The mining business licence, or IUP Exploration Permit, for Challenger Deep Resources’ Tabang coal property has been granted. The permit is for an area totalling 2960 hectares in East Kalimantan.
It gives the rights to the holder to carry out full coal exploration activities within the concession area for three years until May 13, 2014, which may be extended if required. This permit also gives the rights to obtain a coal exploitation licence (IUP Operation-Production) if the prospect proves economical for commercial production.
On approval of a mine feasibility study, the company will be able to transition the IUP into the exploitation stage under an IUP Operation - Production, with the right to conduct mining production on this property for 20 years, with the potential for two further 10-year extension periods.
Challenger’s work on Tabang to date has confirmed the presence of at least seven flat-dipping seams of CVC(adb) 5500-6500 kcal/kg coal. All coal seams discovered to date are in the northern half of the property. Challenger's exploration team is conducting more extensive surface exploration of the southern half.
Challenger’s initial reconnaissance drilling program confirmed coal quality and the coal seam orientation and consistency on the Tabang program with 14 shallow holes for a total of 521 metres of drilling. The company has started a more extensive exploration drilling program of the previously discovered multiple coal seams upon the issuance of this IUP.
It plans to conduct an environmental assessment and a pre-feasibility study later this year as part of the prerequisites for the application to obtain the IUP Operation - Production licence.
Challenger is negotiating the acquisition of additional prospects within the general area as part of its strategy to expand the present landholdings to include coal resource potential from the Ujoh Bilang, Batu Ayau and Balikpapan formations. The goal is to establish a significant land portion in the Tabang area to support a blending operation to maximize returns by combining coal of different quality whilst minimizing overall mining costs.