Palace Resources has been approached by and is in discussions with the owner of the permit immediately to the south of the Lumpo Project in West Sumatra, Indonesia regarding the establishment of a joint venture.

This recent approach gives Palace Resources a further prospect to bolster the current exploration program being undertaken on Lumpo as well as increase its commitment in the area.

The permit to the south comprises a coal production permit over 192 hectares and an exploration permit of 1,686 hectares. It is understood that the coal is of a similar calorific value as the Lumpo coal which is greater than 6,500 kilocalories per kilogram.

Palace Resources has carried out an initial investigation to confirm mine ownership to ensure that it is dealing with the mine owner which has come back positive.

In the event that Palace concludes an agreement with the owner, the company plans to extend its technical due diligence drilling to the neighboring lease with a view to commencing a small production offtake in early 2012.

Earlier this month Palace entered an agreement to acquire Lumpo Resources which is working to earn a 65% interest in the West Sumatran coal project. The production licence covers 922.7 hectares anticipated to be able to produce up to 10,000 tonnes per month immediately.

All environmental and mining approvals have been granted and the project has developed roads and good access to export infrastructure. Only 28 hectares of the permit have been drilled representing just under 3% of the permit area. Samples analysed by the vendor have shown high quality coal with elevated calorific values and low moisture/sulphur content.

(Sourced from www.proactiveinvestors.com.au)