SouthGobi sells Kalimantan coal project to Aussie firm

Canadian firm SouthGobi Energy Resources Ltd. Announced on Tuesday it has entered into an agreement to divest its effective 85% interest in the Mamahak coal project in East Kalimantan to Kangaroo Resources Limited for consideration comprising of US$1 million in cash and 50 million shares of Kangaroo.

As a result of this transaction, SouthGobi will hold approximately 6.7% of outstanding shares in Kangaroo, which will be subject to a 12 month lock-up period, the company said.

On October 12, 2009, SouthGobi announced that it had suspended further development work at Mamahak pending a more detailed operational review. Following various approaches and with the company's strategic focus on Mongolia, it was determined that the project could be best developed and operated by an Indonesian focused coal mining company.

Kangaroo is a coal company focused on the development of a series of coal projects in East Kalimantan, Indonesia. It is listed on the Australian Securities Exchange.

Kangaroo has seven coal projects in the East Kalimantan region of Indonesia. These projects host large coking and thermal coal resources which will assist Kangaroo in becoming a significant Indonesian coal producer. (alex)