Kalimantan Gold has executed a definitive option agreement with Tigers Realm Minerals regarding the Jelai Gold Project in East Kalimantan. The agreement follows completion by Tigers of the due diligence process.
The deed enables Tigers, an Australian-based, privately-owned resources company, to earn up to a 70% interest in Jelai by meeting certain project expenditure obligations and completing a bankable feasibility study (BFS).
The deed remains conditional upon the term of the Izin Usaha Pertambangan (IUP) granted by Bupati Bulungan in respect of land near the village of Tenggiling in the Regency of Bulungan, being extended to at least June 2, 2015 and forestry permits being granted as necessary to enable the on-ground activities to be conducted. Both the IUP revision and forestry permits are expected to be in hand shortly.
Tigers can incrementally earn up to a 70% interest in the project by spending US$6 million by June 2, 2015, with the first US$2 million by June 30, 2012 being an obligation. If Tigers doesn't complete the BFS by the IUP expiry date, its interest earned in Jelai will convert to a royalty capped at two times its investment in the Jelai project.
With the KSK Contract of Work (CoW) Copper Project, also in Kalimantan, the company has delivered most required documentation in relation to the due diligence being undertaken by a major copper mining company and there have been no obstacles identified to date.
The major can earn a 51% joint venture interest in the KSK CoW by expending US$7 million on a substantial exploration program over three years and then a further 24% by sole funding the completion of a feasibility study.
The binding agreement setting out transaction terms and structure is also well under way to completion. However, to accommodate the relatively large volume of due diligence materials, the Kalimantan Gold has agreed with the major to increase the due diligence period to 90 days from 60 days, so that it now extends to March 8.
The major is also well advanced in its preparations to rapidly mobilize a drilling team to begin testing the major porphyry copper targets the company has identified on the KSK CoW.
The main focus of the program will be drill testing the deeper porphyry copper targets that have been identified. Recent advanced inversion modelling identified numerous massive deep seated magnetic bodies below extensive surface geochemical anomalies and existing drill holes where copper mineralization was present.
The three highest priority targets identified are the Beruang Tengah, Beruang Kanan and Tambang Huoi prospects, which are all expected to be drill tested in the first year of the program.