Kalimantan Gold Corporation Limited

Kalimantan Gold Corporation Limited

April 19, 2011 02:00 ET

Kalimantan Gold Signs Definitive Agreement With Freeport

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 19, 2011) - Kalimantan Gold Corporation Limited (TSX VENTURE:KLG)(AIM:KLG) (the "Company") is pleased to announce it has entered into a joint venture agreement (the "Agreement") with a wholly owned subsidiary of Freeport-McMoRan Exploration Corporation ("Freeport") in relation to the Company's KSK Contract of Work copper project (the "KSK CoW") in Kalimantan, Indonesia.

Rahman Connelly, Deputy Chairman and CEO of the Company said, "Freeport-McMoRan Copper and Gold Inc., as the world's second largest copper producer with extensive Indonesian experience is an exceptional and ideal partner to rapidly advance the KSK Copper Project and create value for all stakeholders."

The Agreement formalizes the terms of the non-binding term sheet announced on December 13, 2010 with at that time an unidentified major copper mining company. Pursuant to the Agreement Freeport can earn a 51% joint venture interest in the KSK CoW by expending a minimum of US$7 million on a substantial exploration program over three years and then a further 24% (total 75%) by sole funding the completion of a feasibility study with best efforts to complete it within ten years. Subsequently, if a decision to mine is made, Freeport must use commercially reasonable efforts to arrange non-recourse project financing on reasonable terms and conditions for the costs of development on terms mutually agreeable to each of the participants. Upon a decision to mine, if a participant declines to fund its share, then that party will assign all of its rights and interests in the KSK CoW to the other participant in consideration of a 1% NSR royalty.

The first phase US$7 million expenditure must include an expenditure of not less than US$3 million in the first year of which US$0.5 million must be spent on (i) delineation drilling at Beruang Kanan and (ii) drill testing of each of the deep Beruang Tengah, Beruang Kanan and Tambang Huoi prospects (i.e. a minimum of one drill hole on each such prospect). Preparations to mobilise a drilling team to commence testing the major porphyry copper targets the Company has identified on the KSK CoW are well advanced.

Subject to the approval of the TSX Venture Exchange Freeport will subscribe to a C$350,000 private placement in the Company priced in the context of the market on April 28, 2011, being 7 business days following the date of signing the Agreement.

As previously described, the main focus of the exploration program will be drill testing the deeper porphyry copper targets that have been identified on the KSK CoW. Recent advanced inversion modeling identified numerous massive deep seated magnetic bodies below extensive surface geochemical anomalies and existing drill holes where copper mineralization was present. The three highest priority targets identified are the Beruang Tengah, Beruang Kanan and Tambang Huoi prospects, which are all expected to be drill tested by at least one hole to a depth of up to 1,500 meters in the first year of the program. Previous drilling results at Beruang Kanan have included intersections of 167 meters at 0.59% copper from 4.5 meters, 79 meters at 0.89% copper from 6.5 meters and 102 meters at 0.62% copper from 3 meters. Further details on the inversion modeling and identified targets are contained in technical reports on the Company's website at www.kalimantan.com. The Company will be the operator during this initial phase under the direction of the Freeport.

About Kalimantan Gold

Kalimantan Gold Corporation Limited is a junior exploration company listed on both the TSX Venture Exchange in Canada and on AIM in London. The Company has two exploration projects in Kalimantan: the Jelai epithermal gold project in East Kalimantan (which has recently been optioned to Tigers Realm Minerals) and a Contract of Work in Central Kalimantan with multiple porphyry copper and gold prospects. In addition, the Company continues as agent for the shareholders of PT Indobara Pratama ("IBP") who are seeking to sell IBP's coal concession in exchange for a share of the proceeds and active negotiations with a qualified purchaser are in process.

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.

This news release contains forward-looking statements that are based on the Company's current expectations and estimates. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such factors include, among others: the actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

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
    Deputy Chairman and CEO
    +61 7 552 32298 or Mobile: +61 418 116 955

    Kalimantan Gold Corporation Limited
    Gerald Cheyne
    Director Corporate Development
    +44 (0) 2077311806 or Mobile: +44 (0) 7717473168

    Alexander David Securities Limited
    Bill Sharp/ David Scott
    +44 (0) 20 7448 9820