TIDMKLG
Kalimantan's Third Quarter Results 2014
The unaudited Interim Consolidated Financial Statements and the
management discussion and analysis (the "MD&A") of Kalimantan
Gold Corporation Limited (the "Company" or "KLG") for the third
quarter ended September 30, 2014, are available for viewing on
www.sedar.com and www.kalimantan.com.
The Company incurred a comprehensive loss for the nine months
ended September 30, 2014, of $493,900 (2013 -$131,579). Management
fees related to being the operator of joint ventures and correlated
with the magnitude of the gross exploration expenditures funded by
our joint venture partners and our continuance as operator. During
the nine-month periods ended September 30, 2014 and 2013, the
Company earned management fees of $47,388 and $548,710
respectively. As a consequence of the loss of income, the Company
has since slowed or curtailed many of its discretionary expenses in
2014, and this overall trend can be seen across-the-board in the
nine-month period ended September 30, 2014 compared to the 2013
comparative period.
The Company began the current fiscal quarter with $696,776 in
cash. Operating activities used $359,075 in cash; investing
activities used $38 in cash; and the Company recorded $3,118 of
unrealized foreign exchange gains on cash balances, to end the
third quarter with $340,781 in cash.
The highlights of the third quarter and up to November 26, 2014,
include:
-- The Company announced on November 26, 2014, that it has signed a
non-binding letter of intent ("LOI") with Tigers Realm Copper
Pty Ltd.
("Tigers"), a private Australian corporation within the Tigers
Realm
Group of companies, to purchase Tigers' interest in the
Beutong
copper-gold project, Sumatra, Indonesia ("Beutong"). A
technical
report compliant with NI 43-101 to support the Beutong
Mineral
Resource will be published on Sedar and announced by January 9,
2015.
Highlights of the proposed acquisition include:
-- Agreement reached to acquire Tigers' interest in Beutong;
-- Beutong's Mineral Resource on a 100% basis comprises:
Measured and Indicated Resources of 93Mt at 0.61% Cu, 0.13ppm
Au,
1.97ppm Ag and 97ppm Mo (0.3% Cu Reporting Cut) for
contained
metal of 1,241MIbs copper, 373koz gold, 5,698koz silver and
20MIbs
molybdenum (0.3% Cu Reporting Cut); and
Inferred Resources of 418Mt at 0.45% Cu, 0.13ppm Au, 1.11ppm
Ag
and 129ppm Mo (0.3% Cu Reporting Cut) for contained metal of
4,092MIbs copper, 1,746koz gold, 14,903koz silver and
112MIbs
molybdenum (0.3% Cu Reporting Cut);
-- Beutong's Mineral Resource on a relevant attributable 40% interest
basis comprises:
Measured and Indicated Resources of 38Mt at 0.61% Cu, 0.13ppm
Au,
1.97ppm Ag and 97ppm Mo (0.3% Cu Reporting Cut) for
contained
metal of 496MIbs copper, 149koz gold, 2,279koz silver and
8MIbs
molybdenum (0.3% Cu Reporting Cut); and
Inferred Resources of 167Mt at 0.45% Cu, 0.13ppm Au, 1.11ppm
Ag
and 129ppm Mo (0.3% Cu Reporting Cut) for contained metal of
1,637MIbs copper, 698koz gold, 5,961koz silver and 45MIbs
molybdenum (0.3% Cu Reporting Cut);
-- Complementary asset combination. Small-medium scale, near surface
copper opportunity at KLG's Beruang Kanan with potential to be
the
starter project, a large copper-gold growth option at Beutong,
and a
highly prospective copper and gold exploration portfolio;
-- Highly experienced resource industry CEO Tony Manini to join KLG as
Deputy Chairman and CEO;
-- Extensive project evaluation, mine development and financing
capability and experience available to KLG team;
-- Establishes a strong copper and gold portfolio close to key growth
markets in the Asian region;
-- Diversifies shareholder base and expands funding options for KLG; and
-- Capital raising of at least US$3 million to fund ongoing drilling and
studies.
-- The Company has filed a NI 43-101 compliant technical report
supporting the independently estimated maiden resource for the
Main
Zone of the Beruang Kanan ("BKM") prospect within the Company's
100%
held KSK Contract of Work project, in Kalimantan, Indonesia.
The
report is titled "Beruang Kanan Main Zone, Kalimantan Indonesia:
2014
Resource Estimate Report", prepared by Duncan Hackman
(B.App.Sc., MSc,
MAIG) of Hackman and Associates Pty. Ltd. with an effective date
of
September 30, 2014. Mr. Hackman is an independent consulting
geologist
based in Perth, Australia. He has wide international experience
in
mining and mineral exploration and has completed numerous
mineral
resource estimates on copper deposits. He is a member of the
Australian Institute of Geoscientists and an Independent
Qualified
Person within the meaning of NI 43-101. Highlights of the NI
43-101
report include:
Inferred Resource of 47 million tonnes averaging 0.6% Cu or
621,700,000 pounds of copper (reporting cut 0.2% Cu);
Mineral Resource estimate is only for the Main Zone, a portion
of
the Beruang Kanan mineralized area and is based on assays from
74
diamond drill core holes that were drilled from 1998 to 2007
and
then from 2012 to 2013;
The Mineral Resource is contained within a near-surface,
shallow-dipping and strongly mineralized system, that extends
over
an area of 1000m (N-S) and 950m (E-W) with depth extents
ranging
from surface to between 100m and 450m below surface (top to
bottom). The mineralization remains open in several directions;
and
Other priority targets in the BKM project area have been
identified at Beruang Kanan South, Beruang Kanan West,
Beruang
Kanan Polymetallic North, Beruang Kanan Polymetallic South and
the
Low Zone prospects; each within 1.5km of the BKM Inferred
Mineral
Resource.
