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The Indonesian Projects include:Sangihe (70% interest in gold project), Miwah (85% interest in high sulfidation gold project) and Tangse (80% interest in copper-moly porphyry project JURISDICTIONAL MATTERS a. Indonesia's laws and the application thereof are complex, however it is a proven jurisdiction within which to work, and the New Mining Law is globally competitive. However, after a long period of autocratic government, Indonesia is still at the early stages of democratization. One consequence of this paradigm shift is overlapping and potentially conflicting laws. The Forestry Law and the Mining Law are examples of this. b. The New Mining Law, however brings a level of certainty to permitting for mining. For example, once an area has been designated as "Mining Business License" area, then all government levels must agree on exploration and exploitation in that claim area. Moreover, once a positive feasibility study is accepted, a mining permit is virtually automatic. c. In cases where a mining area overlaps with a protected forest area there are precedents for allowing open pit mining to be carried out in so-called protected forests. d. In 1999, the government enacted Law No. 41/1999, which effectively prohibits open-pit mining in protected forests. The introduction of this law resulted in much confusion, because some already existing CoWs covered areas in protected forests. The resulting uncertainty was substantially resolved by a 2004 Presidential Decree, which effectively exempts 13 existing projects from the application of Law No 41. In 2005, certain NGOs launched a constitutional challenge to the Presidential Decree. In July 2005, the Constitutional Court confirmed the validity of the Presidential Decree. In 2006, a second forestry regulation was introduced that presents an option if the mining company cannot provide the required double size compensation land required by the 2004 regulation. The option is to pay an annual fee. Details of the rates and general terms of the fee payment were set out in a regulation issued in February 2008. Some NGO's view the current status of the Forestry Law as a cave-in by the government in favour of the mining industry, and are likely to continue to lobby for their cause. e. The Indonesian Mining Association and the Indonesian Coal Mining Association are meeting regularly with the government to solve the current overlap and conflict between the Forestry Law and the Mining Law. This overlap affects the majority of exploration and development companies operating in Indonesia. The Indonesian forestry issue is very much a work-in-progress that started in 1999, and whose outcome is uncertain. However, the aforementioned precedents, and the tone of current industry/government negotiations offer considerable encouragement for current important projects. The Company believes that there is honourable intent within the Indonesian Government and the Mining Industry to develop solutions to the conflicting laws which have a positive outcome for all potential stakeholders. The Indonesian government has a history of being pragmatic when it comes to overlapping jurisdictions etc. Indonesia's President recently appointed a well-respected, senior official to oversee "de-bottlenecking" conflicting laws that could impede investment. f. Indonesia introduced in 1999 a de-regulation/de-centralisation law, which effectively gave regencies and provinces greater control over internal issues. This lead to additional levels of overlap and uncertainty with regard to implementation of mining and forestry laws and regulations. However East Asia Minerals notes that this merely means that companies must make province by province determinations as to the suitability of that jurisdiction for investment. Whilst some analysts view this negatively, the Company notes that in this regard the Indonesian situation is rather similar to that in Canada, wherein some provinces are better places for mining investment than others. East Asia Minerals regards Aceh Province as a stable and suitable place for investment. g. In East Asia Minerals' case, Aceh's special semi-autonomous status and its constitution give that Province greater levels of self determination and controls over their internal land use affairs. East Asia Minerals is therefore mindful of this special status and the special sensitivity that should be applied to business dealings in that Province. h. East Asia Minerals' Board has 28 "man-years "on the ground in Indonesia's mining industry, and has always been mindful of the issues discussed above. In addition, the Company's Senior Management have more than 30 man-years on the ground in Indonesia's mining industry, with considerable experience in Aceh Province in particular. i. East Asia Minerals is working with local, provincial, and federal governments, and other stakeholders to ensure that all exploration and future mining activities within its Indonesian projects are sanctioned under law and follow international best practices. As part of this, and according to the Company's standard business practice, the Company is continually in confidential discussions and negotiations with various levels of government and other stakeholders regarding all laws and activities related to, but not limited to, exploration, mining, forestry and other protected areas. The Company will continue to announce receipt of permits and completed negotiations on an ongoing basis. | | | | |||
