KGC signs with Freeport

Photo: Recalling the pioneering days of Subud's mineral exploration in Kalimantan. Mansur Geiger with friend and rainforest giant.
Photo: Recalling the pioneering days of Subud’s mineral exploration in Kalimantan. Mansur Geiger with friend and rainforest giant.

Kalimantan Gold Corporation Limited (the “Company”) is pleased to announce it has entered into a joint venture agreement (the “Agreement”) with a wholly owned subsidiary of Freeport-McMoRan Exploration Corporation (“Freeport”) in relation to the Company’s KSK Contract of Work copper project (the “KSK CoW”) in Kalimantan, Indonesia.

Rahman Connelly, Deputy Chairman and CEO of the Company said, “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”.

The Agreement formalizes the terms of the non-binding term sheet announced on December 13, 2010 with at that time an unidentified major copper mining company.  Pursuant to the Agreement Freeport can earn a 51% joint venture interest in the KSK CoW by expending a minimum of 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 with best efforts to complete it within ten years.

Subsequently, if a decision to mine is made, Freeport must use commercially reasonable efforts to arrange non-recourse project financing on reasonable terms and conditions for the costs of development on terms mutually agreeable to each of the participants. Upon a decision to mine, if a participant declines to fund its share, then that party will assign all of its rights and interests in the KSK CoW to the other participant in consideration of a 1% NSR royalty.

The first phase US$7 million expenditure must include an expenditure of not less than US$3 million in the first year of which US$0.5 million must be spent on (i) delineation drilling at Beruang Kanan and (ii) drill testing of each of the deep Beruang Tengah, Beruang Kanan and Tambang Huoi prospects (i.e. a minimum of one drill hole on each such prospect). Preparations to mobilise a drilling team to commence testing the major porphyry copper targets the Company has identified on the KSK CoW are well advanced.

Subject to the approval of the TSX Venture Exchange Freeport will subscribe to a C$350,000 private placement in the Company priced in the context of the market on April 28, 2011, being 7 business days following the date of signing the Agreement.

As previously described, 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 by at least one hole to a depth of up to 1,500 meters 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.

Further details on the inversion modeling and identified targets are contained in technical reports on the Company’s website at The Company will be the operator during this initial phase under the direction of the Freeport.

The real stuff! Drilling core from KGC’s previous programs.
The real stuff! Drilling core from KGC’s previous programs.

About Kalimantan Gold

Kalimantan Gold Corporation Limited is a junior exploration company listed on both the TSX Venture Exchange in Canada and on AIM in London.

The Company has two exploration projects in Kalimantan: the Jelai epithermal gold project in East Kalimantan (which has recently been optioned to Tigers Realm Minerals) and a Contract of Work in Central Kalimantan with multiple porphyry copper and gold prospects. In addition, the Company continues as agent for the shareholders of PT Indobara Pratama (“IBP”) who are seeking to sell IBP’s coal concession in exchange for a share of the proceeds and active negotiations with a qualified purchaser are in process.

For further information please visit or contact: Rahman Connelly
Deputy Chairman and CEO, Kalimantan Gold
Telephone: +61 7 552 32298
Mobile: +61 418 116 955