Indo Mines acquires S. Kalimantan coal project

ASX-listed mining firm Indo Mines Limited announced on Wednesday that it has entered into a conditional agreement to acquire Fireside Resources Ltd, an unlisted Australian public company, which holds the rights to an advanced coal project, the Bangun Buana Persada Kalimantan (BBPK) Coal Project, South Kalimantan, which is targeting to commence production by April 2010.

Fireside also holds a number of other resource assets in the Republic of Indonesia.

A Bankable Feasibility Study was recently completed by a major mining group on the BBPK Project and Fireside has negotiated the acquisition of the study which will assist in the development and operation of the mine. Fireside is required to achieve a minimum monthly output of 25,000 tonnes of nominal 6,500 kcal (ADB) thermal coal by May 2010, the company said.

The BBPK Project is located in a major coal production area 95 kilometres north of Banjarmasin, the capital of South Kalimantan. Access is via sealed road, contracting services locally available for all of the mining activities and infrastructure is in place for transportation and barging of coal.

With over 5,000 metres of the exploration drilling program completed to date on the BBPK Project there is sufficient information to conclude that the geology of the BBPK Project is consistent with the mines that are along strike, and to commence trial mining. Mining in the adjacent blocks along strike of the project has been consistently recovering 6,300 - 7,000 Kcal/kg (adb) approx high quality thermal coal. Fireside will continue further exploration and in-fill drilling whilst in operation, both to identify new coal seams on the concession as well as extend the resource that will be mined.

The BBPK Project is suitable for an open-cut contract mining operation that will extend the pit along strike from the adjacent mined out block. Production from the adjacent block was in excess of 25,000 tonnes per month and Fireside is contracted to maintain a similar productivity (300,000 tpa), mining conditions are expected to be similar to that in the existing mining operations.

Crushing will take place onsite by use of a mobile crushing unit installed near to the BBPK operation. A suitable crushing unit has been sourced by Fireside and is expected to be operational by April 2010. Transportation of coal will be by road, approximately 50kms to the Sungei Putting port facility along the Barito River, where coal will be stockpiled and sold FOB Barge.

Managing Director of Indo Mines, Phil Welten, said ?The proposed transaction will give Indo Mines the opportunity to develop strategic coal assets which are targeting production to take advantage of the current high thermal coal price that together with the Jogjakarta Pig Iron Project will help to grow the Company?s presence in Indonesia.(kanti)