(EnergyAsia, May 31 2010, Monday) — Australian Stock Exchange-listed Kangaroo Resources said it is completing the acquisition of five Indonesian coal projects, including the high quality Kubah Indah Coking Coal Project, after successfully concluding due diligence.
The acquisitions will be paid for with 300 million Kangaroo shares to be issued to the project vendors upon receipt of shareholder approval. KRL has advised that 17.5 million shares have been brought back into the company as a result of this renegotiation.
The company had announced the acquisition last November as it aims to expand its coal portfolio in Indonesia’s East Kalimantan.
The completion of due diligence clears the way for drilling to commence at Kubah Indah, where the company has an exploration target ranging from 100 to 140 million tonnes of coking coal.
In a statement the company said the drilling programme will be conducted in parallel with the ongoing ramp-up of production at KRL’s other Indonesian operations which are subject to contract.
KRL managing director Mark O’Keeffe said the completion of due diligence on Kubah Indah and the other projects within the portfolio was another positive step forward for the company as it ramps up production in Indonesia.
“The completion of due diligence was high on our list of priorities and, as expected, the projects were found to be technically and legally sound,” he said.
“Kubah Indah in particular will become a very important project for us and, in combination with the Mamahak project, will form the backbone of our coking coal production profile in the future.
“We will now move quickly towards the commencement of an initial exploration programme at Kubah Indah, and over the coming months we expect to be able to delineate a significant JORC resource.”
In June 2009, KRL announced an agreement relating to the acquisition of the high quality thermal coal projects Mitra Barya Karsa (MBK) and Bara Pratama (BP) which have both been subject to necessary due diligence. The company’s economic interest in both the MBK and BP Projects will, on completion of the acquisition, be increased to 100%.
Both projects are considered to be highly prospective, high-quality thermal coal projects which KRL will be aiming to take into production in the medium term.
To date the prioritisation of the coking coal production, particularly at the Mamahak Project, has delayed progress at MBK and BP, but KRL said it is still aiming to bring these two thermal coal projects into production.
KRL also recently secured an initial export sales contract with a Chinese energy company, Guandong Yudean Farnon Investment Co Ltd.
The sales contract involves the provision of three trial shipments containing a total of 150,000 tonnes of coal over a two-month period. Upon successful completion of these shipments, KRL expects to extend this agreement to cover additional tonnages of coal.