Kalimantan Gold Corporation Limited
TSX VENTURE : KLG
AIM : KLG

Kalimantan Gold Corporation Limited

December 03, 2009 02:00 ET

Kalimantan Gold Corporation Limited: Agreement to Sell IBP Coal Concession Reached

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 3, 2009) - Kalimantan Gold Corporation Limited (TSX VENTURE:KLG)(AIM:KLG) ("KLG" or the "Company"), which undertook drilling and had an option at the IBP coal concession in East Kalimantan (the "Coal Project"), is pleased to announce that it has successfully negotiated an agreement to sell the IBP coal concession on behalf of the shareholders of PT Indobara Pratama ("IBP"). Daun Consulting Limited ("DCL"), a Singapore-based business and finance company which has acted as agent for a Coal Investment Entity (the "Buyer"), have agreed to terms with the shareholders of IBP which are subject to the payment by the Buyer of a US$ 1 million escrow deposit, successfully completing three months due diligence and the conclusion of an IBP/DCL Share Purchase Agreement (the "SPA").

In consideration of KLG's work, the IBP selling shareholders will pay KLG US$1.37 million as to US$1 million upon completion of the SPA (projected to take place in April 2010) with the balance payable within 12 months of the first payment. In addition, KLG would be entitled to a production royalty of US$0.40 per tonne of coal produced from the Coal Project.

KLG will assist DCL in its due diligence, negotiations of off-take arrangements and planning mine development for which DCL will pay KLG fees of US$4.766 million, payable as to US$0.5 million upon satisfactory intermediate due diligence reporting after six weeks from due diligence commencement (projected to commence by early January 2010); a further US$2.2 million payable upon DCL signing the SPA; and US$2.066 million upon the commencement of mining of coal from the Coal Project. In addition DCL will pay KLG a production royalty of US$0.10 per tonne of coal produced from the Coal Project.

Commenting on the arrangement, Rahman Connelly CEO, said, "Subject to completion by the parties, KLG will receive total cash payments of US$6.136 million and production royalties of US$0.50 per tonne. Given DCL's intention to commence mining during the second half of 2010, scaling up to production of 10 million tonnes annually, the most significant benefit to KLG will be the royalties of US$0.50 per tonne."

KLG's Coal Division is sourcing new coal areas to upgrade through drilling, with the objective of earning a share of the sale proceeds (as with IBP) or to earn an equity interest in the project.

The Coal Project

The Coal Project is already permitted for production and has the potential to be an open-cut coal mine. KLG completed a 4600m drilling program on the concession that indicates a potential deposit of 270 MTs of between 4,894 and 5,376 kcal/kg coal (air dried basis), with low ash and low sulfur content (see KLG press release dated March 26, 2009).

About Daun Consulting Limited (DCL) Singapore

DCL is a Business/Finance Consultancy, headed by Bryan Yap, former Citibank and Deutsche Bank Executive. DCL is the organizer of a Coal Investment Entity targeting US$200 million investment, owning a portfolio of coal mines with 300-500 million ton reserves and producing 15-20 million ton/year in Indonesia. DCL targets strategic investors/coal consumers/power plants; mine owners and financial investors in High Yielding Asset Backed investments. Further information may be obtained through coal@daunconsulting.com.

About Kalimantan Gold

Kalimantan Gold is a junior exploration company listed on both the TSX Venture Exchange in Canada and on the London AIM market. The Company is active in Indonesia where it has three areas of interest: the Jelai epithermal gold prospect in East Kalimantan; coal opportunities, also in East Kalimantan; and a Contract of Work in Central Kalimantan with multiple porphyry copper and gold prospects.

RFC Corporate Finance Ltd acts as KLG's Nominated Adviser for the purposes of its AIM listing, contact Stuart Laing, ph: +618 9480 2506 or email: stuartl@rfc.com.au.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Kalimantan Gold Corporation Limited
    Rahman Connelly
    Chief Executive Officer
    +61 418116955
    or
    Kalimantan Gold Corporation Limited
    Nick Cottam
    Public Relations
    +44 (0) 1394 384115
    or
    Kalimantan Gold Corporation Limited
    Gerald Cheyne
    Corporate Development
    +44 (0) 207 731 1806
    www.kalimantan.com
    or
    Alexander David Securities Limited
    Bill Sharp/David Scott
    +44 (0) 20 7448 9820