Kangaroo secures $14m loans to boost Indonesian coal output

Australia-listed coal producer Kangaroo Resources Limited (KRL) said Thursday that it has completed a funding agreement with key institutional investors to raise US$14 million through a convertible note instrument to further develop coal production at its flagship projects in Indonesia.

The funds raised will be used specifically to progress the company?s key Indonesian coal projects, in particular the ramp-up of production and exploration at the Mamahak coking coal project in East Kalimantan and to advance exploration across the balance of the company?s key properties, the company said in statement.

Chardan Capital Markets (New York and Sydney) acted as placement agent for this transaction, it said.

KRL is currently in the process of shipping the initial 50,000 tons coal from Mamahak to the coal terminal for delivery into existing coal sales agreements. The company intends to secure additional barges to expedite this delivery and standardize its logistics which will in turn allow KRL to increase sales revenue going forward.

The convertible notes will be issued in two tranches, with an initial tranche to raise $2.55 million under the company?s 15 percent placement capacity and a second tranche to raise $11.44 million which will be the subject of resolutions to be put to shareholders in general meeting.

Kangaroo has eight coal mining projects in East Kalimantan including Kubah Indah coking coal project (100 percent interest), Tanur Jaya Thermal coal project (45 percent interest, subject to the terms of the agreement), Jawana coking coal project (100 percent interest) and Borami coking coal project (100 percent interest).

One of the projects, called Graha Panca Karsa (GPK) project, located in the regency of West Kutai, has started production. It targeted to produce up to 100,000 tons of thermal coal per month by early 2011, and ultimately up to 3-4 million tons per annum (Mtpa) by 2012.

Following the commencement of production by GPK, the company has targeted to start production at the Tanur Jaya Project by the end of the first quarter of 2010. It will be followed by the Mitra Bara Karya Project in the second half of 2010 following the completion of an exploration program that has been designed to delineate resources there.

The company said earlier that it was targeting a total production of 8-12 million tons per annum by 2013 to meet increasing local and export demand. (kanti)