Kangaroo could sell young cash cow

KANGAROO Resources is not ruling out a possible sale of its low-cost, emerging GPK thermal coal mine in East Kalimantan, Indonesia.
Kangaroo could sell young cash cow Kangaroo could sell young cash cow Kangaroo could sell young cash cow Kangaroo could sell young cash cow Kangaroo could sell young cash cow

Kangaroo Resources' GPK project

Blair Price

Formerly known as Kangaroo Metals, back in the December quarter the explorer dived into Indonesian coal, acquiring the GPK project for only $2 million in cash.

Kangaroo quickly made its maiden coal delivery from the mine in January.

With 248 million tonnes of resources, more than half of this was at depths of less than 60m.

The open cut mine is targeting 100,000 per month by early 2011, ramping up to 3-4Mt by 2012.

But Kangaroo has also entered into a string of other deals to gain stakes or acquire Indonesian projects and might be looking at even better opportunities.

The Australian Financial Review recently reported that Kangaroo could sell its emerging GPK mine to raise the cash to advance the other Indonesian coal plays, with more than 10 parties interested.

In response to an Australian Securities Exchange query stemming from the story, Kangaroo said it had appointed Macquarie Bank Singapore to give the possible GPK sale option more credibility and enhance a potential outcome.

The junior said it was considering all options, including mining the GPK asset along with potential joint ventures and a possible sale.

“Any decision made on the GPK project that changes from the current strategy will be reported to the market under normal ASX disclosure requirements, and the board confirms that any such decision would be made in the best commercial interests of the company,” Kangaroo announced.

Of its Indonesian project portfolio, Kangaroo picked up SouthGobi Energy’s major stake in the Mamahuk coking coal project in East Kalimantan in December.

The project holds 10.22Mt of coking coal resources and a trial export sales contract with Chinese energy company Guandong Yudean Farnon was inked in late April.

Kangaroo also completed the acquisition of the Kalimantan-based Kubah Indah project in mid-May, with the explorer setting an exploration target of 100-140Mt of coking coal for this project.

The junior plans to start producing 1-2Mtpa of coking and thermal coal at Kubah Indah by the end of 2010.

On the financing front, Kangaroo has secured $14 million from institutional investors through convertible notes this month.

Kangaroo shares closed down 0.5c to 14c this morning.

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