16 December 2009 The Manager Company Announcements Platform Australian Securities Exchange Exchange Plaza, 2 The Esplanade PERTH WA 6000 311 313 Hay Street SUBIACO WA 6008 P: + 61 8 9381 5819 F: + 61 8 9388 3701 ABN: 45 098 448 269 www.panasiacorp.com.au BUILDING AN EMERGING RESOURCE COMPANY UPDATE ON ACQUISITION OF COAL AND MANGANESE ASSETS IN INDONESIA HIGHLIGHTS: Technical due diligence completed on the most significant coal & manganese projects Target coal production rate of 1 to 1.5Mtpa* in 2010, initial sales in 1 st quarter 2010 Focussing on the delineation of large thermal and coking coal resources to justify substantial increases in coal production. High-grade manganese observed on concessions on Flores Island and West Timor SUMMARY: Production Thermal Coal, East Kalimantan Jasa Tambang Nusantara Project ( JTN ) 90% interest: 20,000* tpm current production, planned increase to 40,000* tpm (500,00TPA) over a 3 month period; >6 km strike length of outcropping coal to be drill tested. Development - Thermal Coal, East Kalimantan CV Bunga Bone Project ( CBB ) 90% interest: Existing small scale open pit mine, with significant amount of exposed coal ready for mining; targeting 50,000* tpm (600,000TPA) within 6 months. Archipelago Timor Perkasa Project ( ATP ) 90% interest: Significant amount of existing mine development; targeting 40,000* tpm (500,000TPA) within 6 months. High Priority Exploration Assets Thermal Coal Projects in East Kalimantan & Sumatra Coking Coal Large concession in Central Kalimantan with outcropping coal seams Manganese Flores Island Primary source expected close to high-grade boulders Coal Terminals/Infrastructure Projects Stage 1 - Samboja area open sea barge loading to service nearby constrained coal producers Stage 2 - Samboja/Sangatta planned direct shipping facility * These tonnage estimates and targets are based on records provided to the company by the vendors during the diligence process. 1
Pan Asia Corporation Ltd. (ASX: PZC, the Company) provides this important update on the review of the extensive portfolio of projects being acquired from Innovation West announced to shareholders on 23 November 2009. The Company s executives have recently returned from visiting the highest priority projects and it is clear that the proposed acquisition of projects represents a significant company changing growth opportunity. The Company believes the suite of assets being acquired is a platform to build a significant Indonesian-focussed resource company with increasing thermal coal production from a number of operations. The extensive pipeline of coal and manganese exploration projects provides the Company with exposure to vast parcels of prospective ground in the prolific coal fields of eastern Kalimantan, as well as the emerging manganese province on Flores Island and West Timor. It is expected that exploration activity, including drilling and detailed project evaluations will begin in the coming weeks. Due to the large number of projects under review, the company prioritised the projects on the basis of first assessing those in production, near development stage or with high priority exploration status. The other projects, while prospective, will necessarily be assessed in detail at a later stage. Figure 1 Location map of Kalimantan illustrating the majority of concessions being acquired in the Innovation West transaction. 2
PROJECT DETAILS: Jasa Tambang Nusantara ( JTN ), East Kalimantan: In Production The JTN concession is located in eastern Kalimantan, approximately 75km SW of Balikpapan. The concession covers 2,750Ha, with a small open pit mine currently producing around 20,000* tonnes per month of sub-bituminous thermal coal with typical analysis (air dried basis): 5,600-6,000 Kcal/kg, 0.3-0.7% total sulphur, 8-10% total moisture, 4-8% ash. Observations from site indicate the current mining activity is in the early stages of extracting two near-surface coal seams with thicknesses varying from 0.8-4m. The seams dip shallowly to the south east at 8 0-15 0. JTN owns and operates coal handling and barge loading infrastructure approximately 7km from the mine site where it currently loads shipments twice weekly. Loading capacity is presently rated at around 200tph. PZC plans on implementing expansion plans to ramp-up production to 40,000* tonnes per month over the coming 3 month period. Additional plant and equipment will be mobilised to site to assist in achieving this goal, with the existing infrastructure capable of handling the increased throughput. In addition, PZC will commit to undertake a detailed near-mine drilling program in order to assess the potential for further production expansions and optimising future mine planning and scheduling. Drilling will focus on the estimated 6km of inferred strike length of coal seams on this concession. * The above production results and targets are based on information provided to the company by the vendors during the due diligence process. Figure 2 Location map of the JTN concession approximately 75km from Balikpapan. 3
