RSM AAJ Associates Email PacssO0K 710 Bios accte Pp eseipten Prone se 80 rae asset Our Ret No. 024170811/PIKNEL Date: 21 June, 2011 To Asia Mining and Metals Group Pte Ltd For the attention : Ilya Oprenko Email ‘oprenko@gmail.com From Nick Graham Total No. of Pages : 5 (including this page) "This message intended ont forthe aiedual rently io which itis addressed and may cotan information thal is pvate nd” ‘rider jou ara not the Intended recent. emsioyee or agent responable for dehvenng be message to te ended ‘eopiont ou ae hereby noite ha any cssominatoneerbuton or copying of hs comimuneaton ang ts aiachmons i ity hota ya rave Need the comma arts acres neo poe net by taetone, a eu he Dear liya, Proposal for Tax Advisory Services re: Financing of Indonesian Mine Investments Further to our correspondence, we are pleased to present this proposal for tax advisory services regarding the financing of the Indonesian mine investments of Asia Mining & Metals Group Pte Ltd. 1.0 Background Asian Mining & Metals Group Pte Ltd ("AMMG") is a Singapore incorporated company that is ultimately beneficially owned by Russian individual shareholders who hold their interests via Belize (64.29%) and BVI (35.71%) companies. AMMG in tum owns 70% of PT Bumi Konawe Mining ("BKM"), an Indonesian company that holds a licence to mine nickel ore on Wawonii Island, Konawe Regency, Sulawesi Tenggara Province, Indonesia, (This information is based on the structure summary as provided by Nick Waters on 18 May, 2010.) Until today, USD 4.5m has been paid by AMMG to acquire 70% of the shares in BKM, all funded by equity subscriptions by the shareholders of AMMG. ‘Separately there is a USD 1m interest free loan from Asia Mining Holding Ltd (Belize) to BKM, of which USD 550,000 is currently drawn Future funding requirements for BKM are expected to involve ‘+ Exploration costs — currently USD 3m budgeted for the next 6-months + Further acquisition cost payments — depending on final resource calculation after drilling. If resource is say 30 million WMT then an additional USD 1.5m will be paid to the vendor shareholders SMA Assoitesis an Branch Ofice independent member A Mayen Surgkono fimo! RSM beratonal, an afliaton of Komplek Dama Park Bik 817-19 independent aocouting and consulting fas Swabaya 60256, Indonesia* Mine & infrastructure development costs ~ unknown currently, but will be in the millions, starting in around 6-months or less *+ Processing ~ this is a total unknown at this stage but this would require investment in the tens of mitlons. Outside of BKM, AMMG will be investing in additional PT mining companies that are currently targeted. These would be of a similar scale to PT BKM. Ideally the plan for financing of BKM will reflect: ‘+ Amount of CAPEX is approximately USD 10m ‘+ The plan is to finance the CAPEX via a shareholder loan, preferably interest free, however if not possible then objective will be to minimise interest + The loan will have first repayment priority from the proceeds of BKM’s project ‘+ The shareholders were planning to use a non-affiliated Belize SPV as lender but accept they may need to consider different options. AMMG requires advice describing the most efficient financing scheme given the above inputs. AMMG also requests comments as to how to minimise tax losses (from potential withholding tax) from the existing USD 550,000 loan to BKM. 2.0 Scope of Work ‘The scope of work will involve: ‘+ Review of Indonesian tax implications of debt/equity financing from Singapore or other existing Group entities (i.e. from the Belize or BVI company) © Ideally any loans would be on an interest-free basis, ‘+ Review of Singapore tax implications for debt/equity financing via AMMG: ‘© Implications if AMMG borrows from one of the existing Group entities for on-lending or on-investment into BKM (ideally the borrowing and lending would be on an interest-free basis) © Implications if AMMG issues Redeemable Preference Shares for on- lending or on-investment into BKM (ideally lending would be on an interest- free basis) © Implications if the shareholders subscribe more shares in AMMG for on- lending or on-investment into BKM (ideally any loans would be on an interest-free basis) + Comment on options to mitigate the potential withholding tax costs relating to deemed interest on the existing loan from the Belize company to BKM + Providing a cashflow illustration of USD 100 of income: (dividend or interest) paid from BKIM under the proposed financing structure (to the dividend and/or interest payment to the Belize or BVI shareholders) The scope would not include a transfer-pricing study (e.g. in relation to interest-margins in Singapore on back-to-back loans or equity financed loans). 