Perth-based Western Mining has signed a Memorandum of Understanding (MoU) giving it the exclusive right to explore and mine PT Pancareka Utama Engineering’s (PUE) thermal coal tenements in South Kalimantan.

Western Mining will conduct due diligence and detailed exploration on the potentially high-calorific value coal deposits during the next three months. Both licences were issued by the Regent of Tanah Bumbu for seven years, ending January 2017.

One licence has a total area of 5149 hectares and the other 398.8 hectares. One section of the larger licence area is already under production with PUE, and Western Mining will not have the right to explore this 198 hectare section.

PUE is also producing about 15,000 tonnes of thermal coal each month at another nearby production licence area and is expecting to double that in the future. The coal specifications from this area include 6957 Kcal/kg, total moisture 7.7%, inherent moisture 4.8%, sulphur 0.75%, ash 11%, fixed carbon 41.7% and volatile matter 42%.

Western Mining says if it is satisfied with results from the detailed exploration, PUE will upgrade the IUP Exploration Licences to IUP Production Licences, with both companies to execute the Joint Production and Coal Sale Agreement.

Western Mining’s executive chairman Christopher J Clower says, “This MoU is another major step forward for the company and a progression of our strategy to obtain exposure to highly prospective and scalable coal projects. We are excited to have secured an area with significant exploration upside adjacent to an existing mining operation which offers the potential for rapid commencement of mining with no forestry or infrastructure issues.”

He says there are significant benefits associated with holding Exploration IUPs next to an operating open pit mine. “Availability of geological data and drilling results in the operating mine provide excellent guidelines for exploration in the larger area of the Exploration IUPs High coal quality potential and Clean and Clear Status, as well as its demonstrated high coal quality and specifications on PUE’s existing Production IUP.”

There are also accessible logistics and an established shipment route with an existing haulage road, river jetty and barging operation to the offtake mother vessel. The area is free of protected forest restrictions, with all the concession falling within the production forest category.

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