West Perth-based Oilex Ltd will acquire a 45 per cent stake in the West Kampar production sharing contract through a joint venture with Sumatera Persada Energi.
West Perth-based Oilex Ltd will acquire a 45 per cent stake in the West Kampar production sharing contract through a joint venture with Sumatera Persada Energi.
The news comes a few days after West Perth-based mineral explorer Red River Resources Ltd entered into a joint venture agreement with Perth-based Iron Mountain Mining Ltd, which will see it earn up to a 70 per cent stake in the Miaree and Wongan Hills projects.
Under the agreement, Iron Mountain will earn an initial 25 per cent through the payment of $50,000 to Red River after receiving shareholder approval.
Iron Mountain must then spend a total of $4.75 million on exploration to acquire the stake.
The full text of both company announcements are pasted below
Oilex Ltd, through a wholly owned subsidiary, has entered into an agreement to acquire a 45% interest in the West Kampar Production Sharing Contract (PSC), onshore Sumatra, Indonesia from PT Sumatera Persada Energi (SPE). The block has an existing oil discovery that can be brought into production quickly if justified by appraisal drilling and a number of highly prospective
structural trends that will be the subject of an intensive exploration program.
The consideration for this interest includes Oilex refunding certain past costs and funding the drilling of the Pendalian-3 exploration/appraisal well, planned for July 2007, and the acquisition of 2D and 3D seismic work commitment programs.
Subject to approvals from the Government of Indonesia and certain other conditions precedent, the participating interests in the West Kampar PSC will be:
| Joint Venture Party | Participating Interest |
| Oilex | 45 per cent |
| Sumatera Persada Energi (Operator) | 55 per cent |
West Kampar PSC The contract area is located in central Sumatra adjacent to the most prolific oil producing province in Indonesia (Figure 1). Awarded in October 2005, the PSC work program commitment provides for the acquisition of 250 kms of 2D seismic and 50 sq kms of 3D seismic along with drilling of the Pendalian-3 well and an additional 4 exploration wells by November 2008.
SPE SPE is an Indonesian oil and gas company which is part of the PT Asiabumi Petroleo group, a diverse private company with interests in crude oil shipping amongst other activities. It acquired the PSC in its own right as operator in 2005 as a relative newcomer to the Indonesian exploration and production scene. SPE employs regarded industry professionals with substantial experience in the upstream oil and gas sector in Indonesia gained while working with international companies over a number of years.
Pendalian-3 The Pendalian-3 well planned for July 2007 will appraise the oil field discovered in 1993 by the Pendalian-1 well, a cored slim hole which encountered a number of oil zones at depths ranging from 250 metres to 500 metres. Two of the zones flowed oil from drill stem tests in Pendalian-1 with maximum rates achieved of up to 530 barrels of oil per day. Independent technical work by Oilex indicates that the best estimate of the "in place resource" for the field is 12 million barrels of oil.
If commercial productivity is confirmed by the extensive cased hole testing program planned for the conventionally drilled Pendalian-3 well, the West Kampar Joint Venture plans to acquire a 3D seismic survey over the Pendalian Field and a number of satellite structures and to accelerate development. Shallow, low cost wells and the proximity to infrastructure are attractive incentives for
the rapid development of the field. Early cash flow generated by Pendalian production will be applied to the exploration of highly prospective trends that have been recognized on the block.
Exploration Potential The proposed 2D seismic exploration program will delineate additional drillable prospects on proven exploration plays in the West Kampar PSC area, particularly on the Daludalu structural trend in the northern part of the block. Currently available data indicates that the Daludalu-1 well tested oil at a rate of 250 barrels per day and other wells on this trend had oil shows. Tonga-1, adjacent to the northern West Kampar block boundary tested oil at a rate of 1560 barrels per day and fields discovered on analogous structural trends in adjacent areas have produced up to 300 million barrels of oil.
Comment Oilex is excited by the prospects in this new area within our designated Indian Ocean Rim sphere of operations. We are particularly pleased with the opportunity that West Kampar offers to move rapidly into production as we seek to expand our interests in Indonesia.
IRON ORE EXPLORATION JOINT VENTURE WITH IRON MOUNTAIN MINING LIMITED
- Agreement for Iron Mountain Mining Limited to earn up to 70% of iron ore rights at two Red River project areas in Western Australia.
- Exploration targets include large-scale magnetite deposits at Miaree, near the Cape Lambert magnetite deposit, and hematite at Wongan Hills.
- Joint Venture consistent with Red River's focus on its Feral Hematite Prospect in the Mid West region of WA.