-- The Company is in discussions with the Government of Indonesia to
amend the KSK Contract of Work. The six points being
discussed
include, 1) royalties; 2) size of CoW in Exploration vs.
Production;
3) domestic processing; 4) divestment obligations; 5) State
Revenues;
and 6) prioritize the use of local manpower and local
products.
Continued progress is being made and we are encouraged by
our
discussions with the Indonesian Government; and
-- Numerous discussions with both foreign and Indonesian companies are
progressing positively, with site visits conducted on the
Company's
KSK and Jelai Izin Usaha Pertambangan ("Jelai IUP") projects to
date.
Non-binding letter of intent with Tigers:
The principal terms of the LOI provide that during a 20 day due
diligence period ("Due Diligence Period") the parties will
negotiate a definitive agreement pursuant to which KLG will
purchase Tigers Copper Singapore No. 1 Pte Ltd a wholly owned
subsidiary of Tigers which holds Tigers' interest in Beutong. The
consideration for this acquisition will be the issue of 171,407,156
KLG common shares ("Consideration Shares") and 14,675,000 KLG share
purchase warrants, such that the weighted average exercise price of
the warrants is the same as the current weighted average exercise
price per KLG option, being C$0.09 ("Consideration Warrants"). On
completion of this acquisition KLG will issue the Consideration
Shares and Consideration Warrants to Tigers which will procure the
distribution of the Consideration Shares to the shareholders in the
ultimate parent company of Tigers being Tigers Realm Metals Pty Ltd
("TRM Parent") on a pro-rata basis and the Consideration Warrants
to TRM Parent's option holders on a pro-rata basis.
Completion of the transaction will be subject to satisfaction of
a number of conditions, including, but not limited to receipt of
applicable regulatory approvals and KLG completing a concurrent
equity placement for gross proceeds of not less than US$3 million
at a price to be determined in the context of the market and as
agreed by the parties ("Capital Raising"). The Capital Raising is
subject to compliance with applicable securities laws and to
receipt of regulatory approval. The Company reserves the right to
increase the size of the Capital Raising.
It is intended that the proceeds of the Capital Raising will be
used to fund the Company's next phase of infill and expansion
drilling and metallurgical studies at KLG's existing Beruang Kanan
prospect within the Company's KSK Contract of Work ("KSK CoW") and
on finalizing conversion of the Beutong Izin Usaha Pertambangan
("IUP") from an exploration IUP to an exploitation IUP, as well as
for general working capital purposes.
TRM Parent will lend KLG the funds required to fund KLG's 50%
share of due diligence and transaction related costs and expenses
on the basis of an interest free loan only repayable from the
proceeds of the Capital Raising ("Due Diligence Loan").
Separate to the Due Diligence Loan, TRM Parent will also provide
KLG with a US$250,000 interest free loan ("TRM Parent Loan") upon
the completion of various conditions precedent by the end of the
Due Diligence Period. The TRM Parent Loan will be used to fund the
ongoing operating expenses of KLG and its subsidiaries in order to
sustain operations at the same level as existed during the Due
Diligence Period. The TRM Parent Loan will be repayable in cash
from the proceeds of the Capital Raising, and, subject to
regulatory approval, in KLG shares if the Capital Raising is not
completed.
On closing the acquisition, current TRM Parent director Tony
Manini will be appointed as the Deputy Chairman and Chief Executive
Officer of KLG in place of Faldi Ismail who will remain as a
director of KLG. Current director of KLG Stephen Hughes will become
the VP Exploration and Mansur Geiger will become VP Indonesia for
KLG. Mr Manini's remuneration level and conditions will be
determined according to industry standards and market
conditions.
Tony Manini has over 28 years of industry experience including
14 years with Rio Tinto and 9 years at Oxiana/OZ Minerals where he
was a founding member and senior executive. Tony is a founding
member of the Tigers Realm Group, a co-founder of EMR Capital and
executive chairman of Tigers Realm Coal. He has a significant
exploration discovery record and a long and successful operating
background in Asia. The Tigers Realm Group is widely known and
strongly supported in mining and metals markets globally and has
raised more than A$150 million for exploration and development
funding in the past five years.
