Challenger Deep Resources Corp.

Challenger Deep Resources Corp.

February 18, 2011 07:00 ET

Challenger Obtains Exclusive Option to Purchase Additional Tabang Area Coal Property

CALGARY, ALBERTA--(Marketwire - Feb. 18, 2011) -


Challenger Deep Resources Corp. ("Challenger" or the "Company") (TSX VENTURE:CDE) is pleased to announce that it has, through its wholly-owned subsidiary, PT Bestindo Energy, ("Bestindo") entered into a Memorandum of Understanding ("MOU") with the principal shareholder of PT Pelangi Kertanegari ("PT Pelangi"), which gives Challenger the exclusive option, for a period of one year, to purchase all of the shares of PT Pelangi. In consideration of the option grant, Challenger has agreed to pay PT Pelangi a total of $8,320 CAD in three instalments, which funds are to be used by PT Pelangi to commence the necessary corporate restructuring to enable the sale of PT Pelangi to Bestindo.

Pelangi Property

PT Pelangi is a private Indonesian company which holds certain coal rights in an area of approximately 4,000 hectares in close proximity to Challenger's Tabang Coal Project. The Pelangi property covers the Balikpapan formation which is prospective for coal in this area. The Balikpapan formation is known to host thick seams of coal in the general Tabang area. The coal exploration rights to the Pelangi property are currently in the application stage.

A program of due diligence is to commence as soon as possible and will include surface reconnaissance and mapping, sampling and analysis in order to evaluate the potential of the Pelangi property. Challenger's exercise of the option to acquire PT Pelangi will depend upon the results of the initial due diligence program.

Terms of the CSPA

The MOU provides that, if Challenger elects to exercise its option, the terms of the applicable Conditional Share Purchase Agreement (the "CSPA"), will include a payment of $33,300 CAD upon execution of the CSPA and payment of the remaining $1,775,000 CAD over the next approximately 18 months, in three scheduled payments. Timing of the remaining payments to be made is based on the date of the issuance of an IUP exploration permit by the relevant Indonesian Governmental authority. The CSPA will also provide that upon Bestindo's production and sale of coal from the property, it will grant and pay to the vendors of the shares of PT Pelangi, a royalty of USD $1.50 per ton.

The Qualified Person (as defined by NI 43-101) responsible for the review and approval of the technical material presented in this news release is Mr. Andre Talaska, a director of Bestindo.

Challenger proposes to pay a finder's fee to an arm's length party in connection with the introduction of this acquisition opportunity, if Challenger elects to exercise its option. The finder's fee would be payable in common shares of Challenger in an amount calculated in accordance with the TSX Venture Exchange policies and subject to the approval of the TSX Venture Exchange.

The option price under the MOU and the purchase price under the CSPA is payable in Indonesian Rupiahs (IDR) and figures used in this release are based on a conversion rate of 1.00 Rp = 0.000110903CAD.

"Signing of this MOU is a key milestone in our strategy of extending our land position in the Tabang area and consolidating coal rights in order to position the Company to establish its first core development area", stated Ranjeet Sundher, President of Challenger. "Our team is evaluating several other exciting potential opportunities in this and other areas of East Kalimantan."

Tabang Project Update

The Phase 1 Tabang Exploration program has now been completed. An additional 8 outcrop and 8 test pit samples are being submitted from the field to the SGS Laboratory in Samarinda. A drill has arrived on site and drilling is to commence at the end of the week.

Through its exploration to date, Challenger has now discovered 58 coal outcrops and a total of 34 test pits have been excavated, of which 15 have now been sampled and submitted to the laboratory for analysis. Challenger's preliminary interpretation of the discovered outcropping coal is that at least eight separate seams are evident in the northern half of the property. The width and number of seams cannot be confirmed until initial drilling operations have been completed. The seams appear to be shallow dipping (10 to 20 degrees). Each coal seam was sampled and all samples were submitted for analysis by Pt Geoservices Coal Laboratory, East Kalimantan. All test pit samples were processed by SGS Coal Laboratories, Samarinda, East Kalimantan. Industry standard Quality Control and Quality Assurance protocols were employed in the sample acquisition, preparation and analysis procedures.

As previously reported, based on the sample analysis performed, coal quality from the initial test pits sampled indicate a range of 5,300 - 6,000 Kcal/kg (AR) on the discovered seams.

The scout drill program will include at least 1,000 m in 25 to 30 holes designed to test the quality, continuity, width and number of coal seams at depth.

About Challenger

Challenger Deep Resources Corp. is an exploration company focused on the Indonesian coal industry. Challenger's business plan is to acquire, explore and to bring its viable coal projects into production. Challenger has an experienced Indonesian exploration and mining team with offices in Calgary, Singapore and Jakarta.


No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.


Statements in this press release may contain forward-looking information including, statements regarding expected exploration activities. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Challenger. Factors that could cause the actual results to differ materially from those in forward-looking statements include, granting of exploration permits, surface access and other licenses from Indonesian regulatory authorities, continued exploration results, the establishment of commercial quantities of coal, availability of new acquisitions on commercially acceptable terms, the continued availability of capital and financing, and general economic, market or business conditions in North America and in the Asia Pacific region. The reader is cautioned not to place undue reliance on any forward-looking information. There can be no assurance that the proposed exploration programs in Indonesia or other project acquisitions will be completed or, if completed, will be successful.

The forward-looking statements contained in this press release are made as of the date of this press release, and Challenger does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities law.

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 of accuracy of this news release.

Contact Information