Killara, Tavesco set up coal JV PT Tavesco Killara Energi

Killara Resources Limited has signed shareholder agreement with an Indonesian firm PT Tavesco International (?Tavesco?) to establish a joint operating company PT Tavesco Killara Energy, which will source, explore and develop coal projects in Indonesia, the company said on Monday.

PT TKE is to be owned equally by Killara and Tavesco which is fully owned subsidiary of PT Tason Holdings (?Tason?), a company associated with Tanri Abeng, one of Indonesia?s most respected political and business leaders, the company said in its statement.

Tanri Abeng will be President Commissioner of PT TKE and Dr Ridwan Zachrie, the Chief Executive Officer of Tason, will be a Director of PT TKE, it said.

Killara?s Ian Prentice and Robert Kipp will be Commissioners of PT TKE, whilst Matthew Driscoll will be President Director and Darren Misquitta will be a Director of PT TKE.

Tavesco has presented a number of coal concessions throughout East and South Kalimantan to Killara for review and assessment for potential inclusion within PT TKE.

?Desktop studies of the short listed concessions have been completed and confirmatory site inspections on the initial six concessions are underway, with results of the site visits expected by the end of August,? the company said, adding the work will determine which concessions will be included in the PT TKE and which concessions will be subject to detailed due diligence prior to potential acquisition.

Tavesco?s 50% interest in PT TKE will be split into a 30% contributing interest and a 20% free carried interest. Under the terms of the Shareholders Agreement, Tavesco has the option to have its 30% contributing interest funded by Killara via a loan agreement, whereby the term of the loan agreement would expire upon a Decision to Mine on a particular project and the loan would become repayable by Tavesco.

The loan amount, which attracts a commercial rate of interest, will be repayable by Tavesco from its share of the proceeds of mining operations in respect of that project.

Upon a Decision to Mine on a particular project Tavesco has the option to contribute its 30% interest or have the development fully funded by Killara, which would trigger a dilution clause which could enable Killara to increase its equity interest in that particular project to a maximum of 80%.

Under the terms of the Shareholders Agreement Tavesco will be responsible for, amongst other things, sourcing suitable coal concessions for initial assessment, conducting initial legal due diligence on each concession as well as negotiation for the acquisition of selected concessions under the direction of the Board of Directors of IKE.

Killara?s responsibilities under the agreement including selecting concessions to be included within TKE and completing technical, legal and financial due diligence on selected concessions

Killara will also be responsible for contributing the majority, or all, of the funding for the sourcing and exploration of selected projects and providing technical expertise for the completion of exploration and potential feasibility studies on selected projects. (alex)