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| | Fri Oct 6, 2006
Kalimantan to Advance Copper Prospects Through a Joint Venture With Oxiana
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| | Kalimantan Gold Corporation Limited (TSX V: KLG) is pleased to announce the signing of a Heads of Agreement with Australia's Oxiana Limited (ASX: OXR) to advance exploration of Kalimantan's KSK Contract of Work (CoW) copper-gold porphyry prospects in Central Kalimantan, Indonesia.
Commenting on the transaction, Rahman Connelly, Executive Chairman of Kalimantan Gold said, "I am delighted that we have agreed a Heads of Agreement with Oxiana to jointly advance exploration at our copper-gold prospects in Kalimantan. Our Board strongly believes that our prospects have the potential to host a world class deposit and ultimately a mining operation. We are confident that partnering with Oxiana, and their proven resources and skills, is the most expedient route to progressing the KSK prospects and realizing value for all our shareholders and stakeholders alike."
Properties
Kalimantan holds exploration rights over a large 941km2 area in Central Kalimantan which is governed by the KSK Contract of Work (CoW). Kalimantan currently holds a 75% interest in the CoW, with the remaining 25% owned by a locally-based company. Kalimantan has been exploring the area since 1996 and has identified three advanced porphyry copper gold prospects and several other highly prospective ones amongst a total 38 defined prospects in the CoW.
Kalimantan and Oxiana believe that these prospects have the potential to become significant world class deposits. Kalimantan has conducted an independent review to prioritize the most prospective targets for further detailed exploration within the CoW.
The three key porphyry copper gold prospects are Baroi, Beruang and Mansur. Exceptionally high-grade drill core results have been recovered at Baroi - eg, Hole BF-5 with 85 metres @ 2.9% copper, 0.6% lead, 1.85% zinc, 70.1 grams/tonne silver, and 0.22 grams/tonne gold. The drilling program to date has drilled 70 holes totalling 12,309 meters over an area of 6 by 4 km. At Beruang, eight mineralized zones have been identified at the margins of a 12 km in diameter caldera. Exploration work included 19 medium depth diamond drill holes which returned results up to 167 meters at 0.59% copper.
Agreement between Kalimantan and Oxiana
Initial Period: Oxiana will sole fund expenditure for a program of full data compilation, review, reprocessing and assessment followed by drill testing with an expenditure commitment of US$2.5 million. The program is expected to include drilling 12 deep holes at the Baroi, Beruang and Mansur prospects. Oxiana will endeavour to complete the program within 12 months, but will have a maximum of 18 months to do so. If Oxiana decides to withdraw at the end of the Initial Period, it will have earned no interest.
After the Initial Period, Oxiana can elect to continue to sole fund the Joint Venture. If so, it will sole fund expenditure to earn up to a total interest of 66.67% in the project, with the following milestones:
• 40% equity at the completion of a Pre-Feasibility Study: 30-42 months.
• 66.67% equity at the completion of a Bankable Feasibility Study: 48-60 months from commencement.
Oxiana may withdraw at any time during the Sole Funding Period, and Kalimantan will have an option to acquire the interest held by Oxiana at the time of withdrawal.
After completion of the BFS, both parties will contribute to future expenditures in accordance with their percentage interests, and Oxiana will use its best endeavours to arrange Kalimantan's share of project financing.
Agreement: Other Details
Pre-Feasibility Study: Oxiana will use reasonable endeavours to complete the Pre-Feasibility Study within 30 months of the commencement date but will have a maximum of 42 months to do so. Within 60 days of completing the Pre-Feasibility Study, Oxiana can elect to continue to sole fund the Joint Venture.
Bankable Feasibility Study: Oxiana will use reasonable endeavours to complete the Bankable Feasibility Study within 48 months of the commencement date but will have a maximum of 60 months to do so.
Sole Funding Period: Oxiana may withdraw at any time during the Sole Funding Period by notice in writing to Kalimantan. Kalimantan will have an option to acquire the interest held by Oxiana at the time of withdrawal for 50% of the total expenditure to the date of withdrawal less the amount expended during the Initial Period. If Kalimantan does not exercise this option to acquire within the stated time period, Oxiana will be free to sell its interest to a third party.
Project Financing: If Kalimantan gives notice that it wishes to participate in the project following completion of the Bankable Feasibility Study and Kalimantan requests Oxiana's assistance, Oxiana will use its best endeavours to arrange Kalimantan's share of project financing and, if possible, on a non-recourse basis, provided that Oxiana will not provide any security to support such financing.
About Kalimantan Gold Corporation: Kalimantan is an exploration company focused on copper and gold in Indonesian Kalimantan. The Company holds exploration rights over two distinct areas: the Jelai-Mewet epithermal gold prospects in East Kalimantan, and the KSK Contract of Work copper-gold porphyry prospects in Central Kalimantan. In pursuit of a stable operating environment, the Company has a strong community and government relations program. Kalimantan is quoted on the TSX Venture Exchange in Canada and expects to list on AIM in London during October.
About Oxiana Limited: Oxiana is an international mining and exploration company listed on the Australian Stock Exchange with a Market Capitalisation of approximately A$4 billion. Oxiana owns and operates the Sepon gold and copper mines in Laos, the Golden Grove base and precious metals operation in Western Australia, and is developing the Prominent Hill copper-gold mine in South Australia. Oxiana is also actively exploring in Australia, Asia and the Pacific.
For further information please visit www.kalimantan.com or contact:
Rahman Connelly
Executive Chairman, Kalimantan Gold
Telephone: +61 (418) 116 955
Email: rconnelly@ozemail.com.au
Gerald Cheyne
Keith, Bayley, Rodgers & Co Limited
Telephone: +44 (0)20 78712274
Email: gerald.cheyne@wcwb.co.uk
Nick Bias
BuckBias Ltd (UK Public Relations)
Telephone: +44 (0)7887 920 530
Email: nick@buckbias.com
The TSX Venture Exchange does not accept responsibility for the adequacy or the accuracy of this release. |
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