As announced on December 13, 2010, Kalimantan Gold Corporation Limited signed a non-binding term sheet with a major copper mining company in relation to its KSK Contract of Work copper project in Kalimantan, Indonesia. Pursuant to the Term Sheet the Major can earn a 51% joint venture interest in the KSK CoW by expending US$7 million on a substantial exploration program over three years and then a further 24% (total 75%) by sole funding the completion of a feasibility study. Further details on the terms are contained in the Company’s previous announcement.
The Company has now delivered most required documentation in relation to the due diligence being undertaken by the Major and there have been no obstacles identified to date. The binding agreement setting out transaction terms and structure is also well underway to completion. However, to accommodate the relatively large volume of due diligence materials, the Company has agreed with the Major to increase the Major’s due diligence period to 90 days from 60 days, so that it now extends to March 8, 2011. Within the later of 15 days after signing the binding agreement or written approval of the TSX Venture Exchange 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 Major is also well advanced in its preparations to rapidly mobilise a drilling team to commence testing the major porphyry copper targets the Company has identified on the KSK CoW.
The main focus of the exploration program will be drill testing the deeper porphyry copper targets that have been identified on the KSK CoW. Recent advanced inversion modeling identified 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.