Kangaroo in coking coal supply deal with Bayan

Australia-listed firm Kangaroo Resources Limited announced Thursday that it has finalised a new contract with its strategic alliance partner, Indonesia-listed coal group PT Bayan Resources, on sales of coal from the former's 100 percent-owned Mamahak coking coal project in East Kalimantan throughout 2011.

The contract involes sales of up to 300,000 tonnes at a market price FOB Mamahak jetty. The deal "reflects the benefits of the company?s recently announced strategic alliance and associated transaction with Bayan Resources to acquire the world-scale Pakar Coal Project, as Bayan is able to overcome operational and logistical issues to collect the coal at the jetty," the company said in a statement.

Kangaroo and Bayan are currently completing due diligence on this transaction and both parties remain confident on the closure of this transaction over forthcoming months, it said.

Operations are continuing to ramp up at Mamahak with total sales of 9,882 tonnes and 20,950 tonnes reported for the months of December 2010 and January 2011 respectively.

The new coal sales contract is consistent with the company?s focus on building and expanding its relationship with Bayan at the time while due diligence and other completion issues on the transaction are being concluded. In this regards, the two companies have been working together since January 2011 on a broad range of corporate and operational issues, one of which is this coal offtake from Mamahak.

Bayan is fully supporting the operational management of the Mamahak operations in order to assist in completing the ramp-up of production as quickly as possible, it said.

The company also said that it has recently acquired 10 new haul trucks and other equipment required to expand the existing operation at Mamahak. This equipment has now been deployed on site and will assist in increasing the coal production rate as well as moving existing stockpiled coal to port site for sale. (denny)