Killara says it has tried to get involved in its East Kalimantan production asset to reduce costs, however it has become apparent that with thermal coal prices continuing to decline and with current coal pricing at nine-year lows BEH has become marginal at best.

Killara announced its divestment plans two weeks ago. It will now assess new opportunities both in Australia and Internationally.

BEH will be sold to a consortium led by two of Killara’s Indonesian directors, Wim and Reza Zulkarnaen.

The Zulkarnaen family will step down as directors.

Killara has been supported to date by directors Matthew Driscoll and Wim Zulkarnaen, but that is unsustainable.

An independent expert’s report will be completed and the sale will be put to shareholders soon.

Killara made the leap from explorer to producer in May 2013 by paying $US2.2 million to acquire an 80% equity interest in BEH and its 100%-owned mining concession in East Kalimantan.

Its operations included a number of trial shipments, including a delivery to Glencore in early 2014

It hoped to become cashflow positive and operate its own mining activities within three months of the acquisition, however quickly ran into contractor issues, with the contractor terminated.

A lack of a coal sales agreement saw operations suspended in mid-2014.