Release: Haddington Resources: Indonesian coal projects added to Minvest portfolio

(10 May 2007) -- Diversified resources company Haddington Resources expects to secure a two year option over two highly prospective coal areas in Indonesia through its recently announced acquisition of Minvest International Corporation.

 

The potential new coal projects in South Kalimantan, Indonesia, will be added to Haddington's existing portfolio of exploration tenements prospective for uranium, garnet, iron, gold and tantalum and Minvest's mineral services business and mineral projects.

 

The new coal projects are being acquired by Minvest International Corporation through its wholly owned subsidiary PT Minvest Mitra Pembangunan (MMP), which has secured options to purchase all of the shares of PT Suryaraya Permata Khatulistiwa (PT SPK) and PT Suryaraya Cahaya Cemerlang (PT SCC), each of which holds a Kuasa Pertambangan (KP or Mining Right) for coal in South Kalimantan.

 

Haddington announced on 16th April 2007 that it entered into an agreement to acquire all of the issued shares of unlisted diversified services and minerals group Minvest International Corporation (Minvest), which has operations in Australia, Indonesia and Madagascar.

 

Haddington Managing Director Colin McCavana said that he was confident the successful acquisition of Minvest would be concluded in coming weeks and that the addition of these coal projects, together with the significant potential of Haddington's Liberator uranium prospects puts the Company in a strong position to become a producer of energy minerals in the short term.

 

"Our strategy is to access revenue through the acquisition of Minvest's mineral services business to help fund exploration and development programs on these highly prospective projects."

 

"The agreement to acquire the South Kalimantan coal assets confirms our confidence in this strategy and demonstrates the expertise of Minvest principals in Indonesia."

 

Mr McCavana said that the South Kalimantan projects would be an exciting addition to the company's portfolio and a drilling program is planned to start as soon as necessary approvals were obtained. "Indonesia is one of the world's major coal producers and as demand continues to rise, we welcome the opportunity to evaluate and potentially develop these new projects." 

 

The Option Agreement with the shareholders of the owners of the coal projects, PT SPK and PT SCC, contains the following general terms:

1. US$50,000 Option Fee per KP.

2. 24 months Option Period to purchase all of the shares in the current owners of the KPs.

3. Purchase consideration is a Royalty of US$2:00 per tonne of coal produced and sold.

 

Location of coal projects

The KPs are located in the coal bearing areas of the Tanjung Formation in the province of South Kalimantan.

 

The two adjacent KPs cover an area of 63 km2 and are located at Muara Uya in the Tabalong district (see attached map). This region of Kalimantan has been the focus of intense exploration for coal, resulting in numerous occurrences of high grade coking coal products as well as high energy thermal coals, both of which can attract premium market prices.

 

The region supports a number of coal mining and exploration areas, the most prominent being Adaro Indonesia which produces some 35MT per year of low energy thermal coal. Interex Sacra Raya and Kideco are producing mines to the east of the leases and Marunda Graha Minerals to the north west. The nearby project of Multi Tambangjaya Utama is in the final stages of feasibility while the Anugerah Group operations located to the immediate west have been producing and are undergoing further production evaluation options.

 

Exploration Status

The General Survey exploration stage is complete and the areas have undergone geological mapping, outcrop location, sampling and analysis leading to drill target definition. A stratigraphic drilling program for the projects is planned to commence as soon as all relevant approvals are obtained. The program will be designed to qualify the geometry and extent of the coal seams, including a core program to determine consistency of coal quality, and be capable of providing sufficient data to determine a resource.

 

Multiple seams exist along an 11 kilometre strike length on the leases, with 8 separate seam intervals identified ranging from 0.5 metre to almost 2.0 metres thick across a 2 kilometre wide outcrop zone.

 

PT SPK has 27 outcrop locations surveyed of which 13 have been sampled and PT SCC has 35 outcrop locations surveyed of which 17 have been sampled. The seams identified have moderate dips of 20 to 40 degrees. The main mapped outcrop zone is approximately 2 kilometres wide with down dip extents to be determined from an upcoming drilling program. Minvest are very encouraged by the surface sample results as the majority of resources that have been developed into successful mining operations in Indonesia have shown similar characteristics in their early exploration stages.

 

Coal Quality

Coal quality is variable but shows an overall high calorific value (CV) with low to medium sulphur levels. The analytical results (below) were collected from surveyed coal outcrops and are displayed as ranges. All results are presented on an Air Dried Basis.

 

	PT SPK	PT SCC
Calorific Value (kcal/kg)	6,900-7,423	6,193-7,402
Total Sulphur (%)	0.35-0.93	0.49-1.88
Total Moisture (%)	9.0-14.3	3.3-17.2
Inherent Moisture (%)	4.0-8.9	1.6-5.9
Ash (%)	1.0-2.7	1.6-5.9
Fixed Carbon (%)	32.6-48.6	40.4-50.5
Volatile Matter (%)	35.5-47.1	35.6-44.5

 

Other Prospects

 

Minvest has recently moved from its core business of a mining service provider to mine ownership and management.

 

Other focus areas have been identified in East Kalimantan with discussions underway for participation in coal projects in the northern part of East Kalimantan.

 

The region hosts PT Berau Coal, one of Indonesia’s top five coal producers, which currently produces 12 million tonnes of coal per annum. Coal bearing sequences in the region have attractive qualities and are ideally located to capitalise on river and ocean access.

 

Minvest is supported by Haddington in its strategy to actively pursue these opportunities with a view to establishing Joint Development or Equity Agreements. (end of release)