KAL, Indo Mines to form JV to develop E. Kalimantan coal project
Tuesday, January 20 2009 - 02:40 PM WIB
Indo Mines will pay KAL US$100,000 during a due diligence period, which is to commence immediately.
Upon successful completion of due diligence, Indo Mines will pay KAL a further US$1.2 million in recognition of historical expenditures on the project. Payment of this sum will be phased over seven months.
Indo Mines will pay 100 percent of the costs attributable to project development up to the point at which a final ?Decision to Mine? is taken, thus providing KAL a ?free carry? through the Exploration and Development phases of the project. Thereafter, project expenditures will be borne by the parties in accordance with their respective net working interests.
Indo Mines will earn a 70 percent working interest in the Joint Venture, and KAL will retain a 30 percent working interest.
Indo Mines will become Operator of the Venture but will contract with KAL on commercial terms to conduct the Graha Exploration and Development Programs on behalf of the Joint Venture.
It is also the intention of Joint Venture participants to enter into a sale and purchase agreement with Indo Mines for the supply of 1 to 2 million tonnes of Graha coal per year at market prices for domestic consumption in Indonesia.
According to KAL, Indo Mines is seeking to secure a large supply of coal for their iron sands project in Jogjakarta. ?The advanced Graha Coal Project has the potential to supply all of the Jogjakarta Liquid Iron Project?s expected power and process needs, with additional capacity for sale to the domestic power market or to meet any increase in demand from future production expansion of the Liquid Iron Project.?(alex)