Challenger signs deal to add Indonesian coal portfolio

Calgary-based coal exploration firm Challenger Deep Resources Corp. announced Friday that it has, through its unit PT Bestindo Energy, signed an MoU to acquire PT Pelangi Kertanegari.

PT Pelangi is a private Indonesian company which holds certain coal rights in an area of approximately 4,000 hectares in close proximity to Challenger's Tabang Coal Project in East Kalimantan. The Pelangi property covers the Balikpapan formation which is prospective for coal in this area. The coal exploration rights to the Pelangi property are currently in the application stage.

A program of due diligence is to commence as soon as possible and will include surface reconnaissance and mapping, sampling and analysis in order to evaluate the potential of the Pelangi property. Challenger's exercise of the option to acquire PT Pelangi will depend upon the results of the initial due diligence program, it said.

The MOU provides that, if Challenger elects to exercise its option, the terms of the applicable Conditional Share Purchase Agreement, will include a payment of C$33,300 upon execution of the CSPA and payment of the remaining C$1,775,000 over the next 18 months. Timing of the remaining payments to be made is based on the date of the issuance of an IUP exploration permit by the relevant Indonesian Governmental authority. The CSPA will also provide that upon Bestindo's production and sale of coal from the property, it will grant and pay to the vendors of the shares of PT Pelangi, a royalty of US$1.50 per ton.(alex)