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INDONESIA: A Significant Player In the Global Coal Market
Indonesia is one of the main players in the global coal market and is one of the leading exporters of sub-bituminous coal which represents the bulk of Indonesian coal production. Indonesia adopted a National Coal Policy in January 2004, which seeks to promote the development of the country's coal resources to meet domestic requirements and to increase coal exports.
SouthGobi Energy Resources has signed a Joint Venture Agreement (JVA) with Score Resources Ltd. to explore and develop the Mamahak coal project in Indonesia. The JVA allows for SouthGobi to earn into a 56% interest by spending US$14.5 million on the development of the project. Provisions are included in the agreement for SouthGobi to increase its interest to 100%.
September 5, 2008:SOUTHGOBI ENERGY RESOURCES INCREASES ITS JOINT VENTURE INTEREST IN THE MAMAHAK COAL PROJECT, INDONESIA, TO 85%
The Mamahak project is ideally located to supply the Japanese, Korean, Indian and Chinese coastal markets, and complements SouthGobi's established strategic advantage in Mongolia. The company's flagship coal project, Ovoot Tolgoi, in southern Mongolia, now is in production to supply coal to interior customers in China later this year.
The Mamahak project site is in East Kalimantan, Indonesia which is the primary coal-producing region in Indonesia. The Joint Venture has obtained the rights for two concessions totalling approximately 12,000 hectares and is applying for two additional nearby concessions totalling approximately 14,000 hectares. The concessions are approximately 30 kilometres from the Mahakam River, which is the primary coal-barging route in the region.
The company has contracted the Jakarta office of Australian based SMG Consultants to assist in the field programs. Preliminary site investigation indicates the potential for continuous coal structures over a large area. Geological mapping delineated encouraging coal outcrops and has identified over thirty coal seams to date. Indicated coal quality which has been taken from outcrops on the concessions is premium thermal, semi-soft and potentially coking coal. The coal found in this formation is generally of a quality rank ranging from sub-bituminous to bituminous with low moisture content and calorific values between 6500 kCal/kg -- 8000 kCal/kg.
Coal mining operations in East Kalimantan typically are located near the sea or along major river systems. The Mamahak project is located in close proximity to the Mahakam River which is a main transportation system for barging coal to markets. Coal barges used on the Mahakam River range in size from 6,000-12,000 tonnes. The barges are used to deliver coal to larger vessels unable to load in shallow coastal waters.
SOUTHGOBI ENERGY RESOURCES CONFIRMS HIGH QUALITY METALLURGICAL COKING COAL AT THE MAMAHAK COAL PROJECT IN EAST KALIMANTAN, INDONESIA; GORDON GORMLEY APPOINTED DIRECTOR OF INDONESIAN COAL OPERATIONS
SouthGobi Energy Resources has received independent laboratory analysis (Nov.5 2008 press release) of a recent bulk sample that confirms high volatile, high-fluidity metallurgical coking coal at the Mamahak coal project in East Kalimantan, Indonesia. SouthGobi has a 85 per cent working interest in the Mamahak coal project with provisions to increase its interest to 100 per cent.
The bulk sample was taken on the Southwest resource block within the MCM concession and consists of proportioned blending of several coal seams from an area where the company plans to commence mining in the first quarter of 2009. The MCM concession area under development at Mamahak is located approximately 30 kilometres from the Mahakam River, a major coal transportation route. The company plans to use barges to transport coal to ocean-going vessels.
PT Multi Mamahak Batubara (PT MMB), the company's Indonesian subsidiary based in Jakarta, Indonesia, is distributing introductory coal samples from the bulk sample to Asian Steel Mills for further testing and market introduction.
Gordon Gormley has been appointed SouthGobi Energy's director of Indonesian coal operations. Mr. Gormley, based in Jakarta, will head up the continuing exploration and development of the Mamahak project and other Indonesian coal opportunities. Mr. Gormley has more than 30 years of coal-related experience in senior production, development and exploration capacities. SouthGobi Energy is establishing an Indonesian subsidiary -- PT Multi Mamahak Batubara (MMB) -- which, under Mr. Gormley's direction, will be responsible for all coal initiatives in the country.
Project highlights include:
* Local Indonesian government approvals have been received which allows for the expedited development of surface coal mining in the APL block within the southern portion of the MCM concession.
* A total of 121 holes has been drilled and geophysically logged in the southwest area within the MCM concession APL block. At least four separate coal seams ranging in thickness between 0.4 metre to 1.25 metres have been confirmed.
* A total of 172 holes has been drilled and geophysically logged in the E1, E2 and E3 resource blocks, which are located in the south-southeast area of the MCM KP.
* In addition to the continuing quality assessment of the southwest block, a total of 136 drill core samples have been taken in the southwest and east block, for coal quality analysis.
* All the current exploration data have been transferred to the company's geological consultant, SMG Consultants, in Jakarta for coal deposit modelling, and National Instrument 43-101-compliant resource estimate and classification. Completion of this report is scheduled for the fourth quarter 2008.
* The company has commenced site preparation at the wet season terminal on the Mahakam River and has rented a temporary construction camp at this location.
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