Term Sheet With Major Copper Mining Company on KSK Project
13 Dezembro 2010 - 5:00AM
Marketwired
Kalimantan Gold Corporation Limited (TSX VENTURE: KLG)(AIM: KLG)
(the "Company") is pleased to announce that it has signed a
non-binding term sheet (the "Term Sheet") with a major copper
mining company (the "Major") in relation to its KSK Contract of
Work copper project (the "KSK CoW") in Kalimantan, Indonesia. The
Major may earn up to a 75% interest in the Company's KSK CoW by
meeting certain project expenditure obligations and completing a
bankable feasibility study ("BFS").
The Term Sheet provides that, concurrent with or after a 60-day
due diligence period, the parties may negotiate and sign a binding
agreement setting out transaction terms and structure. Within 15
days after signing that agreement the Major would subscribe to a
C$350,000 private placement in the Company priced in the context of
the market at that time.
The Term Sheet would allow the Major to undertake a substantial
exploration program on the KSK CoW in order to earn an initial 51%
joint venture interest by funding US$7 million over three years.
Within 12 months of signing a binding agreement the Major must fund
a minimum of US$3 million drilling testing, which must include
drill testing of the three high priority targets; the Beruang
Tengah, Beruang Kanan and Tambang Huoi prospects, and includes an
allowance of US$500,000 for resource delineation drilling at
Beruang Kanan. The Company will be the operator during this initial
phase under the direction of the Major.
The main focus of the exploration program will be drill testing
the deeper porphyry copper targets that have been identified on the
KSK CoW. These targets are permitted and drill ready, with recent
advanced inversion modeling identifying 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.
Previous drilling results at Beruang Kanan have included
intersections of 167 meters at 0.59% copper from 4.5 meters, 79
meters at 0.89% copper from 6.5 meters and 102 meters at 0.62%
copper from 3 meters. Further details on the inversion modeling and
identified targets are contained in technical reports on the
Company's website at www.kalimantan.com.
After earning the 51% interest, the Major would have the right
to earn a further 24% (total 75%) by sole funding the completion of
a feasibility study. The Major will make reasonable business
efforts to complete the feasibility study within ten years. If the
Major ceases to fund, its interest earned in the KSK CoW will
convert to a 1% NSR royalty capped at its investment in the KSK
CoW.
The Major will continue to sole fund until the partners approve
development of the project. If the project is feasible for
development and the joint venture has made an affirmative decision
to mine, the Major would use commercially reasonable efforts to
arrange reasonable project financing on terms mutually agreeable to
each of the parties with both parties pledging their interests in
the project if required.
The Company looks forward to working exclusively with the Major
to negotiate and execute a binding agreement and then to rapidly
mobilise a drilling team to commence testing the major porphyry
copper targets the Company has identified on the KSK CoW.
For further information please visit www.kalimantan.com.
RFC Corporate Finance Ltd acts as KLG's Nominated Adviser for
the purposes of its AIM listing, contact Stuart Laing, ph: +618
9480 2506 or email: stuartl@rfc.com.au.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Kalimantan Gold Corporation Limited Rahman Connelly
Deputy Chairman and CEO +61 7 552 32298 or Mobile: +61 418 116 955
rconnelly@ozemail.com.au Kalimantan Gold Corporation Limited Gerald
Cheyne Director Corporate Development +44 (0) 2077311806 or Mobile:
+44 (0) 7717473168 gerald.cheyne@kalimantan.com www.kalimantan.com
Alexander David Securities Limited Bill Sharp/David Scott +44 (0)
20 7448 9820
(TSXV:KLG)
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