Kalimantan Gold signs agreement to acquire IBP?s coal mine

Vancouver-based junior exploration firm Kalimantan Gold Corporation Limited has signed an option agreement with PT Indobara Pratama ('IBP') to bring the coal deposit on IBP's 100%-owned coal concession into production and acquire up to an 80% interest in IBP.

?Kalimantan Gold has an exclusive 90 day option to undertake due diligence on IBP and we will fund and undertake a 3,000 metre drilling program during the option period at an estimated cost of $150,000. On its completion, the company may provide notice it wishes to proceed to acquire shares of IBP based on the value of $1 per tonne of Proven Recoverable Coal Reserves ('PRCR') estimated in accordance with JORC (the 'Purchase Price'),? the company said in statement on Monday.

The potential deposit is between 55-60 million tonnes with calorific value of 5,400 kcal/kg, it said.

Kalimantan Gold CEO Rahman Connelly comments: ?After reviewing the project we believe it meets our criteria for a viable near production coal deposit. We have had early discussions with potential buyers of the off-take and it is hoped that during the due diligence period these buyers will become a source of either equity or debt capital to fund Kalimantan Gold's entry into coal production. We will also consult with Macquarie Bank, who have expressed interest in financing a coal production project with us, as part of our evaluation of the IBP Concession as a production opportunity.?

The concession has substantial exploration potential and that according to the current owners the coal deposit is permitted and ready to place into production. Transportation to the nearest coal terminal by river is reasonable and the acquisition of IBP will include a barge and conveyor loading system.

The concession has KP permit with 2,700 hectares of the total 4,993 hectare of land has been explored, it located approximately 20 kilometres from a river suitable for barging operations and the operational scenario suggests a road haulage-barging operation via the Mahakam River to a loading point at the mouth of the Samarinda Delta. (denny)