Kangaroo Resources is undertaking a drilling program at the Graha Panca Karsa (GPK) Coal Project in East Kalimantan, Indonesia. The aim of the program is to confirm previous drilling works performed on the site and gain a better understanding of the coal seam geology.

During the December quarter the company finalised its detailed exploration program for the GPK concession and finalised its tender for drilling and geophysical logging services.

The drill program is planned to comprise two stages with approximately 1200 metres of drilling, including 250 metres of coring, in the first stage followed by 1000 metres of drilling, including 340 metres of coring, in the second stage. All drill holes will be geophysically logged.

The company has socialised the drilling program to the surrounding communities, and signed the drilling and geophysical logging contracts in January.

Concurrent with the drill program, Kangaroo will undertake survey work to consolidate topographical information.

Bayan Resources Group, which holds 56% of Kangaroo, has completed the transfer of ownership to Kangaroo of the nine coal concessions in the Pakar Coal Project which were the subject of the December 2010 Sale and Purchase Agreement, however four concessions, TA, AU, BS and CA, could not be transferred due to complications surrounding Indonesia’s foreign ownership and divestment regulations.

The company has obtained initial legal advice from a leading Indonesian law firm on a structure that may enable it to complete the transaction. The company and its legal team are working through legal and tax issues in both Australia and Indonesia.

During the December quarter, the company announced that it had relinquished certain areas on three of the concessions that overlapped with a third-party coal concession of PT Aditya Kirana Mandiri, which paves the way for the government to issue Clear and Clean status for two of these concessions.

The third concession along with four others in this area, have an overlap with another third-part coal company, PT Senyiur Sukses Pratama (SSP). Uncertainty surrounding the exact boundary line between the regencies of Kutai Kartanegara and Kutai Timur gave rise to this overlap.

In 2012, the East Kalimantan government together with the heads of the respective regencies agreed on a final boundary which was in Kangaroo’s favour and the East Kalimantan government instructed SSP to relinquish the overlapping areas.

In August 2016, SSP filed a lawsuit against the provincial government in relation to this matter. Kangaroo understands that as long as the SSP lawsuit remains outstanding, the government will not issue Clear and Clean status for these concessions.

Kangaroo intends to commit to and commence a drilling program at the TA concession of the Pakar North project as soon as it has completed the regulatory permitting required to do so. TA shares a common northern border with Bayan’s Bara Tabang concession which has been extensively drilled whereas TA only has 11 drill holes across the whole 5000 hectare concession.

The company has applied to the regional government for an exploration Borrow-Use (Pinjam Pakai) permit however this is being delayed due to the regional government issuing a moratorium on new Pinjam Pakai permits until April 2017. TA already has Clear and Clean status.

www.kangarooresources.com

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