Kalimantan Going for Gold

Saturday, Nov 19 2011 by
7
Kalimantan Going for Gold

Kalimantan Gold (LON:KLG) the junior exploration company primarily focused on Indonesian gold and copper is about to enter a very interesting phase, as its key gold and copper projects are set to become active with the drill bit.  With two very reputable JV partners working alongside Kalimantan Gold, Faldi Ismail the CEO believes that the two joint ventures ‘give the company breadth and a foundation with enormous potential’, which if the projects yield successful drill results will aid Kalimantan Gold in expanding further as they are also ‘currently seeking new exploration projects’ to develop.

Having recently announced that the Minister of Forestry has granted a "borrow to use" exploration permit for its Jelai Gold project in north eastern Kalimantan, coupled with the strong market value for gold, it’s probably as god a time as any to be exploring and proving up a gold resource alongside a partner committed to funding the project.  This is a very important milestone for Kalimantan Gold, as it has now fulfilled its conditions under the Company's Joint Venture agreement with Tigers Realm Minerals, an Australian based privately owned resources company. [1]

The Jelai Gold project, which is 100% owned by Kalimantan Gold consists of 12 prospects, and has been the subject of considerable work, especially in tracking the results of the previous owner Indochina Goldfields. One of the prospects, the Mewet, is at an advanced exploration stage and has the potential to yield a major epithermal gold deposit, which the company compares in scale to the Vera Nancy mine in Australia, which has produced 2.3 million ounces to date. The permit recently issued, has given the Company authorisation to conduct exploration activities over the Mewet and 10 other of the 12 Jelai gold prospects and is valid for two years.  Tigers Realm Minerals, who in return for meeting certain project expenditure obligations and completing a bankable feasibility study, may earn up to 70% interest in Kalimantan Gold’s Jelai Gold Project located in East Kalimantan.  Tigers Realm's proposed drill program expenditure over the first 18 months is US$2m with approximately 8,000m of drilling at the Mewet prospect planned. [2]

With the eagerly awaited forestry permitting process now complete, the Jelai gold project is set to become active with a drill contactor in place and exploration mapping and sampling set to start in early December.  Kalimantan Gold management see Tigers Relam Minerals as an ideal partner to rapidly advance the Jelai Gold Project with their extensive experience in Indonesia across exploration, project development and mine operations.  Commenting on the recent exploration permit, Faldi Ismail, the Kalimantan Gold Chief Executive Officer noted; [1]

"Securing the forestry permit is a significant step for KGC and the Jelai project and this demonstrates KGC's understanding and ability to work within the Indonesian regulatory environment. It also demonstrates that Indonesia's new mining and forestry regulations work. KGC and Tigers Realm are excited to commence exploration at the Jelai Gold Project,"

Also of interest to Kalimantan Gold investors will be the issue of the necessary forestry permits with regard to the KSK Contract of Work (KSK COW) in Central Kalimantan, which the company having submitted the application 6 months agao now ‘await with confidence’ their issue.  The KSK COW comprises of 38 mineral prospects, several of which are touted as potentially world class copper-gold porphyry deposits.  Kalimantan Gold announced back in April this year that they had entered into a joint venture agreement with a wholly owned subsidiary of Freeport-McMoRan Exploration Corporation, which gives them the option in relation to the Company's KSK Contract of Work copper project, with various funding and percentage terms included of up to 75% ownership by sole funding the operations up to the completion of a feasibility study.  Commenting on signing the definitive agreement with Freeport Rahman Connelly, the then Deputy Chairman and CEO of Kalimantan Gold noted; [3]

"Freeport-McMoRan Copper and Gold Inc., as the world's second largest copper producer with extensive Indonesian experience is an exceptional and ideal partner to rapidly advance the KSK Copper Project and create value for all stakeholders."

Steering and managing the gold and copper projects for Kalimantan Gold will be Faldi Ismail, the Deputy Chairman and Chief Executive Officer of the Company, who took over the reins from Rahman Connelly earlier this year.  Since being at the helm Faldi Ismail has increased hi personal holding in KLG to 3.3% of the issued total and has been exploring new projects in Indonesia for the company. [4] On summing up his first 6 months as CEO of Kalimantan Gold and the way forward for the company, Faldi Ismail commented for this article;

"I stepped in to Rahman Connelly’s CEO role after he had completed the successful negotiations of the joint ventures with Freeport on the copper porphyry and with Tigers Realm on the gold project in East Kalimantan. Since joining , I have been working very hard with a two pronged approach: (1) to secure the IUP and forestry permits and (2) to use the time available and existing resources effectively and efficiently to update our systems, processes and equip ourselves to manage the KSK JV and facilitate the Jelai gold JV.  We have now completed the preparatory work for the two joint ventures."

