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1 November 2007 To: Company's Announcement Office Australian Stock Exchange Ltd

Straits Asia acquires Jembayan coal mine in East Kalimantan

Please find attached a media release, announced by Straits Asia Resources Limited on the SGX last night. Straits Resources Limited

First Floor 35 Ventnor Avenue Straits Resources Limited ABN 22 056 601 417

Shaun Day Company Secretary

West Perth WA 6005

PO Box 1641 West Perth WA 6872 Australia

Telephone (61 8) 9480 0500 Facsimile (61 8) 9480 0520 www.straits.com.au

About Straits Resources

Straits is a diversified resources company focussed on generating strong and sustainable earnings for its shareholders from a balanced portfolio of resource projects. Based in Perth, the company has a management team with an impressive track record of advancing resource projects through to full-production. Straits controls and operates the Whim Creek copper mine in WA, the Tritton Copper Operations in NSW, the Mt Muro gold mine in Indonesia and the Sebuku Coal mine in Indonesia owned by Straits subsidiary Straits Asia Resources which is listed on the Singapore exchange. In addition Straits holds an outstanding portfolio of mining investments, development projects and exploration ground throughout Australia and Indonesia.

Press Release

Straits Asia acquires Jembayan coal mine in East Kalimantan

· · · Transformational acquisition opportunity Large concession area with 115 million tons of resources (non-JORC) Expected to double the Group's annual coal production in 2008

Singapore - 31 October 2007 - Straits Asia Resources Limited (Straits Asia, SGX: SAR) today announced that it had entered into a definitive sale and purchase agreement to acquire a 100% interest in the Jembayan coal mine in East Kalimantan ("Jembayan") for a total purchase consideration of US$350 million. The purchase consideration of US$350 million will be settled through US$275 million in cash and the issue of 75.09 million new SAR shares to the vendors, representing 6.9 % of Straits Asia's enlarged issued share capital. This announcement follows an earlier announcement released on 27 September 2007 regarding the signing of a Memorandum of Understanding between Straits Asia and the Jembayan vendors. Jembayan is located approximately 150 kilometres North West of Balikpapan and approximately 70 kilometres from the sea. The mine has been operating since 2004 with substantial year-onyear ramp up. For the financial year ending December 2007, Jembayan is estimated to produce approximately 4.0 million tonnes of coal. The Jembayan concession covers a total area of nearly 13,000 hectares. Using present records, an independent review of the coal deposits has identified non-JORC classified reserves and resources of approximately 41 million tonnes and 115 million tonnes respectively. Only 48% of the total concession area has been explored, implying significant reserve and resource upside potential. Commenting on the transaction, Richard Ong, CEO of SAR said, "This is a fantastic opportunity for Straits Asia to expand its thermal coal mining business in Indonesia. Jembayan is an outstanding coal mine with excellent infrastructure. I am delighted with this transaction and that the vendors will hold a stake in the future of the combined businesses."

Macquarie Securities (Singapore) Pte Limited is the Sole Global Coordinator, Bookrunner and Underwriter for, and Macquarie Securities (Asia) Pte Limited is the Issue Manager for, the Initial Public Offering of the Company. This announcement has been prepared and released by the Company.

STRAITS ASIA RESOURCES LIMITED 80 Robinson Road #22-04 Singapore 068898 Tel : (65) 6327 4111 www.straitsasia.com

Press Release

"The acquisition will deliver immediate benefits to Straits Asia as it allows us to expand our 2008 production to a target of around 8.5 million tonnes to 9.5 million tonnes from our two mines. The coal quality is of higher grade and contains low sulphur which is the kind of quality that our customers demand. By acquiring the Jembayan mine, we also diversify our risk of relying on a single mine. Furthermore, Straits Asia will embark on an extensive exploration programme over the next 12 months to prove up and expand the Jembayan resource base to JORC standards. We believe the exploration upside is significant." "Our growing production and resource base, and the strong outlook for thermal coal prices provide us the platform to grow further, and deliver outstanding returns to our shareholders," said Mr Ong. "We therefore maintain our positive outlook for thermal coal prices, and this acquisition reinforces our positive view about doing business in Indonesia." Macquarie Securities (Asia) Pte Limited is acting as financial advisor to Straits Asia on the transaction.

