Pan Asia Corporation receives US$1m commitment from Kopex for Indonesian thermal coal project

Thermal coal company Pan Asia Corporation (ASX: PZC) has clinched US$1 million in funding from Kopex for drilling through to final feasibility study at its flagship TCM coal development project in South Kalimantan, Indonesia.

The funding is repayable at Pan Asia's election in cash or convertible into Pan Asia ordinary fully paid shares at A$0.15 per share within 60 days following final feasibility study completion.

Kopex is a large international coal group which has previously recommended the TCM project be advanced to final feasibility stage, following a positive independent study, which signals its view of the project's viability.

TCM has a JORC resource based of 115 million tonnes, the initial resource was upgraded in August 2011. The overall exploration target for TCM is 200 million tonnes over the next 24 months.

In April 2011, Kopex entered into an Agreement with Pan Asia to co-fund the accelerated infill drilling programme and the final feasibility study at the TCM Project.

Kopex’s total commitment to date towards the drilling programme at the TCM Project now stands at US $1.6m.

Kopex has also recommended the option of access from an open cut high wall be pursued as part of future studies, which is positive for TCM given Kopex’s experience in underground mining space, and that Kopex will likely become the mining contractor of the project.

Additionally, Kopex has recommended the option of access from an open cut high wall be pursued as part of future studies. We see this as positive for PZC, given Kopex’s experience in underground mining space and the view that Kopex will likely become the mining contractor of the project.

Pan Asia through its TCM project, has exposure to high quality export thermal coal with an average calorific value of 6,566kcal/kg, 6.41% total moisture, 13.52% ash and 1.52% sulphur.
Completion of the final feasibility study for TCM is expected end of March 2012.

Pan Asia is aiming to supply the fast expanding Asian markets from its thermal coal assets in Indonesia.

Analysis

The company has been something of a sleeper and under the radar of some investors.  However, the involvement and commitment from Kopex should not be underestimated and vindicates the quality and potential of the TCM project to "feed" hungry Asian energy markets.  With the final feasibility study due in first half of 2012, it would not surprise to see the market valuation of Pan Asia begin to kick in 2012.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/23698/pan-asia-corporation-receives-us1m-commitment-from-kopex-for-indonesian-thermal-coal-project-23698.html