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"Having been exposed to our joint venture partners for a while in an operational context we could not ask for a better team to work with. They have added a tremendous amount of technical and logistical expertise to our projects. They are very accommodating in terms of accepting our philosophy in working in Kalimantan particularly the way we have managed the community involvement and sourcing local staff from Kalimantan. The monies we have spent in the past on community development is very much bearing fruit and has given us enormous goodwill for taking the projects forward."

"We are delighted that we now have both the IUP and forestry permits for Jelai gold; we await with confidence the issue of the forestry permit for KSK which we applied for 6 weeks after Jelai.  Obtaining the forestry permits has been a demanding and slow process, taking much longer than we had anticipated, with our senior geologist visiting the Forestry department almost every day for last 6 months!"

"The two joint ventures give the company breadth and a foundation with enormous potential.   We are currently seeking new exploration projects.  How we develop clearly depends upon the success of the drilling program.  My aspiration is that both joint ventures meet the goals our partners believe are there and we find and establish new exploration projects."

 

Upcoming Kalimantan Gold Director Interview

Following on from the recent gold permit news Gerald Cheyne, the Kalimantan Gold Director of Corporate Development has agreed to participate in a Q&A interview as a follow up to the one he participated in towards the end of 2010.  Some other UK listed stocks with an interest in Indonesia include Churchill Mining (LON:CHL), BHP Billiton (LON:BLT).  If anyone wants to get involved with suggesting questions or a topic area for Gerald Cheyne then please let me know in the via Stockopedia mail, I’m aiming to upload onto Stockopedia 16 December 2011 or before, depending on the KSK permit award.

Ticker code: KLG, Shares in issue: 165.407m, Current SP: 5.38, Market Cap: £8.90m, 52 Wk Low: 3.25, 52 Wk High: 8.95

Disclosure: The author holds shares in Kalimantan Gold (LON:KLG)




Disclaimer:  

This content has been created for information purposes only, and is NOT, in any way, a recommendation to invest.  This communication is a snapshot of a certain aspect of a discussed business at a moment in time, and is merely a basic starting point for research.  The article/thread has been created with honesty and integrity in mind and is based on publically available information sourced in relation to the title, such as from, RNS announcements, published reports, management comments, analyst reports, media coverage etc.  To this extent the author who has written the piece in good faith accepts no liability for the accuracy of the information and urges all readers to verify the content independently.  Please note that the value of investments may fall or rise and you may not get back the amount originally invested, or in some cases your investment may be wiped off altogether.  When investing, bear in mind that past performance is not a guide to future performance and that qualified independent financial advice should be sought before buying or selling shares.  The Author of this article may hold shares in the companies discussed.


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Kalimantan Gold Corporation Limited is a Canada-based exploration-stage company. The Company is engaged in the business of acquiring and exploring mineral properties in Kalimantan, Indonesia. The Company has two principal areas of interest: the KSK Contract of Work (the KSK CoW) in Central Kalimantan with multiple porphyry copper and gold prospects and the Jelai epithermal gold prospect in East Kalimantan. The holder of the KSK CoW is PT Kalimantan Surya Kencana (KSK). The holder of the Jelai Izin Usaha Pertambangan (IUP) is PT Jelai Cahaya Minerals (JCM). more »

Share Price (AIM)
0.7p
Change
0.0  0.0%
P/E (fwd)
n/a
Yield (fwd)
n/a
Mkt Cap (£m)
1.2

Churchill Mining Plc (Churchill) is a United Kingdom-based company. The Company focuses on thermal coal deposit (the East Kutai Coal Project EKCP) in the East Kutai Regency of Kalimantan, Indonesia. The East Kutai Coal Project is a thermal coal deposit, with a joint ore reserves committee (JORC) Resource of 2.730 billion tons, which measured resource of 693 million tons, an indicated resource of 825 million tons and an inferred resource of 1,211 million tons. The Company’s segments include Indonesian and Australian corporate offices. The Company has interests in the original South Woodie Woodie Manganese Project in Western Australia. The Company’s subsidiaries include Planet Mining Pty Ltd, PT Indonesia Coal Development, PT Techno Coal Utama Prima, PT Ridlatama Tambang Mineral, PT Ridlatama Trade Powerindo, PT Ridlatama Steel and PT Ridlatama Powera more »

