Challenger acquires Kalimantan coal project

Calgary-based minnow Challenger Deep Resources Corp. announced on Tuesday that, through its wholly owned subsidiary, P.T. Bestindo Energy, (Bestindo) it has entered into a conditional sales and purchase agreement (the CSPA) with PT Alam Tabang Raya Pratama (ATRP) for the purchase of 100% of the issued and outstanding securities of ATRP for CAD $1,851,335, which will be funded by cash payments staged over approximately 18 months.

ATRP is an privately-held Indonesian company that holds the coal exploration rights to a property located in the Mahakam river basin in East Kalimantan.

The 2,900ha Tabang Project is located in the Tabang district, Regency of Kutai Kartanegara.

The project area is accessible by vehicle with well established logging roads and is situated in close proximity to the Belayan River, a major tributary of the Mahakam which in turn is the coal transport route to Muara Jawa, the anchorage point for mother vessels and export to market. This river has the capacity to handle 230 foot (3,500 tonnes) barges from projected port facilities.

Coal operations in the area currently use the Belayan River as a transportation highway for commercial coal production.

The Tabang Project area covers both the Batuayau and Ujoh Bilang geological formations. The typical coal quality of the Ujoh Bilang and Batuayau Formations from producing coal mines in the region is CV 5,600 - 6,000 Kcal/Kg (ADB) with coal seam thicknesses varying from 0.5 - 6 meters.

A preliminary field assessment conducted by Challenger has determined the presence of at least five outcrops of coal which indicates shallow dipping coal seams.

The current exploration rights for the project are held in the form of a SKIP, a permit to conduct reconnaissance surveys for the purpose of applying for an IUP, exploration permit. There are no work commitments associated with the SKIP. The SKIP allows for preliminary exploration, not including resource drilling. ATRP has applied for the IUP which, if issued, would permit drilling operations. If further exploration results warrant it, a permit for actual mining operations would be required and applied for. Surface access to the project area is subject to negotiation with local land owners and typically provides for compensation for damages caused by exploration activities

A comprehensive work program of surface mapping, trenching, sampling and analysis is being prepared to evaluate the potential of the Tabang Project. If and when the IUP (Exploration Permit) has been issued for the Tabang Project, exploration drilling operations may be initiated. This stage will depend upon the results of the initial work program.(alex)