The project comes with a JORC-compliant resource of 10.22 million tonnes of coal and a 30,000t coking coal stockpile onsite.

Kangaroo will pay SouthGobi $A1 million in cash and 50 million shares for an 85% stake in the project.

Mamahuk will be the eighth Indonesian coal project in the Perth-based company’s stable as it seeks to become a coal producer.

The project has site infrastructure in place as well as a river terminal and loading facilities capable of handling up to 1.5Mt of coal per annum.

Kangaroo said today it would immediately look at mining contracts for the project while also testing bulk samples and gaining the necessary permits.

With a target of 1-2Mt of production in 2010, Kangaroo’s longer term goal is to produce more than 10Mtpa within three years.

The company has already started work at the GPK project in Indonesia, which will supply the 1-2Mtpa production next year.

Towards that end, Kangaroo has raised around $38 million from the market in the past few months.

Following the start of production from GPK, the company is targeting production from its Tanur Jaya project by the end of the first quarter of 2010, followed by the MBK project in the second half of 2010.

Shares in the company closed up half a cent at 22.5c by close of trade yesterday.