Share Price (AIM)
28.25p
Change
0.0  0.0%
P/E (fwd)
n/a
Yield (fwd)
n/a
Mkt Cap (£m)
34.9

BHP Billiton plc is diversified natural resources company. The Company generally operates through customer sector groups (CSGs). The Company operates in nine segments: Petroleum, Aluminium, Base Metals, Diamonds and Specialty Products, Stainless Steel Materials, Iron Ore, Manganese, Metallurgical Coal and Energy Coal. As of June 30, 2012, the Company was working in more than 100 locations worldwide. During the fiscal year ended June 30, 2012 (fiscal 2012), the Company total petroleum production was 222.3 millions of barrels of oil equivalent. During fiscal 2012, its aluminium had a total production in 1.2 million tones (Mt) of aluminium. In August 2011, the Company acquired Petrohawk Energy Corporation. On September 30, 2011, it acquired HWE Mining Subsidiaries from Leighton Holdings. On September 7, 2012, the Company announced the sale of its 37.8 % non-operated interest in Richards Bay Minerals. more »

Share Price (Full)
1793.5p
Change
0.0  0.0%
P/E (fwd)
11.4
Yield (fwd)
4.4
Mkt Cap (£m)
95,477



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9 Comments on this Article show/hide all

Elias Jones 9th Dec '11 1 of 9
4

If anyone is interested in proposing Qs or topics for the Kalimantan Q&A, could you please forward them via my Stockopedia mail or comments by mid day Monday, thanks.

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ohisay 10th Dec '11 2 of 9
1

Hi Elias.
I can't say I follow Kalimantan but I had the misfortune to put a few bob into Churchill Mining at the end of last year.
This turned out to be a catastrophic investment even allowing for the "transparency" risks of investing in a country like Indonesia.

http://www.thejakartaglobe.com/business/dispute-over-land-after-coal-is-found/480783

A couple of years ago, Britain-based Churchill Mining pumped in millions to invest in exploration work on a plot of land for a coal project in East Kalimantan and discovered tonnes of untapped coal.

But before it could get going on full mining works, it found itself locked in a bitter court battle with the previous owner of the land, politician and retired general Prabowo Subianto, who reclaimed rights to the area upon realizing its worth. The matter has gone all the way to Indonesia's Supreme Court.

So when I see
"Securing the forestry permit is a significant step for KGC

I'm kind of in deja vue land .

It'll be interesting to see how this resolves - CHL as you might be aware has now written a long letter to the Indonesian president.

Until then I'm inclined to give Indonesia a fairly wide berth.

http://online.wsj.com/article/SB10001424052970204012004577071342939311470.html?mod=googlenews_wsj




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Elias Jones 10th Dec '11 3 of 9
2

Hi ohisay,
Thanks for posting the comment and for the links, having not been invested in CHL, I was hoping for this Q&A that someone with a better understanding and feel of that ugly situation would contribute a question for the Kalimantan Gold Q&A. That type of situation is certainly not helpful in terms of attracting investment into Indonesia, let’s hope that some common sense prevails in the end with CHL.

Kalimantan Gold have reassured us as to the security of their titles and for what it’s worth (probably not much if we ever find ourselves up against a retired general and leader of the opposition!), have some respected natives involved with the business and have been committed to Indonesia and community involvement for a long time.

Having recently entered into two JV agreements with Tigers Realm Minerals and Freeport, one would also hope as a KLG shareholder that their extensive and time consuming due diligence prior to signing the deals would have covered this type of issue also, giving us some additional piece of mind.

Elias

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Elias Jones 16th Dec '11 4 of 9
2

The questions which I’m personally as a shareholder looking forward to reading are currently being completed by Kalimantan Gold, but, as a number either directly or indirectly refer to the KSK copper CoW we need to wait for the permit award first before the piece can be uploaded. Therefore the piece will be uploaded as appropriate when the KSK copper permit has been awarded.

