Palace Resources updates W. Papua project

The following is an edited excerpt from Australian firm Palace Resources? quarterly report ended March 31, 2011 released on Friday.

The Board of Palace Resources has previously announced that, subject to shareholders approval, it is the intention of Palace Resources to:
? Acquire a 100% interest in Primecity Holdings Pty Ltd (?4Primecity?), and following this acquisition, Palace, via Primecity, is set to acquire a 75 per cent stake in extensive coal exploration projects in the West Papua province of Indonesia;
? The tenements are situated in an under-explored region and extend right up to an existing natural deep water port currently used for timber exports
? Numerous coal outcrops can be seen on the leases to be acquired by Palace
? The transaction is subject to due diligence at the absolute discretion of Palace as well as shareholder and relevant regulatory approvals to be considered at a General Meeting. The due diligence on the tenements, title and the respective target companies has been initiated and is currently on-going.
? A technical expert and independent expert have been appointed pursuant to seeking shareholder approval.

Palace has also announced that it has been informed by Primecity that Primecity has:
? Entered into a Memorandum of Understanding (?the MOU?) with the Regional Government of Manokwari on the 28th of November 2010;
? The MOU secures the Regional government?s support for Primecity to exclusively develop a dedicated coal terminal at the port of Mumiwaren;
? A Scoping Study on the port at Mumiwaren highlights its suitability for a beach/barge/ship operation. This location holds the most promising potential to provide safe mooring for the vessels necessary for the export of coal, as well as commercial and recreational fleets in the Manokwari Regency.
? The Scoping Study concluded that a conceptual port design of a coal handling terminal for export, including the necessary support facilities, utilising approved port-marine infrastructure is capable of being developed. This conceptual port is to consist of an integrated? world class open access port ultimately capable of exporting a minimum of 10Mtpa of coat products, together with the option of investigating ramp-up options of 2Mtpa moving to 5Mtpa and then to 10Mtpa.
? The MOU was executed jointly by the Bupati of Manokwari, Inspectorate of the Regional Government, Head of Transportation, Communication and Informatics, Head of the Department of Forestry and Head of Environmental Affairs Agency. Discussions are underway with West Papuan authorities to upgrade the port to a bulk-loading port that has an unimpeded navigational lane to the Pacific Ocean.

During the quarter, Palace Resources continued to complete this Due Diligence process. (end of edited excerpt)