From Government of Indonesia

Kalimantan Gold in Deal with Oxiana

Kalimantan Gold Corporation Limited said Monday (18/12/06) that it has finalized its option deed with Australian copper and gold mining company, Oxiana Ltd.

Previously announced as a Heads of Agreement in October, the option deed grants Oxiana an option to earn up to a total interest of 66.67% in the KSK contract of work.

The agreement is designed to advance exploration at Kalimantan's copper gold prospects in Central Kalimantan, which both parties agree has the potential to produce a world class deposit.

The option covers three key prospects, Baroi, Beruang and Mansur, which form part of KGC's 941 square kilometre holding in Central Kalimantan.

Under the agreement, Oxiana will initially spend $2.5 million to include the drilling of 12 deep holes over a period of 12-18 months.

If it elects to proceed, Oxiana will then have the option of earning a 40% stake by the completion of a pre-feasibility study and a 66.67% stake by the completion of a bankable feasibility study, by which time it will have spent an estimated $37.5 million.
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