Kalimantan Gold Corporation Limited
TSX VENTURE : KLG
AIM : KLG

Kalimantan Gold Corporation Limited

November 17, 2008 02:00 ET

Kalimantan Gold Signs Option on Coal Opportunity

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 17, 2008) - Kalimantan Gold Corporation Limited (TSX VENTURE:KLG)(AIM:KLG) has signed an Option Agreement with PT Indobara Pratama ("IBP") to bring the coal deposit on IBP's 100%-owned coal KP (the "Concession") into production and acquire up to an 80% interest in IBP. The project is permitted for production and the potential to be an open cut coal deposit. The work done on the Concession to date indicates a potential deposit of between 55-60 million tonnes of approximately 5,400 kcal/kg coal. The coal occurrences in the concession area are ranked sub-bituminous thermal coal which are becoming increasingly sought after as a reliable new supply of low ash and low sulphur coal to the new generation of power stations currently being constructed in many parts of Asia, including Indonesia. The Concession located in East Kalimantan, Indonesia is 130 kilometres northwest of Samarinda and is accessible by road and river (to view the figures and pictures accompanying this press release, please click on the following link: http://media3.marketwire.com/docs/klg_figure.pdf).

The potential quantity and grade is conceptual in nature as there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

Kalimantan Gold CEO Rahman Connelly comments: "After reviewing the project we believe it meets our criteria for a viable near production coal deposit. We have had early discussions with potential buyers of the off-take and it is hoped that during the due diligence period these buyers will become a source of either equity or debt capital to fund Kalimantan Gold's entry into coal production. We will also consult with Macquarie Bank, who have expressed interest in financing a coal production project with us, as part of our evaluation of the IBP Concession as a production opportunity."

The Concession has substantial exploration potential and that according to the current owners the coal deposit is permitted and ready to place into production. Transportation to the nearest coal terminal by river is reasonable and the acquisition of IBP will include a barge and conveyor loading system. Only 2,700 hectares of the total 4,993 hectare Concession has been explored.

The Company does not have a study to determine if the project is economic and there is no certainty the project will be found to be economic.

The Option Agreement

Kalimantan Gold has an exclusive 90 day option to undertake due diligence on IBP and we will fund and undertake a 3,000 metre drilling program during the option period at an estimated cost of $150,000. On its completion, the Company may provide notice it wishes to proceed to acquire shares of IBP based on the value of $1 per tonne of Proven Recoverable Coal Reserves ("PRCR") estimated in accordance with JORC (the "Purchase Price"). A Share Purchase Agreement ("SPA") will be executed and payment of the Purchase Price will be made in four stages as follows: 5% payable by February 15, 2009; 15% payable by March 15, 2009; 40% payable by July 15, 2009 and the final payment of 40% payable on the December 15, 2009 or the date of the first commercial shipment of coal from IBP's mine if this is earlier. Upon the third payment being made, 48% of the shares of IBP will be transferred to the Company with another 32% of the IBP shares transferred when the fourth and final payment is made. All IBP costs from the time the SPA is executed until the first shipment of coal shall be borne 80% by the Company and 20% by the selling shareholders of IBP.

Technical Discussion

The coal occurrences within the concession area occur within Balikpapan Formation rocks, a well-known coal-bearing formation in East Kalimantan. Exploration to date has outlined two main seams with thicknesses between 5-7 metres and 13-20 metres respectively. This data was obtained from 63 surface exposures and 20 drill holes that have been completed in the concession area to a depth of 80-100 metres. The seams can be described as low sulphur (less than 0.20%) and low ash (less than 5%) with an average calorific value reported from the vendor documents as approximately 5,400 kcal/kg (air dried basis) based on sampling from drill cores and outcrops. The seams strike north-south and dip between 5-15 degrees to the east.

The property has been subject to a detailed review and geological modelling but the results require validation before being classified into a reportable category and due diligence, currently being planned for the property, will aim to verify the conclusions made within various studies available on the coal occurrences in the area. The concession is located approximately 20 kilometres from a river suitable for barging operations and the operational scenario suggests a road haulage-barging operation via the Mahakam River to a loading point at the mouth of the Samarinda Delta.

All data, as disclosed in this press release, has been verified by Brett Dennis Gunter, the Company's Qualified Person for the coal prospects and a principal of PT GMT. Mr Gunter, who acts as a technical consultant to the Company, is a geologist with over 18 years experience in exploration and mining and has more than 12 years experience in Indonesia in various commodities, including coal. He is a member of the AusIMM.

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 active on gold, coal and copper prospects in Indonesia and has exploration rights in three areas: the Jelai epithermal gold prospect in East Kalimantan, five coal prospects, also in East Kalimantan and porphyry copper and gold prospects in Central Kalimantan.

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.

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

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