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Elias Jones 21st Feb '12 5 of 9
3

Progress in Indonesia permitting and then exploration start is at best slow, however today Kalimantan Gold have updated the market that community consultation in respect of planned exploration activities at the Jelai Gold project is now complete and that they have the full support from the local government, community and village leaders to get going, with a team on site completing the following activities:
• Refurbished the office in Tanjung Selor;
• Commenced base camp construction;
• Commenced camp construction at Mewet Prospect, to accommodate drilling activities;
• Repaired 50% of the access road to the drill & base camp;
• Established contracts for key supplies such as fuel;
• Spotted the first drill hole and surveyed access trails.

Drilling of the proposed first Mewet hole is expected to commence in about 4 weeks time.
With regards to the Q&A, we are still waiting for the KsK forestry permit to be issued before it can be completed and uploaded.

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Elias Jones 29th Mar '12 6 of 9
4

Hooray finally, all be it at a snail’s pace, the Indonesian authorities have awarded Kalimantan Gold the extension to the expired Forestry Permit for its PT Kalimantan Surya Kencana sixth generation Contract of Work, covering its copper project alongside a wholly owned subsidiary of Freeport-McMoRan, who may earn up to a 75% interest in the project by sole funding the completion of a feasibility study.

There is a long way to go, but being an investor in Kalimantan Gold is about to get a bit more interesting (we have suffered boredom long enough!) with both the Jelai gold and KsK copper about to become active with the drill bit.

Now, with regards to the follow up Q&A for those interested Gerald Cheyne of Kalimantan Gold has promised he will have it for me to upload and share soon!

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Marc Benjamin 1st Apr '12 7 of 9

Elias, i have been taking a close look at kalimantan over the last month or so and also mineral facts and figures for Indonesia generally. Great work on the article.

 

You may find the research link below interesting.

http://minerals.usgs.gov/minerals/pubs/country/2010/myb3-2010-id.pdf

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Elias Jones 2nd Apr '12 8 of 9
3

Thanks Marc, the resource potential with both projects is clearly very attractive, but the big problem is actually getting through the Indonesian bureaucracy, which is drawing the life blood from the mineral investors. As investors we want to see exploration and production, but all we seem to hear about is permits, wrangles, community liaison work etc.
Hopefully with both projects finally free to continue with exploration we can put all the niggles behind us and concentrate on the resource. KLG have from what I can observe done it all properly and are now about to enter a very active operational phase.

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Elias Jones 8th May '12 9 of 9
2

Just a quick update for those interested in Kalimantan Gold, the follow up Q&A with Gerald Cheyne, the Kalimantan Gold Director of Corporate Development, discussing the various aspects of the business, including, the Jelai Gold project, KSK CoW copper project, permits, sourcing new projects in Indonesia and forward plans etc will hopefully be upload onto Stockopedia this Friday 11/05.

It’s been a very busy period for the company with the gold drilling set to commence this week and the copper drilling at c. end of the month with 4 drill rigs being mobilized.

Also good to see the company announcing that they have funds on hand for working capital to cover operations for 2012 and beyond, after this morning stating they had secured commitment for £300k at 5p which was above the London open market price when secured with a 4 month lock in, which is good going in this weak market imo, also noted Asian and Australian interest appearing for this placing.

As a long term investor in Kalimantan Gold, I’m certainly hoping that in 2012 the resource does the talking here from now on!

Nice Summary - April 2012 KLG Corporate Update PDF
COPPER JOINT VENTURE WITH FREEPORT-MCMORAN;
GOLD JOINT VENTURE WITH TIGERS REALM - DRILLING TO COMMENCE SHORTLY
http://www.kalimantan.com/i/pdf/Kalimantan-Fact-Sheet-April-2012.pdf

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About Elias Jones

Elias Jones

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I invest in sectors that are of interest to me and tend to look for the penny share AIM companies that have the transformational potential, which also tend to be by nature high risk investments, some come off some fail. One key aspect of investing for me is the approachability, quality and integrity of management, once I fear those have gone or if the fundamental aspects take a nose dive, that’s usually it for me regardless of asset/future potential. I only invest in a clutch of firms and usually keep an eye on a few other potential firms which I may add at some stage. I don’t mind waiting around if there is potential, I still keep my Marconi certificate to remind me of what can happen, and to the day kick myself for not snapping up Next at 18p many moons ago when I was so close to buying! more »



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