For further information, please contact: Investors and Shareholders; Jim Carter Chief Financial Officer Tel: + 65 6327 4111 [email protected] Media Enquiries Ho See Kim Partner August Consulting Tel: +65 9631 3602 [email protected]

Jeremy Figgins Group Manager Corporate Affairs Tel +65 9616 7062 [email protected]

www.straitsasia.com

STRAITS ASIA RESOURCES LIMITED 80 Robinson Road #22-04 Singapore 068898 Tel : (65) 6327 4111 www.straitsasia.com

STRAITS ASIA RESOURCES LIMITED (Incorporated in the Republic of Singapore on June 10, 1995)

(Company Registration Number: 199504024R)

ACQUISITION OF THERMAL COAL MINING BUSINESS IN EAST KALIMANTAN (THE "ACQUISITION") 1. INTRODUCTION The board of directors of the Company (the "Board") wishes to announce that PT Borneo Citrapertiwi Nusantara ("PT Borneo"), a subsidiary of the Company, had on 31 October 2007, entered into two sale and purchase agreements (the "Share SPAs") with each of (i) Pacific Communication Corp. ("PCC") and (ii) Mitsui Matsushima International Pty Ltd ("MMI") (PCC and MMI collectively the "Share Sellers") in relation to the acquisition by PT Borneo of the entire issued share capital (the "Sale Shares") of PT Separi Energi ("PTSE"). The Board wishes to announce that on the same date, Straits Global Trading Limited ("SGT"), a subsidiary of the Company, had entered into a sale and purchase agreement (the "Contract SPA") with Vital Century Investments Ltd (the "Contract Seller") in relation to the acquisition of certain offtake contract rights ("Offtake Contract Rights"). The Offtake Contract Rights comprise of all of the rights, title, interest, duties and obligations of the Contract Seller under the contracts between PT Jembayan Muarabara, PT Arzara Baraindo Energitama and PT Kemilau Rindang Abadi (collectively the "Contract Companies") and the Contract Seller pursuant to which the Contract Companies had agreed to sell coal from their respective mines to SGT.

2.

DESCRIPTION OF THE ASSETS AND BUSINESS ACQUIRED Following the completion of the Acquisition, SARL would possess a 100% effective interest in PTSE and the Offtake Contract Rights as well as acquire: A total mining concession area of 12,885 hectares located in East Kalimantan, Indonesia, comprising 3 separate exploitation kuasa pertambangan ("KP") and 1 exploration KP. An open cut thermal coal mining operation with current production of approximately 4 million tonnes per annum, with appropriate infrastructure in place to ramp-up production to 5.4 million tonnes (subject to SARL's detailed review of the asset).

Macquarie Securities (Singapore) Pte Limited is the Sole Global Coordinator, Bookrunner and Underwriter for, and Macquarie Securities (Asia) Pte Limited is the Issue Manager for, the Initial Public Offering of the Company. This announcement has been prepared and released by the Company.

Known coal resources and reserves (non Joint Ore Reserves Committee ("JORC")) of approximately 115 million tonnes and 41 million tonnes respectively, based on a technical review ("Technical Review"). Upon completion of the acquisition, SARL will embark on an extensive drilling programme in the concession area to prove up the reserve and resource base to JORC standards. 2 coal products comprising bituminous (6,200 kcal) and sub-bituminous (5,950 kcal) quality coal. International customer base, including power utility companies in the United States, Japan, China, Thailand and South Korea.

3.

