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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (19409)	5/12/2008 10:45:16 AM
From: LoneClone	Read Replies (1) \| Respond to of 195027

Coal Is The New Black Gold For Kalimantan Gold By Rob Davies minesite.com[tt_news]=45542&tx_ttnews[backPid]=755&cHash=072593eac9 Kalimantan Gold has just signed a contract to explore for coal in Indonesia. Given that the name of the company suggests it’s looking for gold and not coal, Minews wondered if the company might be changing its name. Chief executive Ray Connelly responded by saying that coal is now the new black gold and that he’s very happy with a company name that encompasses that and its original target. Part of the deal he’s struck with diversified Indonesian giant the Mesra Group, is that the coal interests will be spun off into a separately listed company on an established resource exchange at the right time. That way both companies will get an increase in the value of the capital they will have invested in the project. Doing such an ingenious deal with the promise of greater rewards later, has allowed Mr Connelly to participate in coal exploration in Kalimantan, on probably the most attractive coal field in the world, for the minimal commitment of spending US$500,000 on a 3,000 metre drill programme during the six month option period. He’s not committed the company to any royalty payments, but if a mining decision is made Mesra, the vendor, will receive a cash bonus of US25 cents a tonne, based on the reserves in each coal concession, up to a maximum of US$25 million. If the option is indeed exercised in six months, Kalimantan Gold has also agreed to transfer 5 per cent of its 75 per cent stake in the nominee company to GMT Indonesia, the local consultancy company that will manage the exploration programme. The deal covers five coal concessions, or KPs, over 25,200 hectares, some of them as close as seven kilometres to the coast. All are in areas known to contain coal, and in some cases are adjacent to, or along strike from, existing coal mines. The excitement over the coal deal may push the company’s two other exploration programmes into the background. They don’t belong in the background, though. Kalimantan’s copper programme at KSK suffered a major hit when partner Oxiana withdrew at the end of last year. That was the trigger for a sell-off that pushed Kalimantan’s shares down, depressing the market capitalisation to C$6 million. But Mr Connelly remains very upbeat about the potential of KSK, which lies in the middle of the island, and has been compared by some observers to the massive Oyu Tolgoi deposit in Mongolia. Oyu Tolgoi was not discovered until 140 holes had been drilled into it, so it’s understandable that Mr Connelly is looking to do a deal with a larger company that will be able to fund the scale of the programme that is required. In the meantime work is progressing on the Jelai gold property in the north east of the island. Ivanhoe did 4,000 metres of drilling in the area before Kalimantan gained control. Out of 12 prospects, so far only Mewet has been drilled to any degree. It’s had 26 shallow holes drilled into it so far. These have revealed good intersections, including one hit of 10.4 grammes per tonne over 4.8 metres, but deeper drilling is required to get a better picture of the epithermal vein system that Kalimantan believes it’s working on. Three rigs are now turning as part of a further programme to drill 3,000 metres to depth and another 2,000 metres of scout drilling. Mr Connelly expects to have a fully JORC compliant inferred resource on Jelai by the end of the year. That will hopefully come up to the high standards he hopes to achieve on the coal properties, and at the same time too. So, if Mr Connelly doesn’t want to change the company name, he’s going to have to come up with some good numbers at Jelai. But so far the indications for that outcome look favourable.