Killara mulls to be directly engaged in E. Kalimantan coal project

By Romel S. Gurky

ASX-listed Killara Resources Ltd said Thursday that after reviewing contractor rates in respect of the PT Borneo Emas Hitam (BEH) coal project in East Kalimantan, and the decrease in the price of thermal coal now at an equivalent low to 2009 pricing, Killara is reviewing plans to engage directly in the production process.

?This comes with the direct assistance of our largest shareholder the Zulkarnaen family who has operated their own coal and palm oil businesses for many years,? the company said in a statement.

Killara said it has estimated the cost of the production phase for the direct hiring of personnel and equipment to engage in the coal production directly. This is anticipated to allow a satisfactory margin of profit from the sale of coal, despite the current subdued coal prices. ?Discussions with coal traders and end users are well progressed for the funding of the BEH project via advance coal sales agreement. Four parties have been identified and discussions are expected to be completed in the coming weeks,? it said.

The general operating conditions for small miners have been rigorously challenging over the past 12 months, principally due to reduced operating mar gins from lower coal sale prices together with general subdued share market conditions in the junior mining sector, it said.

?In order to preserve cash resources, whilst management work towards bringing BEH back into production, the Board has also embarked on a cost review of all activities. This cost cutting measure will remain ongoing and has the support of all Directors. An immediate outcome is to seek a new Jakarta based managing director commencing immediately,? Killara said.

?This will allow Robert Kipp the current Managing Director, to remain as a Director, whilst also saving the company critical funds at this time. An executive search will commence with candidates expected to be resident in Jakarta Indonesia,? it added.

Editing by Reiner Simanjuntak