Challenger Acquires East Kalimantan Coal Project

Calgary-based minnow Challenger Deep Resources Corp., through its wholly owned  subsidiary PT Bestindo Energy (Bestindo), signed a conditional sales and purchase agreement (CSPA) with PT Alam Tabang Raya Pratama (ATRP) to purchase 100% of the issued and outstanding securities of ATRP for CAD $1.85 million.  The purchase will be paid in crash within about 18 months. ATRP is private Indonesian company that holds the coal exploration rights to a property located in Mahakam river  basin, East Kalimantan. 

The 2,900-hectare Tabang Project is located in Tabang district, Kutai Kartanegara regency. The project area is accessible by vehicle with well established logging roads and is situated in close proximility to the Belayan river, a major tributary of the Mahakam, which turn is the coal transport route to Muara Jawa, the anchorage point for mother vessels and export to market. This river has the capacity to handle 230ft (3,500 tons) barges from projected port facilities. 

Coal operations in the area currently use Belayan River as a transportation highway for commercial coal production. Tabang Project area covers both Batuayau and Ujoh Bilang geological formations, which typically produce coals with the calorific value of 5,600 – 6,000 Kcal/kg (ADB), and coal seam thicknesses varying from 0,5 – 6 meters. 

A preliminary field assessment conducted by Challenger has determined the presence of at least five outcrops of coal, which indicates shallow dipping coal seams.

The current exploration rights for the project are in the form of a SKIP, a license to conduct reconnaissance surveys for the purpose of applying for an IUP, or the exploration permit.  There are no work commitments associated with the SKIP, as it allows preliminary exploration, but not including resource drilling.  ATRP has applied for the IUP that, if issued, would permit drilling operations.  If further exploration results warrant it, a permit for actual mining operations would be required and applied for. The surface access to the project area is subject to negotiation with local landowners and typically provides for compensation for damages caused by exploration activities. 

A comprehensive work program of surface mapping, trenching, sampling and analysis is being prepared to evaluate the potential of the Tabang Project. If and when the IUP (Exploration Permit) has been issued for the project, the exploration drilling operations may be initiated. This stage will depend upon the results of the initial work program, it said.