Kalimantan Gold, Oxiana finalize deal on copper, gold property
Monday, December 18 2006 - 07:04 PM WIB
KGC signed last October a Heads of Agreement, which granted Oxiana an option to earn up to a total interest of 66.67 in the KSK Contract of Work.
The agreement is designed to advance exploration at Kalimantan's copper gold prospects in Central Kalimantan, Indonesia which both parties agree has the potential to produce a world class deposit.
The option covers three key prospects, Baroi, Beruang and Mansur, which form part of KGC's 941km? holding in Central Kalimantan. Under the agreement, Oxiana will initially spend US$2.5 million to include the drilling of 12 deep holes over a period of 12-18 months.
If it elects to proceed, Oxiana will then have the option of earning a 40% stake by the completion of a pre feasibility study and a 66.67% stake by the completion of a bankable feasibility study, by which time it will have spent an estimated US$37.5 million.
Should any of the projects proceed to mine development, the Deed allows for Oxiana to provide significant funding assistance for KGC to fund its one third share of mine development finance. If KGC cannot raise sufficient funds at the development stage, Oxiana will pay its share of the equity as a loan taken out at agreed commercial terms.
KGC began working on the project in 1996, since when it has spent around US$12 million, drilling 70 holes, totaling 12,309 metres in the process.
Kalimantan Gold is a junior exploration company listed on both the TSX Venture Exchange in Canada and on London Stock Exchange's AIM.(alex)