to acquire 30pcen interest in indonesian coal

Australia Oriental Minerals NL
Suite 206, 1 Katherine Street,
CHATSWOOD, NSW, 2067, Australia
T +61 (0)2 9419 2966 F +61 (0)2 9419 2944
ACN: 010 126 708
2 July 2008
AOM TO ACQUIRE 30% INTEREST IN INDONESIAN COAL OPERATION
FOR US$6.75 MILLION
The Board of Directors of Australia Oriental Minerals NL (“AOM”) is pleased to
announce that the Company, together with its major shareholder, Malaysia Smelting
Corporation Berhad (“MSC”), have entered into an agreement to each acquire a 30%
interest in Asiatic Coal Pte Ltd (“ACPL”) which has rights in a mining concession of
approximately 4,005 hectares located in the Central Kalimantan Province, Indonesia
for US$6.75 million. The mining concession is located in an area of well known
Indonesian coal basins and within the known region of Anthracite/High Bituminous
coal in Kalimantan.
Preliminary drilling and exploration has been undertaken in an area of approximately
200 hectares within the mining concession, with drilling encountering coal seam
intersections of anthracite and high bituminous coal that has high calorific value in the
range of 7,500 to 8,300 kcal per kilogram, low ash averaging 6%, high carbon content
averaging 80.6% and low average moisture at 8.5%.
The current market price of anthracitic coal of this type is in the range of US$180 to
US$260 per tonne with typical specifications approximating those identified in the
preliminary drilling.
Based on the preliminary drilling results, production is expected to commence in the
fourth quarter of 2008 and the project will require approximately US$6.2 million to
commence coal mining operations. AOM’s share at 30% will be US$1.86 million.
Local contractors will be used for the mining and transport operations.
A further drilling program, with an estimated budget of US$500,000 is planned by
ACPL for the next six months to delineate a coal resource in accordance with the
JORC standard. The exploration target for this drilling programme, based on
preliminary results, is 7 million tonnes to 10 million tonnes. This target estimate has
been based on the preliminary drilling results and is conceptual in nature as there has
been insufficient exploration to define a mineral resource in accordance with the
JORC standard. It is uncertain if further exploration will result in the determination of
a mineral resource in accordance with the JORC standard.
The initial payment of US$6.75 million entitles AOM to a 30% share of profits
arising from the mining operations of the first 1.5 million tonnes of coal mined.
Subject to the results of the proposed drilling programme, AOM has an option to
acquire any JORC compliant resource delineated within the mining concession in
Australia Oriental Minerals NL
Suite 206, 1 Katherine Street,
CHATSWOOD, NSW, 2067, Australia
T +61 (0)2 9419 2966 F +61 (0)2 9419 2944
ACN: 010 126 708
excess of 1.5 million tonnes by paying its share of 30% of the agreed consideration of
US$15 per tonne.
AOM is proposing to fund its payment of US$6.75 million and it share of the
exploration and development costs (US$1.86 million) through a rights issue. Details
of the rights issue are currently being finalised, and are expected to be announced
within two weeks.
In the interim, AOM has arranged for a short-term loan facility for AU$5 million. The
facility will be repaid out of the proceeds of the rights issue.
For further information:
Andrew Bursill
Company Secretary
(02) 9419 2966
John Field
Field Public Relations
0418 819 527