Challenger signs deal to acquire Berau coal mine

Calgary-based firm Challenger Deep Resources Corp. announced Monday that it has, through its wholly-owned subsidiary, PT Bestindo Energy, entered into an MoU with the principal shareholder of PT Prapatan Prima Coal (PPC), which gives Challenger the exclusive right, for a period of 45 days, to purchase all of the shares of PPC through the execution of a Conditional Share Purchase Agreement (CSPA).

PPC is an Indonesian company which holds an IUP Exploration permit granted in April, 2010 and valid for up to 7 years. The IUP covers an area of 2,994 hectares and is located in the regency of Berau, East Kalimantan. The property covers the Latih and Tanjungredeb geological formations which are prospective for coal in this area.

The PPC IUP immediately adjoins the northern boundary of the property hosting the Berau Coal operations, specifically the Lati area. Outcrop and scout drill data data provided by PPC indicates the presence of at least 4 coal seams. The average cumulative thickness from the drill data is 11.7m from 3 seams with maximum widths of individual seams of around 4m, the company said.

The target for the area is coal with a low strip ratio, GCV(adb) of 5,600-6,000 kcal/kg with very low sulfur, it added.

A program of due diligence is to commence as soon as possible to verify the data provided by PPC and to confirm Challenger's exploration target parameters. The due diligence program will include surface reconnaissance and mapping, sampling and analysis in order to evaluate the potential of the PPC Project. Challenger's execution of the CSPA to acquire PPC will depend upon the results of the initial due diligence program, it said.(alex)