Figure 3 - Current coal mining operations at Jasa Tambang Nusantara Project, East Kalimantan CV BUNGA BONE ( CBB ), East Kalimantan: In Development The CBB Project has a recent history of small-scale production and sales of sub-bituminous thermal coal from a 100Ha concession area located approximately 30km SE of Samarinda, Eastern Kalimantan. Barge loading infrastructure with a capacity of approximately 20,000-30,000* tonnes per month is located 7km from the mine site and is ready for immediate start-up. Coal quality is expected to be in the range of 5,600-5,800 Kcal/kg, 10-15% moisture, 5-10% ash and 0.5-0.8% sulphur. With some additions to the existing mining fleet and infrastructure, the Company is aiming for an initial production target of 50,000* tonnes per month. Four coal seams have been identified at CBB, with thickness varying from 1.1m to 5m and dipping at 12-18 0 to the SE. A significant amount of near-surface coal has recently been exposed and is ready for extraction (see Figure 5). The Company is also acquiring drilling data which will be further verified by additional drilling to take place in the first quarter of 2010. * The above production results and targets are based on information provided to the company by the vendors during the due diligence process. 4
Figure 4 Location of the CV Bunga Bone in Eastern Kalimantan. Figure 5 - In Situ coal exposed near surface at CV Bunga Bone. 5
ARCHIPELAGO TIMOR PERKASA ( ATP ), East Kalimantan: In Development A significant amount of mine development has been undertaken at ATP, with the extraction of 100,000t* of coal within the last year. Coal is present in seams up to 5m thick which exhibit high calorific values, up to 6,700 Kcal/kg. The sulphur content is elevated such that this coal will require blending with lower sulphur coals, such as material from JTN, to produce a saleable product. The coal seam outcrops intermittently over a 3km strike length, some of which has been drilled by the project vendor. The 3,930Ha ATP concession is located approximately 90km SW of Balikpapan and has direct access to owned and operated barge loading infrastructure. A significant near-mine exploration and resource delineation program is being planned for ATP. The Company believes this coal will add significant value as a blending coal with other projects nearby, particularly JTN. * The above production results and targets are based on information provided to the company by the vendors during the due diligence process. Figure 6 Location of Archipelago Timor Perkasa, Eastern Kalimantan. 6
ABADI PANDU SELARAS ( APS ), Central Kalimantan: High Priority Exploration An exploration application has been submitted over an 8,000Ha area in Central Kalimantan which is targeting coking coal and high quality thermal coal. Several photos of outcropping coal seams up to 3m thick are available from this area and are shown below as Figures 7 & 8. Further exploration and evaluation work is planned to begin within the coming weeks to ascertain the aerial distribution of outcropping coal, with a drill program designed to define the size and prospectivity of this area. Figure 7 - Coal outcrop discovered on the Abadi Pandu Selaras concession, central Kalimantan Figure 8 - Coal outcrop discovered on the Abadi Pandu Selaras concession, central Kalimantan. 7
SARANA MANDIRI UTAMA ( SMU ), East Kalimantan: High Priority Exploration The 5,250Ha SMU concessions are located in the north of Kalimantan with easy access to the adjacent river system. The Company is acquiring a significant amount of drilling data which will be verified by additional drilling undertaken by the Company in the coming weeks. The Company believes the SMU concessions appear highly prospective for the rapid delineation of potentially large areas of near-surface thermal coal. An initial production target of 40,000* tonnes per month appears feasible. * The above production results and targets are based on information provided to the company by the vendors during the due diligence process. Figure 9 Location of the SMU concessions in north eastern Kalimantan. BHARATINDO MINERALS MANDIRI ( BMM ), Sumatra: High Priority Exploration The 4,500Ha BMM concession is a greenfields project area which the Company believes has excellent potential to host near-surface thermal coal. The project vendor reports a nearcontinuous coal seam outcropping for over 1.6km. Coal quality analysis and seam thickness information is not yet available, however will be investigated further by the Company early in 2010. The area is serviced by several logging roads with only slight topography. 8
Figure 10 Location of the Bharatindo Minerals Mandiri concession in southern Sumatra. Manganese concessions, Flores Island, West Timor NTT: High Priority Exploration A number of manganese concessions covering more than 15,000Ha are being acquired as part of the Innovation West transaction. These projects are located in Flores, West Timor, East Kalimantan and Sumatra. Following the site visits undertaken by the Company s technical staff, the concessions on Flores Island are considered highly prospective for the discovery of in-situ primary manganese deposits. Figures 11 and 12 illustrate massive manganese oxide (pyrolusite) contained within a large boulder as part of a small landslide. The size of the boulder and the morphology of the immediate area suggest this boulder has not travelled far from its source. Detailed geological mapping and prospecting will be undertaken in areas directly upslope from this boulder with the aim of identifying the original source rocks. Additional exploration work will be carried out on the concessions in West Timor to fully understand the geology of this region and ascertain the prospectivity for hosting primary manganese deposits of significant size. Recent site visits indicate predominantly alluvial manganese occurrences in these concessions. 9
