Challenger signs deal to acquire four coal projects in E. Kalimantan

Calgary-based coal exploration firm Challenger Deep Resources Corp. announced Tuesday that it has, through its wholly-owned subsidiary, PT Bestindo Energy, entered into three separate MOU which give Bestindo the exclusive right, for a period of thirty days, to purchase the shares of three separate private Indonesian companies which hold various coal rights related to four separate coal projects.

Each of the coal projects is 100% owned by the respective private company and all of the projects are located in the Regency of Kutai, East Kalimantan, it said.

Each of the MOUs provide for the subsequent execution of a Conditional Share Purchase Agreement , which provides for staged payments of the purchase price over a period of four months in respect of one MOU and over a period of 24 months for the other two MOUs, it added.

Details of the coal projects are summarized below:

1) Arni Bersaudara Coal Project (AB)

PT Arni Bersaudara is the holder of two contiguous IUP Exploration permits covering 3,039 and 2,874 hectares in the District of Muara Kaman. The IUP's are approximately 40km north of the Mahakam River.

The Arni MOU provides that it can acquire 100% of Arni for payments totalling CAD$2,4 million in staged payment.

2)Apriadi Bersaudara Coal Projects (AP 1 and 2)

PT Apriadi Bersaudara is holder of a KP PU (Mining Authorization for General Survey) covering an area of 930 hectares, which is currently being converted to IUP Exploration in the District of Samboja (AP1) and a SKIP (Exploration Permit Application) covering an area of 3,086 hectares in the District of Muara Kaman (AP2). The AP1 project is 10km from the coast and close to an independent haul road and port loading facilities which are under construction. The AP2 project is approximately 45km north of the Mahakam River and in close proximity to the Arni Bersaudara projects.

The Apriadi MOU provides that it can acquire 100% of Apriadi for payments totalling C$2 million.

3) Putri Etam Coal Project (PE)

CV Putri Etam is a private Indonesian company which is in the process of applying for an IUP Exploration and has successfully secured a Local Announcement letter from authorities. The application covers 100 hectares and is located in the Muara Badak district.

If Challenger elects to enter into a CSPA, it can acquire 100% of Putri for payments totalling C$84,215 and a royalty of US$4.50 be paid to the former Putri shareholders for every ton of coal produced and sold.

A program of due diligence on all of the projects is to commence as soon as possible to verify the data provided and to confirm Challenger's exploration target parameters, the company said.(alex)