Proactive Investors reported that, Overseas & General (ASX: OGL) has entered into a joint operating agreement on the Jambi Coal Lease in Sumatra, Indonesia.

The agreement was made through its majority owned Indonesian joint venture company, PT OGL Indotrade Resources, with the owners of PT Sembilan Setia Mitra (SSM).

The lease covers an area of 1,204 hectares in the West Tanjung Jabung district and complements OGL’s existing Jambi properties of Chandra and Sokki, giving a total of 2,121 hectares of contiguous lease area.

Importantly, there is a 23 kilometre road from the lease area to the Pelabuhan Taman Raja port site on the Pengabuhan River, which has open barge passage to the ocean.

The river is capable of handling barges up to 275 feet, though as the river is tidal, a maximum of 7,000 tones of coal could be loaded.

Coal would be barged directly to market destinations within Indonesia or to neighbouring Malaysia or Thailand, as is the practice of other operators who currently use this port and other Jambi ports.

An initial small payment has been made to secure the contract and a royalty will be paid to the owner through the life of the project, with no other payments necessary.

Several manually dug test pits and eight shallow holes have been drilled near outcropping coal. Coal intersections are reported up to 2.5 meters in thickness.

Quality information shows the coal is a high energy, marketable steaming product with the following characteristics: inherent moisture % 7 - 9, ash % adb 3 - 12, sulphur % adb 1.1 - 1.8, and gross calorific value cal/gm adb 6,180 – 6,765.

The high energy content of the coal means it will be a sought after product in both domestic and export markets.

OGL Indotrade will commence detailed exploration work in the lease during the first quarter of 2011 and a resource target of up to five million tonnes of high energy, shallow thermal coal is projected.

If adequate reserves of coal are determined through exploration and feasibility works, OGL expects to develop a mining operation at Jambi during the second half of 2011, becoming its second mining operation in Indonesia.

About Overseas and General
Overseas and General (ASX: OGL) is a public company listed on both the Australian Stock Exchange and on CLOB International, Singapore. The Company had previously been involved in agribusiness and bio-fuels. OGL is taking advantage of the current strength in the commodities markets worldwide with the objective of becoming a medium sized producer of metallurgical and steaming coal in Australia and Indonesia, both major coal producing nations.
Source: Proactive Investors