The lease is located in a thermal coal-mining region of Kalimantan, where an initial payment has been made to secure the contract, which will be deducted from royalties paid to the owner through the life of the project. No other payments are necessary.
The company said that the geological mapping has identified a single seam of 4mt in thickness dipping gently from the surface. Analysis of outcrops shows the coal to have a medium energy with low ash and sulphur. OGL has committed to a small drilling and sampling program over the lease commencing in late May to better quantify the geometry, quantity and quality of coal.
Providing adequate tonnages of coal of acceptable quality are defined, mine planning will follow with the intention to fast track the project into production in July/August 2010. OGL envisage operations of around 50,000 tonnes per month thermal coal production.
OGL said that its JV partners, PT Indotrade Resources are currently producing in the region and can gear up quickly to meet these objectives.
The company added that this opportunity takes it into coal production in Indonesia in a very short period of time and sets a base for its growth plans into larger coal mining projects in Indonesia and Australia.