered in the CHESS system.
Insert the number of Shares you wish to apply for. The application must be for a minimum of 10,000 Shares and thereafter in multiples of
5,000 Shares. The applicant(s) agree(s) upon and subject to the terms of the Prospectus to take any number of Shares equal to or less than
the number of Shares indicated on the Application Form that may be allotted to the applicants pursuant to the Prospectus and declare(s) that all
details of statements made are complete and accurate.
No notice of acceptance of the application will be provided by the Company prior to the allotment of Shares. Applicants agree to be bound upon
acceptance by the Company of the application.
Please provide us with a telephone contact number (including the person responsible in the case of an application by a company) so that we
can contact you promptly if there is a query in your Application Form. If your Application Form is not completed correctly, it may still be treated as
valid. There is no requirement to sign the Application Form. The Company’s decision as to whether to treat your application as valid, and how to
construe, amend or complete it, shall be final.
PAYMENT
Applications for Shares must be accompanied by the application money of 20 cents per Share (in Australian currency). Cheques should be made
payable to “APAC Coal Limited – Share Issue Account” and crossed “Not Negotiable”.
LODGING OF APPLICATIONS
Completed Application Forms and cheques must be:
Posted to: APAC Coal Limited
c/- Security Transfer Registrars
770 Canning Highway, Applecross WA 6153
Applications must be received by no later than 5.00pm WST on the Closing Date 15 May 2008.
BROKER SPONSORED APPLICANTS
The Company intends to become an Issuer Sponsored participant in the ASX CHESS System. This enables a holder to receive a statement
of holding rather than a certificate. If you are already a Broker Sponsored participant in this system, you may complete this section or forward
a signed Application Form to your sponsoring broker for completion prior to lodgement. Otherwise, leave this box blank and your Shares will
automatically be Issuer Sponsored on allotment.
TAX FILE NUMBERS
The collection of tax file number (“TFN”) information is authorised and the tax laws and the Privacy Act strictly regulate its use and disclosure.
Please note that it is not against the law not to provide your TFN or claim an exemption, however, if you do not provide your TFN or claim an
exemption, you should be aware that tax will be taken out of any unfranked dividend distribution at the maximum tax rate.
If you are completing the application with one or more joint applicants, and you do not wish to disclose your TFN or claim an exemption, a separate
form may be obtained from the Australian Taxation Office to be used by you to provide this information to the Company. Certain persons are
exempt from providing a TFN. For further information, please contact your taxation adviser or any Taxation Office.
CORRECT FORM OF REGISTRABLE TITLE
Note that only legal entities are allowed to hold securities. Applications must be in the name(s) of a natural person(s), companies or other legal
entities acceptable to NAME OF COMPANY. At least one full given name and the surname are required for each natural person. The name of the
beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the example
of the correct forms of registrable names below:

TYPE OF INVESTOR CORRECT FORM INCORRECT FORM


OF REGISTRATION OF REGISTRATION
Individual Mr John Alfred Smith J A Smith
Use given names in full, not initials
Company ABC Pty Ltd ABC P/L or ABC Co
Use the company’s full title, not abbreviations
Joint holdings Mr Peter Robert Williams & Peter Robert &
Use full and complete names Ms Louise Susan Williams Louise S Williams
Trusts Mrs Susan Jane Smith Sue Smith Family Trust
Use trustee(s) personal name(s), Do not use the name of the trust <Sue Smith Family A/C>
Deceased Estates Ms Jane Mary Smith & Mr Frank William Estate of Late John Smith, or
Use the executor(s) personal name(s) Smith <Estate John Smith A/C> John Smith Deceased
Minor (a person under the age of 18) Mr John Alfred Smith Master Peter Smith
Use the name of a responsible adult with an appropriate <Peter Smith A/C>
designation
Partnerships Mr John Robert Smith & Mr Michael John Smith and Son
Use the partners’ personal names. Do not use the name of the John Smith <John Smith and Son A/C
partnership

PAGE 80
APAC COAL
APAC COAL

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