Kalimantan Gold Corporation Limited

Kalimantan Gold Corporation Limited

November 16, 2007 02:00 ET

Kalimantan Gold Signs Heads of Agreement on Indonesian Coal Prospects

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 16, 2007) - Kalimantan Gold Corporation Limited (TSX VENTURE:KLG)(AIM:KLG) is positioning itself to play a part in Indonesia's burgeoning coal market following the signing of a Heads of Agreement with the Indonesian-based Jhoswa Group, designed to earn the company an interest in a number of coal prospects situated in the Kutai provinces which are considered the epicentre of coal mining in East Kalimantan. Over the last 10 years, Indonesia has become a world hot spot for coal with production quadrupling to 200 m/t per annum and East Kalimantan province accounting for 90% of the country's output.

As part of the Agreement, KGC is working closely with the specialist mining consultancy, PT GMT Indonesia, which has been contracted to assess the prospect areas for exploration potential prior to their inclusion in a formal joint venture agreement between KGC and the Jhoswa Group. KGC can elect to enter into the joint venture once the assessment phase has been completed.

"The agreement is an important step for the company at a time when coal production in Indonesia is continuing to rise, primarily because of increasing demand from China and India," commented CEO Rahman Connelly. "Globally, coal is set to replace oil as the main source of energy and in countries such as China and India around 80% of future power generation is projected to be coal based."

East Kalimantan is synonymous with the Indonesian coal industry with four of Kalimantan's six biggest coal producers located there. Kalimantan coal resources have been estimated at 35Bt, most of which are suitable for the thermal coal markets of Asia, including India and China. East Kalimantan has significant undeveloped coal potential and there is a continuing opportunity for new players to enter the market.

Under the joint venture, KGC will establish a 100% owned subsidiary to carry out mining services (PT PMA) within six months. PT PMA will sign a mining services agreement for each prospect and will be required to fund 100% of the costs of work programs for the prospects with the objective of establishing a commercially viable coal resource in each case.

KGC would then be entitled to 80% of all proceeds of coal sales less agreed expenses and any other specified items, with 5% of the projects being allocated as a royalty to PT GMT for its role as project manager and technical advisor on the project.

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 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 KSK COW copper-gold porphyry prospects in Central Kalimantan.

About GMT Indonesia

PT GMT Indonesia is a Jakarta based geological consulting group specialising in metallic and bulk commodity exploration, consulting and project management. The principal aim of GMT is to assist investors to enter and operate within the Indonesian mineral industry through the provision of sound advice and high standards of exploration management and implementation suited to Indonesian conditions. GMT manages projects for, and consults to, a large number of international investors in Indonesia in coal, gold, base metals, iron ore and industrial minerals.

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
    +61 418 116 955 (FAX)
    Kalimantan Gold Corporation Limited
    Nick Cottam
    Corporate Relations Manager
    +44 (0) 1394 384115
    Website: www.kalimantan.com
    Keith, Bayley, Rodgers & Co Limited
    Gerald Cheyne
    +44 (0)20 78712274
    Email: gerald.cheyne@wcwb.co.uk
    RFC Corporate Finance Ltd
    (the Company's AIM Nominated Adviser)
    Stuart Laing
    +61 8 9480 2500