Kalimantan Gold sells IBP coal concession
Friday, December 4 2009 - 03:28 AM WIB
KLG has no shares in IBP but is now working as a driller at the coal mine and has an option of buying shares in the firm.
The sales and purchase agreement (SPA) is expected to be signed in April 2010, KLG said in a statement on Thursday.
As a reward for its service of selling the concession, IBP shareholders will pay KLG a total of US$1.37 million, $1 million of which is to be disbursed upon completion of the SPA and the balance payable within 12 months after the first payment. In addition, KLG would be entitled to a production royalty of $0.40 per ton of coal produced from the project, the company said.
KLG will assist DCL in carrying out due diligence, negotiatng for off-take agreement and planning mine development.
DCL will pay KLG a total fee of US$4.766 million for its service. Of the total amount, $0.5 million is payable upon reporting of satisfactory intermediate due diligence six weeks after the due diligence commencement. The due diligence is projected to commence by early January 2010). Another $2.2 million of the fee is payable upon DCL signing the SPA; and another $2.066 million upon the commencement of mining of coal from the coal project. In addition DCL will pay KLG a production royalty of $0.10 per ton of coal produced from the project.
"Subject to completion by the parties, KLG will receive total cash payments of US$6.136 million and production royalties of US$0.50 per tonne. Given DCL's intention to commence mining during the second half of 2010, scaling up to production of 10 million tonnes annually, the most significant benefit to KLG will be the royalties of US$ 0.50 per tonne," KLG's CEO Rahman Connelly said.
The project has gained permit for production and has the potential to be an open-cut coal mine. KLG completed a 4600m drilling program on the concession that indicates a potential deposit of 270 MTs of between 4,894 and 5,376 kcal/kg coal (air dried basis), with low ash and low sulfur content.
DCL is headed by Bryan Yap, former Citibank and Deutsche Bank Executive. DCL is the organizer of a Coal Investment Entity targeting $200 million investment, owning a portfolio of coal mines with 300-500 million ton reserves and producing 15-20 million ton/year in Indonesia.
DCL targets strategic investors, coal consumers, power plants, mine owners and financial investors in "high yielding assets backed investment". Further information on the firm may be obtained through coal@daunconsulting.com. (denny)