PT. SBP – South Kalimantan

PT SEGA BARA PERSADA (“PT SBP”) – SOUTH KALIMANTAN COAL PROJECT

PROJECT AGREEMENT

Worldwide Mining Projects have been able to secure an agreement to purchase two tenements in the Southern Area of Kalimantan Indonesia. The tenements fall within an extremely active coal mining area that produces over 100 million tonnes of coal per annum. Excellent infrastructure exists in the region and the local government has and continues to support mining activity in the area.

LOCATION

The tenement is located on the island of Borneo, 300 kilometres south-west of Balikpapan and 120 east of Banjamasin.

Access to the site is via a regular 45 minute jet service operated by 3 airlines from Balikpapan to Banjamasin or a new daily 45 minute turboprop light aircraft service from Balikpapan to Batu Licin. Drive time from Banjamasin is 3.5 hours on a good sealed road and 1 hour on gravel or 2 hours from Batu Licin with 1 hour on gravel. The site is 25km from the coast on the west side of the Banjamasin Balikpapan highway.

The project area is surrounded by operating mines and access to the site is very good. Within the project area there are numerous small tracks that make traversing the tenements relatively easy. The majority of the vegetation in the project area has been removed by logging companies with only secondary scrub and grasses remaining. Small areas of production forest remain in parts of the tenement.

TENURE

As shown in Figure 2 below, the project area is comprised of 2 tenements (“IUP”), a larger IUP Exploration that surrounds an inner IUP Production. The IUP Exploration covers some 1,147 hectares with the internal IUP Production being some 199.6 hectares.

GEOLOGY

 

The geology at the PT. SBP IUP’s is mainly comprised of the Tertiary Miocene Warukin Formation which is present as alternating layers of quartz sandstone and claystone, intercalated with shale, coal and limestone. Small portions of the northwest area of the IUP are occupied by the older unit of Tertiary Oligo-Miocene rock of Berai Formation.  Regional geology structure is controlled by a major WSW-ENE gently dipping syncline which is generally faulted in a NE-SW and NW-SE orientation. The PT.SBP concession is situated in the southern flank of the syncline and the sediments observed are gently to shallow dipping to northwest.

Coal outcrops in the project area are limited and primarily confined to a thin coal seam (0.5 metre thick) that is flat to gently dipping to the northwest and an excavated test pit that has a coal seam approximately 2 metres thick from 7 meters depth.

Coal from the tenement has not been tested sufficiently to provide accurate details but mining from the coal units in surrounding areas produces coal in the range of 5200 to 5800kcal/kg ADB with low sulphur. It is expected that similar results will be obtained from this area.

SUMMARY OF PROJECT STRENGTHS

From the information provided by the Vendor, WWMP considers this project as a priority acquisition target for the following reasons:

  • The project already contains an IUP production over the main coal area and a significant sized IUP Exploration with the potential to host a further 25.0 million tonnes JORC Resource;
  • Excellent potential to identify surrounding synergistic projects;
  • Significant infrastructure already exists in the area;
  • Shallow dipping coal seams 5-12 degrees;
  • Small potential to locate deeper coal seams of up to 25m thickness;
  • Can be brought into production in under 1 year, potentially 9 months;
  • Estimated free cash flow of AUD$1.0M per month for first few years of production;
  • Will not interfere with WWMP’s ability to bring larger projects on stream and may assist in financing those projects easier;
  • Can be brought into production pre IPO if required;
  • Initial estimated margin over expected production cost of $USD40.00/t at current coal prices.
  • The purchase cost of the project will be approximately AUD$0.12c/t of resources or AUD$0.60/reserve tonne (based on a 25million tonnes Resources/5million tonnes Reserve).