5th Apr 2006 07:01
Churchill Mining plc05 April 2006 5 April 2006 CHURCHILL MINING PLC ("Churchill" or "the Company") Acquisition of Sendawar Coal Project in Indonesia Placing to raise £5.25m Churchill Mining PLC (AIM-CHL) is pleased to announce that it has acquired theSendawar Coal Project ("Sendawar" or "the Project"), a large thermal coalexploration project in Kalimantan, Indonesia. The Sendawar project covers more than 1,000 square kilometres of prospectivecoal ground and lies in close proximity to two operating open-cut mines: Thaiminer Banpu's newly-commissioned Trubaindo operation which is currentlyproducing at a rate of approximately 6 million tonnes per annum; and theprivately-owned Gunung Bayan mine which has been operating since 1998 andproduces approximately 3.4 million tonnes per annum. The Sendawar project islocated approximately 50km from the Mahakam River, the central coal transportartery in the region. Churchill has acquired the Project from PT Indonesia Coal Development ("ICD"),for a value asset consideration of £2,750,000 of which £2,500,000 is beingsatisfied by the issue of 100 million Churchill shares at 2.5p per share and£250,000 in cash. The shares issued to the vendors of ICD ("the Vendors") willsubject to a 1 year lock-in period. The sale and purchase agreement with ICD entitles the Company to an 80% stake inthe Sendawar project, up to the completion of a bankable feasibility study,after which the Vendors are obliged to either contribute to the next stage ofthe Project's development or dilute their shareholding in the Project. ICD willalso be entitled to a royalty once production commences. Churchill's short term strategy is to delineate a reserve on the Project so thatit can begin trial mining with a view to producing immediate cash-flow. Anysuch revenues from this mining programme will then be redirected back into theProject to work towards defining a large resource base that will support amulti-million tonne mining operation, such as those established by its nearbyneighbours. The Placing In conjunction with the acquisition of Sendawar, the Company has raised £5.25mby way of a placing of 210,000,000 new ordinary shares at 2.5p per ordinaryshare with institutional and other investors. Application will be made forthese new ordinary shares and the shares to be issued pursuant to theacquisition to be admitted to trading on AIM. This is expected to take place on10 April 2006. The proceeds from the placing will be used to map and sample coal outcrops andbegin drilling at those areas already identified by the Company as immediatelyprospective. Churchill has assembled a strong team of local and expatriate geologists to runthe exploration programme. The Company is also establishing offices in Jakartaand at Sendawar, the main provincial town close to the project. Ends Enquiries Churchill Mining Plc Corporate Synergy Plc Parkgreen CommunicationsPaul G Mazak / James T Hamilton Olly Cairns Justine Howarth+61 (0) 89388 0377 020 7448 4400 020 7493 [email protected]@churchillmining.com Notes to editors Background to Indonesia and Sendawar Indonesia has approximately 7 billion tonnes of measured coal reserves and 33billion tonnes of measured and indicated resources (source: Barlow Jonker). Themajority of coal produced in Indonesia comes from Kalimantan. Typically, coal mining operations in Kalimantan are either located near the seaor along major river systems. The Sendawar project is located within closeproximity to the Mahakam river via which coal is shipped to the port ofSamarinda. Coal barges used on the Mahakam most commonly range in size from6,000-8,000 tonnes but more recently larger sizes of 10,000-12,000 tonnes havebeen employed. The barges are used to deliver coal to larger vessels unable toload in shallow coastal waters Indonesian coal production and export sales have surged in recent years. In 2004total coal production grew by 14.2% year-on-year to 136.2 million tonnes(source: Barlow Jonker). Tight supply in world thermal coal markets coupled with China's flat coal exportperformance continues to benefit Indonesian producers. Churchill's South Woodie Woodie Manganese Project South Woodie Woodie has three granted exploration licences. These licencescover a total area of approximately 490 km2, in the highly prospective EastPilbara Craton of Western Australia, an area renowned for its proliferation ofmanganese deposits. During 2006, the Company intends to begin a campaign of airborne and groundgeophysics to look at mineral bearing structures "under cover" in its Licencearea. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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