Figure 11 Massive manganese oxide (pyrolusite) on the WELL concessions, Flores. MANGANESE BOULDER Figure 12 Pan Asia Corp CEO Alan Hopkins standing next to boulder containing massive manganese oxide within a small landslide in the WELL concessions on Flores Island. Coal Terminals / Infrastructure The executives visited the Samboja site and met with representatives of the state owned company specialising in sea barge loading facilities. The review of feasibility data is ongoing and future updates will be provided as further progress is made. 10
PZC joins with Mr Gerald Nirahuwa to mine, develop and explore for coal and manganese A key part of the acquisition is the joining with Indonesian partner Mr Gerald Nirahuwa who has over 12 years experience as a coal mining contractor/owner operator in Indonesia. His extensive and strong-on-the-ground network secures and enhances the opportunities provided and establishes a pathway for further opportunities. Our Indonesian partner s local presence complements the project management, exploration planning and financial market capabilities of the Pan Asia group. The Company s overall growth approach is to support and expand current initial production, while planning and aggressively undertaking modern exploration on the significant high potential land holdings with a view to building significant JORC tonnages and shareholder value. Corporate Update The Company is positioning to quickly become a significant participant in the Indonesian mining industry and indicative milestones are set out below: Corporate: Finalisation of technical and legal due diligence Jan / Feb 2010 Notice of extraordinary meeting February 2010 Shareholder approval obtained Feb / Mar 2010 Completion of transaction March 2010 Allotment of shares to vendors March 2010 Australian / European presentations Jan - Mar 2010 Operations: Management and executive review of operations in Indonesia ongoing Drilling and assaying of drilling programme results on 4-5 projects Jan Mar 2010 Takeover of coal and manganese operations March 2010 Legal Due Diligence The Company advises that legal and technical due diligence on the projects / acquisition of Innovation West Pty Ltd is ongoing and will update the market as to further progress. The Company will seek all regulatory and shareholder approval in respect of this transaction. Yours sincerely ALAN G. HOPKINS Chief Executive Officer DISCLAIMER: The information concerning production targets in this announcement are not intended to be forecasts. They are internally generated goals set by the board of directors of Pan Asia Corp and to a large degree are based on information provided to the company by the vendors. The ability of the company to achieve these targets will be largely determined by the company s completion of adequate due diligence, its ability to secure adequate funding, implementation of mining plans, resolution of logistical issues associated with mining and potential to enter into off take arrangements with reputable third parties. 11
* It is common practice for a company to comment on and discuss its exploration and development in terms of target size and type. The information included in this announcement to the production, development or exploration target should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient exploration to define a Mineral Resource or Reserve. It is uncertain if further exploration will result in the determination of a Mineral Resource or Reserve. About Pan Asia Corporation Limited Pan Asia Corporation Limited is a rapidly growing diversified resources company listed on the Australian Securities Exchange with offices in Perth, Australia and Jakarta, Indonesia. The Company aims to be a major supplier of key resources into the expanding Asian markets and is well advanced in its due diligence and requirements for regulatory and shareholder approval for the acquisition of a number of significant coal and manganese assets in Indonesia. This diversified portfolio of assets includes projects in both production & exploration stages as well as a significant opportunity to participate in key infrastructure development which will complement the existing coal projects held by the Company. The evaluation & development of the current suite of assets in addition to new opportunities that arise from a strong local partner network will be the foundation for Pan Asia s aim to become a top tier coal & manganese company in Indonesia over the next three years. An extensive international financial network provides support for the Company s rapid growth plans. 12