South Gobi enters E. Kalimantan coal mining venture

Vancouver-based mining firm SouthGobi Energy Resources Ltd. announced Wednesday it has signed a Joint Venture Agreement (JVA) with private investment company Score Resources Ltd. to explore and develop a coal project in East Kalimantan.

The JVA allows for SouthGobi to earn into a 56% ownership position by spending US$14.5 million on the development of the project with option to increase ownership to 100 percent, the company said.

The Mamahak project site is in West Kutai regency. The Joint Venture has obtained the rights for two concessions totalling approximately 12,000 hectares and is applying for two additional nearby concessions totalling approximately 14,000 hectares. The concessions are approximately 30 kilometres from the Mahakam River, which is the primary coal-barging route in the region, the company said.

The company has contracted the Jakarta office of Australian based SMG Consultants to assist in the field programs.

Preliminary site investigation indicates the potential for continuous coal structures over a large area. Geological mapping delineated encouraging coal outcrops and has identified over thirty coal seams to date. Indicated coal quality which has been taken from outcrops on the concessions is premium thermal, semi-soft and potentially coking coal. The coal found in this formation is generally of a quality rank ranging from sub-bituminous to bituminous with low moisture content and calorific values between 6500 kCal/kg - 8000 kCal/kg, it said.

Two new geological field programs to better define the potential size of the project and the coal quality are now underway. The main field program will consist of a detailed drilling program on the most advanced Mamahak concession to determine down-dip continuity, thickness variations, coal quality and geology. The second field program will concentrate on the other three concessions and will focus on geological mapping and sampling of outcrops, the company said. (alex)