Indo Mines in $2m coal project deal

Shares in Perth-based Indo Mines have risen on news the company will spend $2 million to form a joint venture to develop a coal project in Indonesia.

The company has signed a letter of intent with Kal Energy over the Graha coal project which has a resource of 248 million tonnes of thermal coal and is located near infrastructure including power.

Indo will pay an initial $US100,000 to Kal for an exclusive period of due diligence.

Should Indo wish to continue with the project, the company will pay Kal a further $US1.2 million ($A1.8 million).

Indo will become operator of the JV and earn a 70 per cent interest by paying all costs attributable to project exploration and feasibility up to a decision to mine.

Shares in Indo climbed three cents or 10.71 per cent to 31c at 12:30 AEDT after coming out of a trading halt.