15.10.08 - 12:25 Uhr
 

15th October, 2008 CHL:AIM

CHURCHILL MINING PLC

("Churchill" or "the Company")

UPDATE ON EAST KUTAI COAL PROJECT & COMPANY FINANCES

Churchill Mining Plc, the Indonesia focussed mining company with a JORC resource of 1.4bn tonnes of thermal coal at its East Kutai Coal Project ("EKCP"), is pleased to provide an update on the project including the expansion of the feasibility study to accelerate bringing the project into production.

Fast Track Production Priority

The Company has progressed well in fast tracking the development programme for the East Kutai Coal Project to bring the first stage of the mine into production by the end of Q4 2009.

To that end, heavy equipment has been brought into the area to clear access and speed up the drilling programme. In addition to this, to complete the intense in-fill drilling programme ahead of schedule, all drill rigs have been moved to the mine pit. This phase of the drilling programme will also include the aerial survey of the resource area in order to convert the inferred resource to the measured category.

Project Finance and Cash

Churchill has a strong balance sheet position with 7.2m of cash in the bank. The directors believe that this will enable the Company to complete its present programme which has already resulted in significant exploration results and the expectation that the project can be brought into production ahead of its original schedule.

Even in light of the fast tracking of the EKCP development programme, the Companys expenditure rate has been less than budgeted due to the consistency and efficiency of the exploration programme.

On completion of the feasibility study, further capital will be required by the Company to bring the project into production. In addition to discussions with three international investment banks regarding project finance, Churchills Managing Director and technical staff are accompanying a number of non-banking investment and coal groups to the EKCP site during October, as part of their due diligence investigations on the project. The Directors are confident that production capex funding will be available to the Company and further announcements will be made when negotiations and agreements are finalised.

Additional Haulage and Infrastructure Options

The feasibility study is progressing well with the appointment of Technical Director John Clayton to manage the process. In light of the large resource tonnage and the potential life of mine reserve being much higher than originally anticipated, Churchill is assessing a number of haulage options and routes. These options include opening discussions with other potential users of such infrastructure in the region and the building or utilisation of multi-user port and transport facilities.

Under Mr Claytons direction, the Company is completing much of the preliminary feasibility work in-house. Engineering firms and construction companies have been short-listed for the next phase of the project development and an appointment will be made in due course.

Coal Enhancement

The Company will be investigating a number of treatment processes that have the potential to move the energy content of EKCPs thermal coal from the current range of kcal 4700 - 5600 ADB (Air Dried Basis) to over kcal 6000. This would enable the Company to achieve additional pricing for its thermal coal. A decision on whether to proceed with this enhancement process will be made in due course.

Paul Mazak, Managing Director of Churchill Mining commented:

"Not withstanding the current global financial turmoil, there is still plenty of capital available for the right projects in the right sector, with investments into coal and energy at the top of the list. Churchill has been working with a number of diverse parties in regard to potential joint ventures, off-take agreements and the funding of the EKCP mine and infrastructure development; many of whom are now visiting Jakarta and the project site with their advisors. The Company will work with these interested parties with the aim of selecting a partner who not only provides a solid financial backing for the project but also provides the greatest upside for Churchill and its shareholders."

Candice Sgroi
Associate Director

+44 (0)20 7743 6376 M +44 (0)7894 462 114

NO 1 CORNHILL LONDON EC3V 3ND
FAX +44 (0)20 7743 6671

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