Feb 19 2011
Challenger Deep Resources Corp. (TSX VENTURE:CDE) has announced that it has, through its wholly-owned subsidiary, PT Bestindo Energy, entered into a Memorandum of Understanding with the principal shareholder of PT Pelangi Kertanegari, which gives Challenger the exclusive option, for a period of one year, to purchase all of the shares of PT Pelangi.
In consideration of the option grant, Challenger has agreed to pay PT Pelangi a total of $8,320 CAD in three instalments, which funds are to be used by PT Pelangi to commence the necessary corporate restructuring to enable the sale of PT Pelangi to Bestindo.
Pelangi Property
PT Pelangi is a private Indonesian company which holds certain coal rights in an area of approximately 4,000 hectares in close proximity to Challenger's Tabang Coal Project. The Pelangi property covers the Balikpapan formation which is prospective for coal in this area. The Balikpapan formation is known to host thick seams of coal in the general Tabang area. The coal exploration rights to the Pelangi property are currently in the application stage.
A program of due diligence is to commence as soon as possible and will include surface reconnaissance and mapping, sampling and analysis in order to evaluate the potential of the Pelangi property. Challenger's exercise of the option to acquire PT Pelangi will depend upon the results of the initial due diligence program.
Terms of the CSPA
The MOU provides that, if Challenger elects to exercise its option, the terms of the applicable Conditional Share Purchase Agreement (the "CSPA"), will include a payment of $33,300 CAD upon execution of the CSPA and payment of the remaining $1,775,000 CAD over the next approximately 18 months, in three scheduled payments. Timing of the remaining payments to be made is based on the date of the issuance of an IUP exploration permit by the relevant Indonesian Governmental authority. The CSPA will also provide that upon Bestindo's production and sale of coal from the property, it will grant and pay to the vendors of the shares of PT Pelangi, a royalty of USD $1.50 per ton.
The Qualified Person (as defined by NI 43-101) responsible for the review and approval of the technical material presented in this news release is Mr. Andre Talaska, a director of Bestindo.
Challenger proposes to pay a finder's fee to an arm's length party in connection with the introduction of this acquisition opportunity, if Challenger elects to exercise its option. The finder's fee would be payable in common shares of Challenger in an amount calculated in accordance with the TSX Venture Exchange policies and subject to the approval of the TSX Venture Exchange.
"Signing of this MOU is a key milestone in our strategy of extending our land position in the Tabang area and consolidating coal rights in order to position the Company to establish its first core development area", stated Ranjeet Sundher, President of Challenger. "Our team is evaluating several other exciting potential opportunities in this and other areas of East Kalimantan."
Tabang Project Update
The Phase 1 Tabang Exploration program has now been completed. An additional 8 outcrop and 8 test pit samples are being submitted from the field to the SGS Laboratory in Samarinda. A drill has arrived on site and drilling is to commence at the end of the week.
Through its exploration to date, Challenger has now discovered 58 coal outcrops and a total of 34 test pits have been excavated, of which 15 have now been sampled and submitted to the laboratory for analysis. Challenger's preliminary interpretation of the discovered outcropping coal is that at least eight separate seams are evident in the northern half of the property. The width and number of seams cannot be confirmed until initial drilling operations have been completed. The seams appear to be shallow dipping (10 to 20 degrees). Each coal seam was sampled and all samples were submitted for analysis by Pt Geoservices Coal Laboratory, East Kalimantan. All test pit samples were processed by SGS Coal Laboratories, Samarinda, East Kalimantan. Industry standard Quality Control and Quality Assurance protocols were employed in the sample acquisition, preparation and analysis procedures.
As previously reported, based on the sample analysis performed, coal quality from the initial test pits sampled indicate a range of 5,300 - 6,000 Kcal/kg (AR) on the discovered seams.
The scout drill program will include at least 1,000 m in 25 to 30 holes designed to test the quality, continuity, width and number of coal seams at depth.
Source: Challenger Deep Resources Corp.