Kangaroo updates Indonesian coal projects

(September 03, 2010)--International coal producer Kangaroo Resources Limited (KRL) is pleased to report that all cash relating to its recent US$15 million convertible note funding (~A$17 million) has now been received following receipt of shareholder approval on 16 August 2010.

The funds secured will be used to progress development of the Company?s portfolio of coal projects in Indonesia with a particular emphasis on:
? Targeting ramping up production at the Mamahak Coking Coal Project to a steady state level of 50,000 tonnes per month by the end of 2010 (annualised target of 600,000tpa);
? Progressing the acquisition of the 49% interest (subject to completion of investments terms) in the Tanur Jaya Thermal Coal Project, where KRL recently announced a maiden 297Mt JORC coal resource (5,255 kcal/kg (adb)J# to underpin its plans to commence production during the 2011 financial year; and
? Continuing to license its other coal concessions as required.

Chardan Capital Markets (New York and Sydney) acted as placement agent for this funding.

ACTIVITIES UPDATE

Mamahak Coking Coal Project
KRL has been working closely with its Indonesian partners to develop the Mamahak Coking Coal Project into a steady-state production mine. This has involved a detailed review of exploration, mine planning, mining, human resources, contractors and logistics to position the operation for a ramp-up during the final quarter of 2010, to a steady-state production target of 50,000 tonnes per month.

As previously reported, the Mamahak Coking Coal Project has been hampered over recent months by record low water levels on the Mahakam River, resulting in delays to the movement of significant tonnages of coal downstream for sale. KRL has used this period as productively as possible to review and improve equipment usage, mine planning, third party contractors, infrastructure requirements and all other aspects necessary to ensure that the Mamahak Coking Coal Project will be able to ramp up operations over the next few months.

KRL expects river levels to rise over the next month (based on local wet season timings) to provide reasonable access to enable coal to continue to be moved down the river for sale. In the meantime, the Company will continue to stockpile coal at site, which will provide significant tonnages to move and sell from October onwards.

Tanur Jaya Thermal Coal Project
KRL recently announced a maiden JORC-compliant resource and reserve statement for Tanur Jaya, as a first step towards the development of this Project. Further work is continuing on infrastructure, licensing and other necessary prerequisites in order to advance this Project as KRL?s second production hub in 2011.

Kubah lndah Coking Coal Project
KRL continues to work through the previously reported concession overlap issues with its Indonesian partners and is confident that a positive commercial outcome will be achieved in the near term. This will clear the way for commencement of an exploration programme to undertake the necessary resource definition work to upgrade the previously reported Exploration Target to JORC resource status.

KRL hopes to start this exploration programme during Q4 2010.

GPK Thermal Coal Project
The commercial review of the GPK Coal Project is continuing and KRL is presently considering a number of options. This process has been ongoing for some months due to the range of possible options available and the high level of interest received from third parties.

The Company is again confident in the potential outcome for KRL in this regard and will continue to manage this process responsibly to provide the best possible outcome for KRL shareholders. (end of release)