Straits Asia is on target to produce approximately 9.0 million tonnes of coal in 2008, with approximately 5.0 million tonnes and 4.0 million tonnes contributed by the Jembayan and Sebuku mines respectively.

They have experienced strong production performances during 1Q08, which has traditionally been a wet period and the weakest quarter in production terms. Straits Asia produced 1.20 million tonnes and 0.95 million tonnes from Jembayan and Sebuku respectively during this quarter.

They continue to invest in on-mine infrastructure to increase production capacity at both mines, with the installation of a 2nd wash plant at Sebuku and the increase of coal stockpiling and barge loading facilities at Jembayan well underway. This capital expenditure will be adequate to increase their total annual production capacity to 19.0 m tonnes (11.0 m tonnes and 8.0 m tonnes at Jembayan and Sebuku respectively). They are therefore well placed to have the ability of producing approximately 14.0 m tonnes per annum in the medium term and additional production beyond that. They remain confident that their '09 production levels will meet their target of 11 m tonnes.

They note recent market speculation about the perceived risks relating to the boundary extension at Sebuku being delayed as a result of alleged corruption investigations into the Indonesian forestry department. Straits Asia firmly believes that no such investigations (if they exist) have any relevance to the process being followed by Straits Asia. Straits Asia is in the final stages of its approvals process and continues to make progress towards its approvals at Sebuku being granted. Although there can be no certainty, Straits Asia is confident based on the current process that the Sebuku approvals will be concluded before the end of the '08 calendar year.

The integration of Jembayan has gone smoothly and they're spending much effort on drilling out the Jembayan resource.

The market price for seaborne thermal coal has continued to remain robust, driven by strong demand from end users. It was previously communicated that Straits Asia has committed and priced approximately 7.9 m tonnes of its '08 production. They have since then taken advantage of the strong market conditions and reported that approximately 9.0 m tonnes of '08 production has now been committed at an average price of US$70.50 per tonne. Approximately 1.9 m tonnes of their '09 production (which mainly relates to the extension of certain '08 contracts) has already been committed at an average price of US$66.00 per tonne. The balance of '09 production remains unpriced and accordingly the Company is very well placed to take full advantage of these strong coal market conditions.