Australian copper and gold producer Oxiana (OXFLY-O, OXR-A) has signed an agreement with Vancouver junior Kalimantan Gold (KLG-V, KMGLF-O) to earn an interest in Kalimantan’s KSK copper-gold property in Indonesia.
Under the agreement Oxiana commits to funding US$2.5 million in exploration on KSK within 18 months. At that point Oxiana can either withdraw or commit to providing a prefeasibility study by the 42nd month of the agreement, to earn a 30% interest (40% of Kalimantan’s 75% stake in the project). That can be increased to 50% by providing a final feasibility study within five years of the start of the agreement.
Kalimantan Gold keeps a right to buy back any interest Oxiana has earned if Oxiana drops its option. The junior would have to pay 50% of Oxiana’s spending on feasibility work. Oxiana also undertakes to arrange financing for Kalimantan’s share of funding once there is a final feasibility study.
The 941-sq.-km KSK property is a Contract of Work area in which a local partner owns a 25% interest. Kalimantan Gold has outlined three major prospects — Baroi, Beruang Kanan and Mansur — through several drill campaigns totalling 12,300 metres. So far there has been no resource calculated.
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