RATIONALE FOR THE ACQUISITION The Company considers the Acquisition to be beneficial to its business and shareholders for the following reasons: Potential for significant upgrade of the Company's reserve and resource base Based on the Technical Review, it was indicated that there is 41 million tonnes of non-JORC reserves and 115 million tonnes of non-JORC resources. Additionally, the Technical Review indicates that approximately 48% of the concession area has been explored by geological mapping. The Company believes that further drilling may yield exploration upside in in the unexplored areas. SARL will immediately embark on an extensive exploration and drilling programme over the next 12 months in order to prove up the resource base to JORC standards. Increase in SARL's production capacity in an environment of sustained strong coal prices Post Acquisition, the Company expects to more than double its current production. The Technical Review indicates that the existing infrastructure could support an annual production rate of up to 5.4 million tonnes, which is approximately 1.5 times more than SARL's existing production target of 3.4-3.6 million tonnes for 2007. SARL will review the production levels of the Acquisition following the completion of the transaction. Diversification from a single mine owner The Acquisition allows SARL to diversify its production away from a single mine. This mitigates the risk of production disruption due to natural events such as abnormally heavy rainfall. Earnings and cash flow volatility due to factors beyond SARL's control (such as weather irregularity) could be better managed. The Acquisition will also bring about greater operational flexibility for the Company. Mining coal from multiple pits from two distinct areas will allow for optimal infrastructure development, sales planning and shipping plans. Complementary coal product to Sebuku coal The Company will continue to market Sebuku Coal as a premium brand and maintain its focus on the North Asian markets. Coal from the Acquisition, which is of different specification, would allow SARL to broaden its product offering to suit the requirements of its customers and potentially attract new customers.

4.

PRINCIPAL TERMS OF THE ACQUISITION Consideration The total purchase consideration for the Sale Shares and the Offtake Contract Rights (the "Acquisition Consideration") amounts to US$350 million. The Acquisition Consideration was agreed between the parties on a willing-buyer and willing-seller basis. The Acquisition Consideration will be satisfied by: I. II. a cash payment of US$275 million (the "Cash Consideration"); and an issue of 75,086,394 ordinary shares in the capital of SARL (the "Share Consideration") at an issue price of S$1.4758 per ordinary share in the capital of SARL.

Upon completion of the respective SPAs, the Cash Consideration and the Share Consideration will be paid and issued to the Sellers. Cash Consideration The Cash Consideration will be funded from: I. proceeds of the placement of 94,485,000 new ordinary shares in the capital of the Company, which was announced on 5 October 2007; a US$230 million corporate facility of which SARL has received a committed, underwritten offer from a major international bank. The loan documentation and syndication process is currently being progressed by the Company; and SARL's internal cash flows.

II.

III.

Share Consideration The shares under the Share Consideration will be issued pursuant to the general share issue mandate obtained by SARL at its annual general meeting held on 30 April 2007.

Conditions Precedent Completion of the SPAs will take place on the earlier of 31 December 2007, or the day five business days after the Purchaser notifies the Seller in writing after the following condition precedents have been satisfied or waived: Share SPA Completion of the sale and purchase agreement entered into between PCC and PT Borneo (the "PCC SPA") is conditional on, inter alia, the following: (a) PCC completing certain corporate rectification actions in relation to the PTSE and the Contract Companies to the reasonable satisfaction of PT Borneo, and PT Borneo confirming the same in writing to the Share Seller all in a form satisfactory to PT Borneo; PCC providing evidence satisfactory to PT Borneo that all amounts due and payable to PT Bhineka Wana have, at the date of the PCC SPA, been paid;

(b)

(c)

delivery by PCC to PT Borneo of notarised deeds of transfer evidencing (a) the transfer of 350 shares in PTSE from SP Coal Pte Ltd to PCC; (b) the transfer of 6,650 shares in PTSE from Truefull Limited to PCC; and (c) the transfer of 21,000 shares in PTSE from PT Rentalperdana Putratama to PCC; together with the approval of Badan Koordinasi Penanaman Modal ("BKPM") in respect of the transfers above, BKPM approval to change the line of business of the PTSE to "general mining contractor", the approval of the Ministry of Law and Human Rights to the change in the shareholders of PTSE and a copy of the shareholders register of PTSE reflecting the transfers referred to above, all in a form satisfactory to PT Borneo; delivery by PCC to PT Borneo of a copy of the approval from BKPM revoking the Penanaman Modal Asing ("PMA") status of PTSE; and

(d)

Completion of the sale and purchase agreement entered into between MMI and PT Borneo is conditional on, inter alia, the following:(a) approval of the shareholders of MMI in respect with the Share SPA between MMI and PT Borneo; PT Borneo confirming to MMI that the Company has finalised financing facilities to fund the payments by PT Borneo of the Contract Consideration, and all drawdown conditions under the finance facilities have been satisfied (or validly waived in accordance with the terms of the financing documents) to fund such payments.