Beutong Overview:
The Beutong Project is located within the Beutong IUP located in
Aceh in Indonesia, some 60 kilometres inland from the coastal city
of Meulaboh on the island of Sumatra. Beutong Project details,
including details of its Mineral Resource, may be found in the KLG
announcement dated November 26, 2014 regarding the execution of the
LOI with Tigers and in the Company's Management Discussion and
Analysis for the nine-months ended September 30, 2014, published on
SEDAR.com and available from the Company's website.
Jelai IUP:
The Company has been in discussions with a number of major
mineral companies regarding a potential joint venture or similar
arrangement in respect of its 100% owned Jelai IUP. These
discussions are continuing and some site visits have already been
undertaken. Meanwhile, the Jelai IUP is on care-and-maintenance to
conserve cash, until such time as a way forward can be found.
KSK CoW:
The Company has recently applied to the Ministry of Energy and
Mineral Resources to recognize a suspension in operations (a hiatus
of activities) until further notice as allowable and outlined in
clause 23.3.(ii) of the KSK CoW. The KSK CoW is officially in its
4th year of existence following a number of previously granted
suspensions (the KSK CoW has been granted for a minimum of 38
years). The Company has applied for the current suspension for two
reasons, the first being that Surya Kencana LLC ("SK LLC"), who was
funding operations withdrew from the joint venture agreement with
SK LLC, a wholly-owned subsidiary of Freeport-McMoRan Exploration
Corporationin January 2014 and secondly that the Company is waiting
on the renewal of its forestry working permits (Ijin Pinjam Pakai
Kawasan Hutan, or IPPKH) allowing it to work within production and
protected forest. The Company has also applied to extend the
recognized exploration period of the KSK CoW for a year (to April
2015) as allowable and outlined under Article 23.3(ii) of the KSK
CoW. These requests are considered and granted at the discretion of
the Ministry. The KSK CoW is in good standing regarding meeting
expenditure social and environmental commitments and the Company is
of the belief that the Ministry will look favorably upon their
requests and grant both the suspension of activities and extension
of exploration period. The Company is also of the opinion that
there is no reason that their permit to work within a production
forest will not be renewed for a further 2 year period.
Liquidity:
Management believes that the Company does not have sufficient
financial resources to maintain its core activities over the next
12 months and therefore, the Company will need to seek additional
equity financing. The Company's ability to continue on a going
concern basis beyond the next twelve months depends on its ability
to successfully raise additional financing for continued operations
and for the necessary capital expenditures required to achieve
planned principal operations. While the Company has been successful
in the past in obtaining financing, there is no assurance that it
will be able to obtain adequate financing in the future or that
such financing will be on terms acceptable to the Company. These
material uncertainties cast significant doubt upon the Company's
ability to continue as a going concern.
In light of the above, the Company intends to conduct a capital
raising of up to US$3 million, to be priced in the context of the
market at the time, as a condition precedent to completing the
acquisition of the Beutong project. Should this be successful, it
is expected this would alleviate the near term liquidity concerns
of the Company.
Qualified Person:
Technical data disclosed in this news release have been reviewed
and verified by Stephen Hughes, P. Geo, a director of KLG and a
Qualified Person within the meaning of NI 43-101.
-Ends-
Faldi Ismail
Deputy Chairman and CEO, Kalimantan Gold
Mobile: +61 (0) 423 206 324
Email: faldi.ismail@kalimantan.com
Gerald Cheyne
Director Corporate Development
Telephone: +44 (0) 2077311806
Mobile: +44 (0) 7717473168
Email: gerald.cheyne@kalimantan.com
VSA Capital Limited
Andrew Raca / Justin McKeegan
Telephone: +44 20 3005 5004 / +44 20 3005 5009
Email: araca@vsacapital.com
KLG's Nominated Adviser
RFC Ambrian Limited
Andrew Thomson / Trinity McIntyre
Telephone: +61 8 9480 2500
Email: andrew.thomson@rfcambrian.com /
trinity.mcintyre@rfcambrian.com
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, Indonesia: the Jelai epithermal gold project in East
Kalimantan and the KSK Contract of Work in Central Kalimantan with
potential for multiple porphyry copper and gold prospects. For
further information please visit www.kalimantan.com
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This news release contains forward-looking statements that are
based on the Company's current expectations and estimates.
Forward-looking statements are frequently characterized by words
such as "plan", "expect", "project", "intend", "believe",
"anticipate", "estimate", "suggest", "indicate" and other similar
words or statements that certain events or conditions "may" or
"will" occur. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that could cause
actual events or results to differ materially from estimated or
anticipated events or results implied or expressed in such
forward-looking statements.Such factors include, among others: the
actual results of current exploration activities; conclusions of
economic evaluations; changes in project parameters as plans
continue to be refined; possible variations in ore grade or
recovery rates; accidents, labour disputes and other risks of the
mining industry; delays in obtaining governmental approvals or
financing; and fluctuations in metal prices.There may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended.Any forward-looking statement
speaks only as of the date on which it is made and, except as may
be required by applicable securities laws, the Company disclaims
any intent or obligation to update any forward-looking statement,
whether as a result of new information, future events or results or
otherwise. Forward-looking statements are not guarantees of future
performance and accordingly undue reliance should not be put on
such statements due to the inherent uncertainty therein.
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