Under the MOU, the parties will work together to develop a marketing plan in addition to negotiating a formal coal sales agreement in time for first coal production at Tabang which is slated for 2013.
Surya Dinamika Lestariwill will seek to secure domestic buyers for the coal produced from Tabang and will advise Challenger on the best pricing parameters for different production scenarios.
Challenger chief executive officer Ranjeet Sundher said the MoU signified the first step in the sales planning component for Tabang’s project development
“This relationship is focused primarily on the lower heating value coal component of our project and on domestic consumption, which provides the cornerstone of our initial development plan,” he said.
“Moving to this stage in the process also demonstrates our confidence in this project and in our marketing partner, SDL.”
Challenger’s Tabang project comprises four properties in close proximity to each other.
ATRP is the most advanced of the Tabang properties, with the project currently in the permit application process.
A feasibility study on the Tabang’s ATRP tenement has been completed while an environmental study is nearing completion pending approval of the feasibility study.
If the feasibility study is approved along with the ES, Challenger could be issued a mining permit as early as the end of the 2012 second quarter.
Challenger has acquired a diverse portfolio of coal properties in Indonesia and is aiming to stockpile coal by the end of 2012, with commercial production targeted for first quarter 2013.