letter to management, page-5

here the further correspondence with CEO Hacon,
the chronology is bottom up:

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our answer to Hacon's email:

Dear Mr. Hacon,

we are not satisfied with your short answer but first of all thankful for your answer.

are you personally at the international fair in munich at the 2nd and 3rd November this weekend?

we mentioned not only external factors for the inappropriate development of your/our company. you don't comment the internal factors! self-criticism is a very important thing of reflection.

WE

- insist on a declaration (as mentioned in the Letter to Management below) which detailed facts led to the sale of the unsuccesful Mangkok coal project that has run through BFS and doubled the share amount of Indo Mines. the management of Indo Mines owes us a clear explanation!
- want the full report of the Feasibility Study published on the Asx
- insist on a declaration what has led to the inappropriate delay in Feasibility Study (as mentioned in the Letter to Management below) and according to this: Quotation from the Letter: "Why does the Management consistently give such time targets that won’t be fulfilled in the mentioned periods? They might have raised false hopes each time with self-made discontent of the shareholders afterwards and the company/management lacks credibility."

we know the details of the $50m pp you mentioned as we study every news carefully. but like we asked you "if the $50m private placement of Rajawali becomes reality, do you have sold Indo Mines to Rajawali?" Such a pp at $0.10 AUD with 500m new shares, the chance that shareholders would approve this would be much much smaller. So your "substantial premium over the 30 day VWAP of 100% and a premium of 70% over the 90 day VWAP" is the minimum level that Rajawali should pay to get the majority at Indo Mines as this is a kind of a silent takeover bid by Rajawali (shareholders approval is necessary because of section 606 (1) c Corporations Act). So, in our eyes this pp and the further massive dilution to shareholders is unacceptable and the worst decision ever made by this management that will get disempowered. to get connected with the strong support of the Rajawali Group would be great but not under these circumstances (massive dilution with a majority shareholder of 50%+). It seems to be that the management of Indo Mines is unable to develop the company on a greater sustainable basis further for achieving greater goals. So the future of Indo Mines will lie in other hands than yours and the work will be done by others. sarcastically this would be maybe better.

let us give you one more hint: when shareholders want to get in touch with the management of Indo Mines (or you directly) the only email-adress is "[email protected]". but maybe interested people or shareholders don't like to email with the webmaster to discuss the homepage design. it would be beneficial to arrange an email-adress like "info@..." or "contact@..." or a personal email-adress (like your [email protected]) directly on your homepage. good investor relations starts with this.


kind regards,

a Group of Indo Mines Shareholders

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Email from CEO Hacon:

Dear ---,

I have thought long and hard about your comments and would like to thank you and your colleagues for your interest in Indo Mines.

There is no question as you point out that a number of external factors for example; weak iron ore price, confidence in the financial markets, changes to Indonesian mining laws combined with our equipment issues at site have adversely impacted the Indo Mines share price performance.

However, looking ahead the $50m placement to Rajawali, one of the largest and most respected businesses in Indonesia, demonstrates long-term strong local support and commitment to achieving the Indo Mines vision of establishing an Indonesian Steel industry based upon the vast Indonesian iron sand resources. The issue price of 20cents represents a substantial premium over the 30 day VWAP of 100% and a premium of 70% over the 90 day VWAP. The Independent Directors believe this transaction to be in the companies and shareholders best interests in the absence of a superior offer and its now up to shareholders to decide.

For your information Rajawali conducted a similar investment pattern to gain a majority shareholding in Archipeligo Resources, an Indonesian gold project listed on the AIM London Exchange. This business has since flourished under Rajawali’s direction.

The Board is confident that the Rajawali Group’s increased participation will assist the Company:

with ongoing regional support for the iron concentrate and pig iron projects;
in securing appropriate project financing; and
in acquiring additional iron sands assets in the future to help grow the overall business.


The business will also benefit substantially from integration with the excellent business systems and processes of the Rajawali Group.

Best regards,
Martin

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additional e-mail to our "letter to management:

Dear Mr. Hacon,

regarding our letter below: when can we expect an answer? we would like to have one before 15th November 2012.

and we would like to add a very important question to the letter below:

if the $50m private placement of Rajawali becomes reality, do you have sold Indo Mines to Rajawali? after that transaction they would have a voting power of 57,12%, got the chairman and 3 of 6 persons of the Management Board will be from Rajawali. They could block any decision. So what power do you have at Indo Mines after the pp? what power does Indo Mines have without being dependent to Rajawali? what if Rajawali takes noew the 57,12% of the company and dilutes the share account, and then takes the rest of the company before the iron sand project will commence production (and maybe privatize the company)?

How should shareholders carefree benefit from this enormous dependency (in addition when we take a look at the future participation rights for Rajawali at point 4.4 of the Notice of General Meeting dated 15th October 2012)?

kind regards,

a Group of Indo Mines Shareholders