Kalimantan Gold to focus on coal project

Vancouver-based exploration firm Kalimantan Gold Corporation Limited announced on Tuesday it has raised C$428,000 from a non-brokered private placement, or only half of its original target.

As a consequence of the shortfall, the company has instituted strong cost cutting measures including suspension of drilling at its Jelai gold project in Kalimantan, so as to focus the company's resources on advancing the recently announced Indobara Pratama (IBP) Coal Project in East Kalimantan, it said.

On November 17, 2008 the Company 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.

Drilling at IBP commenced on 12 December using two drill rigs drilling to depths of between 50-100 meters. To date, twelve holes have been completed over 500 meters, with coal seams of between 2.5 and 8 meters intercepted in ten of the twelve holes. Assays are pending. A third rig will commence drilling in early January.

"The Company is in active discussions with several power station operators with regard to coal off-take and project equity participation given that the specifications of IBP coal closely match the requirements of new power stations in India and Indonesia," it said. (denny)