Challenger signs LOI for sale of Barito coal project

By Romel S. Gurky

Canadian firm Challenger Deep Resources Corp. announced on Wednesday it has entered into a binding Letter of Intent (LOI) for the sale of its Barito coal project in Central Kalimantan. Under the terms of the LOI the purchaser, a private Australian company, will purchase all of the outstanding shares of PT Bestindo Energy, a wholly-owned subsidiary of Challenger which holds all of the Corporations rights to the Barito project.

The purchase price under the LOI is US$$2 million payable as to $50,000 on signing of the LOI, $100,000 on signing the formal Conditional Share Purchase and Sale Agreement (CSP&SA), $150,000 within 60 days of signing the CSP&SA, $500,000 on preliminary forestry permit approval for the project and $1,200,000 on final approval of the forestry permit and commencement of commercial production. Challenger will also be granted a royalty of $2 per ton on all coal produced from the project lands and from lands within a 2 km area of interest surrounding the project lands in which the purchaser may acquire further coal rights.

Effective immediately, the purchaser has assumed responsibility for all ongoing expenses of PT Bestindo Energy and the Barito project.

As a consequence of its significant financial interest in the project going forward, Challenger will provide such advice to the purchaser in its development efforts as may be appropriate. Challenger will continue its efforts to finance or to find a joint venture partner for its Tabang coal project located in East Kalimantan, Indonesia and will continue to review business opportunities in both the resource and non-resource sectors.

Editing by Johannes Simbolon