Kalimantan Gold to divest part of stake at coal project

Vancouver-based coal and mineral explorer Kalimantan Gold Corporation Limited is in talks with four Indian and Indonesian firm to divest part of its stake at its Indobara Pratama (IBP) Coal Project in East Kalimantan, a company official said.

CEO Rahman Connelly told Petromindo.Com that the company would pick one of the company which would give ?best offer?. He did not disclose names.

?Hopefully we could reach decision this week,? he said, adding that the partner would take minority stake at the project and would also offtake some of the project?s future production.

According to Connelly, IBP has reserves of 23 million tonnes and could increase to 30MT by the end of February 2009, when the company would complete current drilling program.

Connelly expected IBP would start production in July 2009 with production of 500,000 tonnes, ramping up to 1-2MT in the following years.

Connelly said the company has also held talks with power plant in East Java and Indian firm Essar Group to offtake the project?s future production.

On November 17, 2008 Kalimantan Gold announced the terms of an option agreement with PT IBP to acquire up to an 80% interest in IBP. The Company has an exclusive 90 day option to undertake due diligence on IBP and fund and undertake a 3,000 meter drilling program during the option period. The IBP coal concession is permitted for production and has the potential to be an open cut coal deposit. The work done on the Concession to date indicates a potential deposit of between 55-60 million tonnes of approximately 5,400 kcal/kg coal, the company said. (denny)