3.0 QurFees Based on our understanding of the background and the issues, our fee to undertake the above scope of work is USD 10,000.Please note that any work or advice outside the scope above to be carried out by us upon your request will be billed for separately based on a fee to be agreed with you upfront. We will endeavour to keep the actual fees to the estimate quoted above. However, if due to unforeseen circumstances, the extent of our service to be rendered varies significantly such that we need to spend more time than anticipated on the assignment, we will seek your approval of the applicable additional fee payable before we continue to proceed with the assignment 4.0 Service Team ‘The engagement will be lead by Nick Graham (Technical Adviser) with the assistance from RSM AAJ Associate's professional staff and in consultation with RSM Chio Lim in Singapore. 5.0 Timing of Services & Deliverables We shall commence our assignment upon your acceptance of the terms and conditions. We expect to provide our draft report within 2 weeks of commencement. Unless significant additional issues are raised then the final Report will be delivered within ‘1 week of the meeting/discussion regarding the draft Report. If there are significant issues then an additional 1-2 weeks might be required, 60 — Email Communicatic It is understood that email may be the most efficient method of communication. though we read incoming emails on a regular basis during normal working hours, we cannot guarantee that any email sent by you will be read within 1-2 hours of being sent. Accordingly, any urgent matters should firstly include the words “URGENT ACTION’ in the subject heading and, if very urgent, be followed by the telephone call to advise that a very urgent email has been sent 7.0 Use of Name for Marketing From time to time we are requested by potential clients to provide names of clients that we provide services to Unless advised otherwise, we will assume that it is acceptable to include the Group's name as our client. We will not, however, provide contact details (e.g. to act as a reference) unless this is first agreed by you. 8.0 Validity This proposal is valid for a period of 1 week unless accepted in writing,9.0 Limitation of Our Responsibility We would like to highlight that we do not render legal advice and neither do we guarantee the outcome of the tax treatment as advised by us. Our analysis or any other work will be based on the information furnished by AMMG. as well as the Indonesian and Singapore tax laws and regulations, and how we understand these tax laws and regulations would apply to the relevant circumstances of the proposed structure. Consequently, our view of these laws and regulations, and their implications may differ from the view adopted by the either the Indonesian and/or Singapore tax authorities or that are subsequently upheld in the courts. In this regard, we cannot guarantee that our interpretation of these laws and regulations will not be challenged by the Indonesian and/or Singapore tax authorities in the event of 2 review or audit ‘Our liability in respect to the work performed shall be limited to the fees invoiced and paid under this proposal. 40.0 Tesmination o Delay Ifyou terminate this engagement or there is a delay or more than 1 month in conclusion of the engagement (for example after the provision of the draft Report per Item 5.0) then we reserve the right to raise an interim invoice for the time incurred to that date, Any termination or delay does not remove AMMG's obligation to settle any invoices that, have already been issued 14.0 General (Our fees include costs associated with local communications, courier charges, taxis and general photocopying. Although we would seek to utilize email as much as possible, we reserve the right to charge for use of international telecommunications and couriers, All amounts quoted are exclusive of Indonesian VAT which will be due on the fees and disbursements payable under this proposal (Our invoices for the work will be raised on the following basis: ‘+ 50% will be invoiced on commencement ‘+ 50% will be invoiced on delivery of the draft Report or in accordance with Item 10.0. Payment is expected to be made by bank transfer or giro (non-negotiable cheque/payment order) with 14 days of invoice date. Payment shall be made without deduction for your bank’s sending charges. If your bank's, sending charges are deducted then these will be reimbursed to you as out-of-pocket expenses We trust that the scope and conditions of this proposal are consistent with your understanding. To accept the terms and conditions, please provide a director's signature ‘on the space provided below and return the duplicate of this letter for our retention,Please feel free to contact us if you need any clarifications. Best Regards Nick Graham ACCEPTANCE We hereby engage the tax advisory services of RSM AAJ Associates and accept the terms and conditions stipulated in this letter No. 02417061 1/P/KAJEL dated 21 June, 2011 Drurey Googes te fay hor Lf 2b Name & signature Date For and on behalf of Bon Won eigtl loins, CeouphE Uo