Red River Resources Limited (ASX: RVR - "Red River Resources") is pleased to announce that it has reached agreement with Iron Mountain Mining Limited ("Iron Mountain") to farm into the iron ore exploration rights at two of Red River's Western Australian projects.
Under a Heads of Agreement between the companies, Iron Mountain can carry out exploration for iron ore at Red River Resources' tenements in the following regions of Western Australia:
- the Miaree Magnetite Trend in the Karratha area, Pilbara region; and
- the Wongan Hills Project, located 130 kilometres north-east of Perth in the Mid West region.
Under the terms of the HOA, Iron Mountain can earn up to 70% of the iron ore rights over these tenements for a total expenditure of $4.75 million.
Subject to completion of due diligence and execution of an exclusive option to enter into the Joint Venture, the agreement would enable iron ore exploration within these areas to be significantly accelerated. The Joint Venture is consistent with Red River's focus on its Feral Hematite Prospect in the Mid West region, where it is preparing to commence drilling later this year.
MIAREE
The Miaree Magnetite Trend lies within the Kaninda East (EL47/1309) and Kaninda West (EL/08/1350) Exploration Licences (see Figure 1). The tenements comprise approximately 30 kilometres strike length of Cleaverville Formation, a magnetite-rich geological unit which also hosts the Cape Lambert magnetite deposit, located approximately 60 kilometres to the east. Significantly, the aeromagnetic field strength at Miaree is similar to that at Cape Lambert.
Published magnetite grades at Cape Lambert are in the range of 40-45% and, based on the geophysical similarity, potential magnetite grades over the Miaree Magnetite Trend are inferred to be at similar levels. An aeromagnetic map of the eastern part of the Miaree Magnetite Trend is displayed in Figure 2.
Modelling of the aeromagnetic data suggests that the Miaree Magnetite Trend hosts mineralised widths of up to 200 metres (see Figure 3). Conceptually, the exploration target for the Miaree Magnetite Trend is 1.5-2 billion tonnes of magnetite-bearing rock grading on average 40-45% magnetite, based on the following parameters:
The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the determination of a mineral resource.
The area has potential for the delineation of large-scale magnetite deposits with the potential to underpin a long-life mining operation. The Miaree Magnetite Trend lies adjacent to the North West Coastal Highway, near the Pilbara coastline, and adjacent to the Dampier-to-Bunbury gas pipeline (see Fig. 1).
Recent field work by Red River Resources has also discovered zones of hematite enrichment over the Cleaverville Formation, which may have the potential for the production of direct shipping grade (DSO) lump ore. Samples from these zones have been submitted for analysis.
WONGAN HILLS
The Wongan Hills area is prospective for hematite mineralisation, as demonstrated by the distribution of aeromagnetic highs which are indicative of the presence of banded iron formations (BIF) (Fig. 4). Given its proximity to an existing railway line, the area is regarded as having good potential for the delineation of direct shipping grade (DSO) ore).
TERMS OF THE HOA
- The HOA between Red River and Iron Mountain applies to the following tenements:
- Miaree Magnetite Trend: E47/1309, EL08/1350, ELA47/1707
- Wongan Hills: E70/2437, E70/2343, E70/2728.
Iron Mountain has the right to conduct a due diligence study for a period of thirty (30) days from execution of the HOA. If Iron Mountain elects to proceed beyond the due diligence period, then Iron Mountain would have an exclusive option to enter into a Joint Venture with Red River Resources, the details of which are outlined below.
As Mr David Zohar is a substantial shareholder and Director of both companies, this is a "related party transaction" and therefore requires ratification by shareholder approval at Extraordinary General Meetings of both companies, subject to receipt of an independent experts report stating that the proposed transaction is "fair and reasonable". The cost for any independent expert report to shareholders of both companies would be payable by Iron Mountain.
Under the terms of the agreement, Iron Mountain may earn an initial 25% interest in the Exploration Licences by paying $50,000 to Red River within 7 days of the receipt of shareholder approval.
Under the terms of the Joint Venture, Iron Mountain must spend a minimum of $1.25 million on exploration within two years. It can increase its interest to 49% by spending an additional $1.5 million, and finally to 70% by spending a further $2 million. Iron Mountain will be operator of the Joint Venture during the period of exclusive expenditure.
Iron Mountain may withdraw from the Joint Venture at any time but will not earn any equity in the tenements if it withdraws prior to meeting its initial $1.25 million expenditure commitment.
Iron Mountain may only withdraw from the Joint Venture if it has conducted sufficient exploration to meet the minimum expenditure requirements as required by the Western Australian Department of Industry & Resources during the first year.
