14 March 2014 KRAKATOA SECURES EXCLUSIVE PIPELINE OF IRON ORE PROJECTS FROM TIGA SERANGKAI GROUP Highlights • Krakatoa signs a Memorandum of Understanding for the exclusive rights to assess, explore, acquire, joint venture, or offtake 4 iron ore tenements in Lampung and 1 iron ore tenement in South Sulawesi • 1 of the tenements in Lampung is currently producing iron ore, using an on-site crushing plant for stockpiling • Assessment and exploration activities will begin immediately on the tenements located in Lampung • Existing strategic alliance with the Sitasa Group, Indonesia’s leading high grade iron ore producer and supplier to the domestic steel industry, provides excellent leverage for Krakatoa to acquire further promising Indonesian iron ore tenements which are banned from export and have not yet secured domestic customers The Directors of Krakatoa Resources Limited (“Krakatoa” or the “Company”) are pleased to announce that a Memorandum of Understanding (“MOU”) has been signed with Tiga Serangkai Group (“Tiga”) whereby Krakatoa’s Indonesian subsidiary has gained exclusive rights to assess, explore, acquire, joint venture, or offtake iron ore from the following pipeline of iron ore tenements, which are ultimately 100% owned by Tiga: IUP Production Exploration Exploration Exploration Exploration Name CBL Tenement BAS Tenement HAT Tenement SFP Tenement BMS Tenement Location Tanggamus Regent, Lampung Province Tanggamus Regent, Lampung Province Tanggamus Regent, Lampung Province Tanggamus Regent, Lampung Province Bone Regent, South Sulawesi Province Area 121ha 100ha 150ha 144ha 384ha Summary – Lampung Province Tenements The CBL Production IUP is situated in Samanka Bay, Lampung. CBL is currently stockpiling iron ore on the tenement (figure 1) using the on-site crushing plant (figure 2). The mining area is located approximately 1 km to Tiga’s jetty where ore can be loaded directly on to barges for transport of 115 km across the Sunda Strait to Sitasa Group’s existing customer, the Krakatau Posco Steel Plant (figure 3). The 3 Exploration IUP’s in Lampung are also in the immediate area surrounding the CBL Production IUP and provide a combined area of 515ha. The tenements in Tanggamus Regency in Lampung are located in a highly strategic area for mining and production of iron ore. They are located practically adjacent to a natural harbour where the Tiga group has constructed its own Jetty and loading area. Figure 1: Existing stockpile from production on the CBL Tenement Figure 2: Crushing plant on the CBL Tenement Figure 3: Map showing 115 km direct barging from the Lampung Tenements to Krakatau Posco Smelter Exploration Activities Krakatoa will begin exploration activities on the Lampung tenements immediately, with remote sensing, preliminary logistics investigation, site visit, sampling and review of geology and existing data initially planned. Key Terms of the MOU Should exploration activities on any of the IUP’s be successful, Krakatoa can exclusively negotiate with Tiga to: a) Acquire the IUP; b) Enter into a Joint Venture on the IUP; c) Have an exclusive off-take on the IUP; d) Do a combination of points a, b and c above. If Krakatoa elects not to take any further action once the exploration activities are completed, Tiga has agreed to pay 50% of the total cost incurred by Krakatoa in obtaining the exploration data. Yours sincerely, Kevin Kwok Managing Director
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