Kalimantan Gold Corporation is set to play a part in Indonesia"s burgeoning coal market after signing an agreement with the Indonesian-based Jhoswa Group, designed to earn the company an interest in a number of coal prospects.

The Heads of Agreement covers coal prospects in the Kutai provinces, which are considered the epicentre of coal mining in East Kalimantan.

In the last 10 years, Indonesia has become a world hot spot for coal with production quadrupling to 200 million/tonnes per annum and East Kalimantan province accounting for 90% of the country's output.

As part of the agreement Kalimantan Gold is working closely with specialist mining consultancy, PT GMT Indonesia, which has been contracted to assess the prospect areas for exploration potential before their inclusion in a formal joint venture agreement between Kalimantan Gold and the Jhoswa Group.

Kalimantan Gold CEO Rahman Connelly says: "The agreement is an important step for the company at a time when coal production in Indonesia is continuing to rise, primarily because of increasing demand from China and India. Globally, coal is set to replace oil as the main source of energy and in countries such as China and India around 80% of future power generation is projected to be coal based."

East Kalimantan is synonymous with the Indonesian coal industry and four of Kalimantan's six biggest coal producers are there. Kalimantan coal resources have been estimated at 35 billion tonnes, most of which are suitable for the thermal coal markets of Asia. www.kalimantan.com