Killara Resources has signed a Memorandum of Understanding (MoU) which outlines the commercial terms of acquiring an 80% interest in two large coal concessions in East Kalimantan. The 13,000 hectare Nunukan coal project covers two concessions in the largely unexplored Tarakan Basin coal province, 6km north of PT Medco Energi Mining Internasional (MEMI)’s mine.

MEMI has completed 389 drill holes on its property, with average coal specifications being low ash, high sulphur and high energy 6800 Kcal/kg for a direct ship coal product.

Killara has mobilized a field team to Nunukan to begin community liaison and field mapping designed to locate coal outcrops and collect representative samples of coal occurrences. The company’s executive director Darren Misquitta says, “We are very happy to be progressing with these transactions. Our relationships in Indonesia are strong and we look forward to engaging in additional projects in due course.”

After completing a six month due diligence program Killara will have the option to proceed with the transaction via a series of payments made at agreed milestones to entitle the company to an 80% interest. If the due diligence is favourable, Killara has options of paying US$1 million for both concessions, $2 million for an initial resource drilling program, $4.5 million for upgrade of the concessions to production status, $5.5 million to complete a feasibility study and $12 million for commencement of commercial production.

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