Pending a favourable conclusion of its due diligence, Melbourne-based Killara would pay a minimum of $US2.2 million to acquire an 80% equity interest in BEH and its 100%-owned mining concession in East Kalimantan.

The deal would position Killara to become cash flow positive and be operating its own mining activities within three months.

Should an independent technical assessment of the concession establish a mineable coal deposit of greater than 733,333 tonnes, Killara will pay $3.00 for each additional tonne.

“This transaction underscores the board’s strategy of establishing an Indonesian coal focused business and, more importantly, illustrates the benefits of partnering with major shareholder the Zulkarnaen family to yield immediate strategic benefits to Killara,” the company said in a statement.

BEH currently sells its entire production of coal to an international buyer. ILN was unable to obtain further information on the company and the site.

Killara’s only other project is the Ora Banda Project in Western Australia, which is prospective for gold and nickel mineralisation.