Adavale Resources makes Indonesian coal acquisition

ASX-listed firm Adavale Resources Limited reported on Friday that it has entered into an agreement to acquire the rights to two thermal coal projects ? Tapan and Jambi- in Sumatra, held by United Energy and Resources.

Under the agreement, Adavale will fund an initial exploration programme to seek to upgrade the existing 15 million tonne inferred coal resource at the Tapan project to a Measured Coal Resource of 5 MT.

The expected costs of this initial program will be an upfront payment of US$110,000 and subject to a review of due diligence up to a further $ 650,000.

Adavale?s chairman Richard Poole said: ?Whilst recognizing the substantial opportunities for successful mining development in Indonesia, Adavale is aware of the potential risks and have been working hard to reduce these as much as possible. We are developing the projects in stages.?

On completion of proving up a 5 MT resource, and Adavale being satisfied with the development to that date, Adavale will provide up to a further $3.4 million to develop and gain all necessary approvals to take the project through to the mining stage.

The works program to seek to prove up a Measured Coal Resource will commence during the first week of November. The program will focus on proving up a Measured Coal Resource and will include mine planning in order to ensure an efficient and economically viable mining operation for the Tapan Project can be developed.

First production at Tapan is being targeted for the second quarter of 2010.

The company is expected to development Jambi after Tapan. Preliminary drilling and trenching has identified an inferred coal resource in excess of 20 MT at Jambi.

Adavale has acquired United?s rights to a MOU over four coal concessions within the Jambi Province. Adavale?s initial target is within an Exploration Licence of 10,000ha located close to the provincial capital of Jambi. (alex)