East Asia Minerals Comments on the New Indonesian Mineral and Coal Mining Law, and Implications for the Company

VANCOUVER, BRITISH COLUMBIA–(Marketwire – Jan. 26, 2009) – East Asia Minerals Corporation (TSX VENTURE:EAS) believes that the changes proposed under the New Indonesian Mineral and Coal Mining Law (“New Mining Law”) are largely positive for the Company and considers that the New Mining Law of Indonesia is a globally competitive framework within which to operate. It will provide the Company with excellent security of tenure, and a well defined framework within which to grow the Company.
The draft of the New Mining Law was approved by the Indonesian legislature on December 16, 2008, and was signed by the President on January 12, 2009. Upon its enactment, the New Mining Law will replace the current law on Principal Provisions of Mining (“Law No 11/1967” or “Old Mining Law”). However, the existing implementation regulations of the Law No 11/1967 shall remain applicable to the extent that such implementing regulations do not contravene with the New Mining Law. The new regulations required for the implementation of the New Mining Law will take several months to draft.
There are several major changes in the New Mining Law compared with the Old Mining Law. Under Old Mining Law mineral exploration and mining activity in Indonesia was conducted under either a Mining Authorization (“KP”) and/or a Contract of Work (CoW), which was issued by the Central Government. East Asia Minerals Corporation currently operates under several CoW applications, and KP’s.
The New Mining Law grants permits through the issuance of the mining license or IUP. The IUP is granted in two stages, namely the Exploration IUP and the Operation Production IUP. The New Mining Law guarantees that the holder of the Exploration IUP will be consecutively granted with the Production Operation IUP as the continuance of its business activity.
Under Old Mining Law an Exploration KP was granted for 3 (three) years, followed by an Exploitation KP for 30 (thirty) years, extendable for 10 (ten) years twice. The Exploration IUP for the metal minerals may be granted for the maximum period of 8 (eight) years and the subsequent Production Operation IUP will be granted for 20 (twenty) years, extendable for 10 (ten) years twice. Thus total tenure will be shortened by 5 years; however, the exploration term has been extended by 5 years. The Exploration IUP for metal minerals can grant an area of 5,000 (five thousand) to 100,000 (one hundred thousand) hectares. Hence large areas are available to prospective explorers. The Operation Production IUP grants a maximum area of 25,000 (twenty five thousand) hectares. EAS considers that the changes to term and size of tenure are unlikely to impact upon its future operations and are sufficient for all foreseeable mining activities.
IUPs can be granted by the Mayor/Municipal Official, Governor, or Minister, depending on the location of mining area. This is a departure from the previous Mining Law, wherein all exploration and mining licenses were issued by the Central Government. EAS has long been positioning itself for this eventuality and has excellent relationships with all levels of Government in Indonesia.
The Exploration IUP for metal minerals mining will be granted by way of public auction. This may well be a significant disincentive to new entrants to Indonesia. However, under the New Mining Law CoW applications submitted at least (1) one year prior to the enactment of the New Mining Law, where the applicant has obtained a principal license (izin prinsip) or the preliminary investigation permission (surat ijin penyelidikan pendahuluan), will be honoured and treated as an IUP application without the public auction requirement. Similarly, existing KP’s will be automatically converted to IUPs. Hence East Asia Minerals Corporation believes that its large and hugely prospective land position in Indonesia will be converted to the new IUP system automatically.
Furthermore, the Company believes that direct foreign ownership of its tenements will be allowed under the New Mining Law; however there may be some requirement for divestment to an Indonesian entity, much in the same way as there were such requirements under the Old Mining Law.
Kalimantan Coal


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s