CALGARY (Yosefardi) – MILL CITY GOLD CORP. has signed a Letter of Intent (LOI) to purchase up to a 60% interest in the North East Tanjung Block, an onshore Indonesian gas concession and Production Sharing Contract with a 30 year contract term including initial 6 year exploration period, from PT Anugerah Trimata Kaltim Energi (PTATKE), an Indonesian limited liability company that holds a 100% working interest in the project.
The North East Tanjung Block project is located at Kutai Barat regency, East Kalimantan Province, which is approximately 180 km to the north-west of Balikpapan City. The project area covers initially 11,191.8 square kilometres and reduced into approximately 5,453.27 square kilometres within the onshore Kutai Basin. Geologically, the project area is situated in Western Kutai Basin, known as the Upper Kutai Basin, which is one of the most prolific petroleum basins within Indonesia. Moreover, from a previous study on adjacent ground, the gas potential has been proven in the Mendung Well, within the onshore West Kutai.
There are three target “pay zone” formations on the project. Previous work conducted on the project by the Indonesian government indicates that a gas resource is present. The Company intends to complete a NI 51-101 report in due course to verify this resource.
To confirm the potential of the North East Tanjung Block, the joint venture partners plan to conduct exploration activities including drilling 2 exploration wells and 2 delineation wells, and to conduct a 2D seismic survey over a 2 km x 300 km area by the end of 2016. The estimated total cost to complete the exploration program is approximately US$31.52 million.
To earn up to a 60% interest in the North East Tanjung Block, Mill City agrees to provide up to US$32 million thru staged financings over three years to provide the working capital to conduct the work program described above.
The signed LOI allows for up to ninety (90) days from the signing to complete due diligence and to arrange the first year tranche of required capital to finance the work program.
PT Anugerah Trimata Kaltim Energi is an Indonesian limited liability company engaged in oil and gas exploration and production business. PTATKE was established in 2012, exclusively for the purpose of the exploration and production activities of the North East Tanjung PSC. Currently, PTATKE holds a 100% working interest in the North East Tanjung PSC Block.