Orpheus Energy (ASX: OEG) continues to progress operations in the East Kalimantan Province of Indonesia, and just recently secured a 51% equity ownership in two additional tenements, under the joint venture agreement with strategic alliance partner Pt Mega Coal International.
Importantly for the additional tenements, all legal and technical due diligence has been completed - with the tenements known as Blocks 3 and 4, or simply B34.
B34 already has an exploration target of 5 to 10 million tonnes of coal, with a drilling program planned in the June quarter of 2012, which will target a JORC Resource.
Orpheus said that the conversion of the B34 Exploration KPs into Exploitation IUPs is forecast to occur before mid 2012.
The significance of the new tenements is the potential to double Orpheus’s total production from the area, as the company already has another project, B26, just 60 kilometres away.
The future production plan is that coal mined out of B34 will also be transported by barge out of the same facilities near Tampang as B26 production.
Terms of the joint venture
The joint venture provides that Orpheus’ wholly owned subsidiary, Orpheus Energy Group Pty Ltd (OPL) pay A$2.2 million to Mega for 51% equity in B34.
Orpheus has agreed to pay the A$2.2 million worth of convertible notes to Mega as payment for OPL’s 51% equity, with the strike price of $0.25 per note, with a maturity date of 31 December 2014.
High coal quality
B3 covers an area of 4775 hectares, has had historical geological mapping, and reported a high quality coal sample in 2007 featuring low ash (1.5%), low total moisture (8.3% ar) and an energy content of 7123 Kcal/kg.
B4 covers an area of 3126 hectares, has also had historical geological mapping, and reported a high quality coal sample in 2007 featuring low ash (1.9%), low total moisture (6.5% ar) and an energy content of 7253 Kcal/kg.
Samples taken in July 2011 returned calorific values at 7270, 8055, 8095 Kcal/kg (adb).