(b)

.

Contract SPA Completion of the Contract SPA is conditional on, inter alia, SGT confirming to the Contract Seller that the Company has finalised financing facilities to fund the payments by SGT of the Contract Consideration, and all drawdown conditions under the finance facilities have been satisfied (or validly waived in accordance with the terms of the financing documents) to fund such payments.

5.

FINANCIAL EFFECTS OF THE ACQUISITION AND ACQUISITION FUNDING The proforma financial effects of the Acquisition on the earnings per share ("EPS"), the net tangible assets ("NTA") per share and net asset value ("NAV") per share of the Company and its subsidiaries (the "Group") as set out below are prepared purely for illustration only and do not reflect the actual future financial situation of the Group after the Acquisition. The proforma financial effects have been prepared based on the audited consolidated financial statements of the Group for the financial year ended 31 December 2006 ("FY2006"), and the audited consolidated financial statements for PTSE for the financial year ended 31 December 2006. The Group's financial statements are prepared in accordance with International Financial Reporting Standards. PTSE's financial statements are prepared in accordance with Indonesian GAAP. The financial effects analysis has not been adjusted for any differences in accounting standards.

Earnings Per Share ("EPS") For FY2006, PTSE recorded a net income of US$2.656 million. The effect on the Group's EPS is illustrated in the table below:

Before the Acquisition [1] (FY2006) Net income (US$m) EPS (US$) 48.153 0.0522

[5]

PTSE [2] (FY2006) 2.656 [4]

Pro forma Group following [3] the Acquisition 50.809 0.0490

[6]

Notes: [1] [2] [3]

Prepared in accordance with IFRS Prepared in accordance with Indonesian GAAP Assumes the following Acquisition funding structure: Consideration Debt Scrip Shares for cash Total Amount US$230m US$75m US$45m US$350m Basis of calculation Approximately 75.1m new shares at S$1.4758 per share Approximately 41.6m new shares at S$1.60 per share

[4] [5] [6]

Assumes a USD:IDR exchange rate of 1:9423 Issued share capital of 920,765,220 shares as at 31 Dec 2006 Proforma enlarged share capital of 1,037,406,301 shares following the Acquisition and Acquisition funding

NTA Per Share and NAV Per Share The financial effect of the Acquisition on the Group's NTA is not a meaningful analysis because the majority of the value that the Company is paying for the Acquisition will be recorded as intangible assets on the Group's balance sheet. Accordingly, an analysis of the financial effect of the Acquisition on the Group's NAV is more meaningful. The effect on the Group's NAV Per Share is illustrated in the table below:

Before the Acquisition (as at 31 Dec 2006) NAV (US$m) NAV Per Share (US$) 57.484 0.0624

[2]

Pro forma Group following the Acquisition 177.484 0.1711

[1]

[3]

Notes: [1] [2] [3]

The proforma adjustment in NAV comprises an increase in equity of US$350m, less the amount of debt (US$230m) used to fund the Acquisition Issued share capital of 920,765,220 shares as at 31 Dec 2006 Proforma enlarged share capital of 1,037,406,301 shares following the Acquisition and Acquisition funding

6.

INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS None of the directors or controlling shareholders of the Company has any interest, direct or indirect, in the transaction. No directors are proposed to be appointed to the Company's board in connection with the transaction.

There will be no material impact on the earnings per share of the Company on completion of the acquisition of the Contract Companies and the Offtake Contract Rights. 7. WAIVER FROM SINGAPORE EXCHANGE SECURITIES TRADING LIMITED ("SGX-ST") On 29 October 2007, SARL was granted a waiver by SGX-ST from complying with Rule 1014 of the SGX-ST Listing Manual in respect of obtaining shareholders approval for the Acquisition on the basis that the Acquisition is part of the Company's ordinary course of business which constitutes an expansion of the Company's core business and would not materially adversely change the risk profile of the Company. Accordingly, the Acquisition will not be subject to shareholders approval.

BY ORDER OF THE BOARD James Carter Company Secretary 31 October 2007

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