Kalimantan Gold Corporation Limited

Kalimantan Gold Corporation Limited

December 19, 2007 02:01 ET

Kalimantan Gold Corporation Limited: Oxiana Announces Withdrawal From Option Deed

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 19, 2007) - Following a review of work conducted in 2007 at our KSK Contract of Work in Central Kalimantan, Indonesia, Kalimantan Gold Corporation Limited (TSX VENTURE:KLG)(AIM:KLG) has received notification from Oxiana Ltd that they will not be exercising their option under the Option Deed, originally signed between the companies in December 2006.

Oxiana considers that its 2007 exploration program during which it spent US$2.5 million drilling 16 holes over 6,000 metres, adequately tested the four highest ranked copper prospects currently known within the KSK COW and failed to indicate the presence of a shallow style economic porphyry deposit.

Commenting on Oxiana's decision, Kalimantan Gold's CEO, Rahman Connelly said, "Whilst its disappointing to see the caliber of an Oxiana walk, our own geologists retain confidence in the copper potential of the KSK COW and for this reason the Board has commissioned an independent report from Dr. Peter Pollard, a leading expert, who has consulted to most of the world's major copper projects. His report, to be completed by the end of January, will form the basis of a data package to be provided to two major mining companies that have already confirmed their interest to review data should Oxiana not proceed."

"Meanwhile, following encouraging results from a scout drilling program, we are stepping-up the drilling program at our Jelai epithermal gold prospect in East Kalimantan, where we plan to have 3 drill rigs working 24/7 by early 2008. On the coal front, following the heads of agreement announced in November 2007, we expect to be able to announce our first coal project acquisition in the first quarter of 2008."

Oxiana program details

During the Initial Period of the Option Deed, Oxiana spent in excess of US$2.5 million at the KSK COW. Oxiana geologists reviewed a decade of Kalimantan Gold exploration data relating to the KSK COW targeting large porphyry copper/gold/molybdenum porphyry deposits. Exploration focused on the Beruang Kanan, Beruang Tengah, Mansur and Baroi prospects and involved geological mapping, re-logging, re-processing of geophysical and geochemical data followed by diamond drilling.

Oxiana drilled ten diamond drill holes at the Beruang Kanan copper prospect in an area of 3,600 metres by 3,600 metres. All diamond drill holes intercepted intense alteration and variable low-grade copper mineralisation, with the best intersections recorded in KBK0021 being 44 metres @ 0.58% copper, from 16.6 metres and 41.7 metres @ 0.46% copper, from 147 metres. Mineralisation is typically associated with sheeted quartz-pyrite-chalcopyrite veins and patchy fracture-controlled supergene chalcocite and covellite at shallow levels. Deep drilling at Beruang Kanan (to 600 metres) has not indicated the presence of shallow porphyry style mineralisation beneath the extensive sericite-quartz-pyrite (phyllic) alteration and structurally-controlled quartz-clay-(alunite-pyrophyllite) (advanced argillic) alteration. Analysis of alteration and mineralisation failed to produce indicators of zoning to potential higher grade mineralisation (eg. as may be reflected in potassic alteration, increase stockwork vein density, etc.).

One deep diamond drill hole was drilled at the Beruang Tengah porphyry copper-gold/molybdenum prospect. Alteration and mineralisation are hosted within a series of multiphase dioritic porphyry intrusions and is associated with a broad zone of intense sericite-quartz-pyrite (phyllic) alteration that overprints an earlier intense biotite-dominated potassic alteration event. Strong to intense porphyry style stockwork and sheeted quartz-sulphide veining was encountered over much of the hole (consistent with existing drilling at the prospect). The results from this programme confirmed the presence of a low grade porphyry copper-molybdenum-gold mineralisation (KBT0004 - 202.50 metres @ 0.10% copper, 0.14 g/t gold and 0.004% molybdenum, from 19.70 metres). Drilling has shown that low grade mineralisation is very widespread but that no zoning toward higher grade copper is evident and that insufficient room exists within the prospect area for an economic porphyry deposit and no further work is recommended.

Three diamond drill holes were drilled at the Mansur porphyry copper-gold prospect. Two diamond drill holes tested a semicircular zone of anomalies (greater than 500 parts per million) copper in soil geochemistry which extends around the western side of the contact between the dioritic Mansur porphyry and the hornfelsed host rocks. The copper anomalism is coincident with a zone of biotite- K-feldspar-magnetite (potassic) alteration. One diamond drill hole tested a buried Induced Polarization chargeability anomaly. All holes failed to intercept any significant mineralisation, and copper and gold grades intersected to date demonstrate the presence of a significant but sub-economic mineralized porphyry system.

Two diamond drill holes were drilled in the Baroi prospect area of 6,000 metres by 4,000 metres. One diamond drill hole was sited in the Central Zone and tested a conceptual porphyry target. The drill hole intersected very weakly claypyrite (+/- trace sphalerite) altered andesite. The hole was drilled to its planned depth, however failed to intercept any porphyry-related alteration or mineralisation. In the Far East Zone one diamond drill hole was sited in an area of a gossanous-silica alteration and clay-pyrite +/- sphalerite alteration within an area of weakly anomalous gold and copper geochemistry. The hole intersected weakly chlorite-quartz-pyrite (sub propylitic) altered andesite, associated with a series of northwest and north-northwest trending base-metal veins and breccias. Although it is still possible that a small tonnage high-grade vein-type deposit occurs within the Baroi Far East Zone, deep drilling (to 600 metres) has not indicated the presence of shallow porphyry style mineralisation beneath or adjacent to the mesothermal vein system.

About Kalimantan Gold

Kalimantan Gold Corporation Limited is a junior exploration company listed on both the TSX Venture Exchange in Canada and on AIM. The company is focused on copper and gold in Indonesia and has exploration rights in two areas: the Jelai-Mewet epithermal gold prospects in East Kalimantan and the copper-gold porphyry prospects in Central Kalimantan.

The TSX Venture Exchange does not accept responsibility for the adequacy or the accuracy of this release.

Contact Information

  • Kalimantan Gold Corporation Limited
    Rahman Connelly
    Deputy Chairman and CEO
    +61 7 552 32298 or +61 418 116 955
    Email: rconnelly@ozemail.com.au
    Kalimantan Gold Corporation Limited
    Nick Cottam
    Corporate Relations Manager
    +44 (0) 1394 384115
    Website: www.kalimantan.com
    Keith, Bayley, Rogers & Co Limited
    Gerald Cheyne
    +44 (0)20 78712274
    Email: gerald.cheyne@wcwb.co.uk