Kalimantan Gold Corporation Limited

Kalimantan Gold Corporation Limited

April 21, 2008 19:21 ET

Kalimantan Gold Signs Option Agreement on Five Coal Concessions

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 21, 2008) - Kalimantan Gold Corporation Limited (the "Company" or "KGC") (TSX VENTURE:KLG)(AIM:KLG) has signed an Option Agreement to acquire a 75% stake in five coal concessions ("KP's") in Indonesia, a move designed to establish a presence for the company in Indonesia's rapidly growing coal industry.

Pursuant to the Option Agreement, KGC will have exclusivity for a six month period in which to conduct its due diligence on the companies that hold the KP's and carry out a minimum of 3,000 metres of drilling on the KP areas to assess the potential for coal reserves. To this end, KGC will work in close association with PT GMT Indonesia, an Indonesian-based consulting group which manages a number of coal exploration projects in East Kalimantan. If KGC elects to exercise its option then the shares of each of the KP companies will be transferred to a new nominee company with the vendors retaining 25% of the shares in the new company. KGC will allocate 5% of its 75% interest to GMT as an incentive payment. Upon a decision to mine, the KP companies shall pay a cash bonus to the vendors based on the amount of coal reserves in each KP at the rate of US $0.25 Pt, with a minimum bonus of US$3 million and maximum of $25 million.

The Option Agreement, which covers a total of 25,2000 ha, is with the Indonesian Mesra Group which has a track record of securing good coal areas, having completed deals with Korean, Indian and Middle East companies.

CEO Rahman Connelly commented: "All five KP's are strategically located in areas where coal occurrences are known to occur and, in some cases, the KPs are adjacent to, or along strike from, operating coal mines. Some of the concession areas also benefit from being located within seven kilometres of a port facility capable of loading barges for trans-shipment to mother vessels offshore." To view attached map please click on the following link: http://media3.marketwire.com/docs/klg0421.pdf

One KP is located in Mandul Island, in northeast Kalimantan, where drilling is already underway to define the extent of the coal deposits. The coal occurs in six seams of up to four metres in thickness and has an initial indicated thermal value of 5300 to 5800 kcal/kg with accompanying low sulphur.

The CSU KP, located in East Kutai, is a prospective area of 2000 hectares containing seams up to five metres in thickness that has been identified by recent mapping. Follow up drilling is planned for this area, where the thermal value of the coal ranges between 5500-5900 kcal/kg and the distance to the coast is less than 40 kilometres.

Two other KPs are located close to Balikpapan and Samarinda in East Kalimantan and have easy access for exploration. One of these, the CIC KP, adjoins the Multi Harapan Utama contract of work that is reported to produce around 3Mt per annum from a reported resource of 120Mt. The host formation is the Pulaubalang and Balikpapan Formations which are both well known for their coal production in East Kalimantan, itself now recognized as a world hot spot for coal.

The final KP covers an area of 6066 hectares and is located within Warukin Formation sediments in West Kutai. The target in this area is higher calorific value coals, which can be transported by barge along the major coal-trading route of the Mahakam River.

During the coming months a further four Mesra KP areas are expected to be included under the Option Agreement.

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 gold, copper and coal prospects in Indonesia and has exploration rights in two areas: the Jelai epithermal gold prospects in East Kalimantan and the porphyry copper and gold prospects in Central Kalimantan.

About the Mesra Group

The Mesra Group is an Indonesian group which is active in mining, hospitality and property development Mesra has successfully completed coal deals with Korean, Indian and Middle East companies. Outside mining, the Group has successfully developed the first shopping mall in Samrinda, East Kalimantan as well as a four star, 300 room hotel, also in Samarinda.

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