4th Oct 2007 07:01
Churchill Mining plc04 October 2007 4 October 2007 AIM: CHL CHURCHILL MINING PLC ("Churchill" or "the Company") South Woodie Woodie Manganese Project Project Update and Acquisition by Spitfire Resources Limited Highlights: • Heliborne Versatile Time-Domain Electromagnetic geophysics programme and interpretive work completed • Follow-up Dipole-Dipole IP survey identifies multiple drill targets • South Woodie Woodie project to be acquired by Spitfire Resources Limited - ASX listing in Q4 2007 ("the Disposal") The Directors of Churchill Mining Plc (AIM: CHL) announce a project update toits South Woodie Woodie Manganese Project ("South Woodie Woodie") and thedisposal of 80% of the project to Spitfire Resources Limited which is due tolist on the ASX in the fourth quarter. Project Update Churchill has completed a detailed phase of airborne and ground geophysicalexploration work at its 100%-owned South Woodie Woodie manganese project in theEast Pilbara region of Western Australia in preparation for drilling. Following on from its 6,600km airborne magnetic and radiometric survey over theentire South Woodie Woodie project last year, the Company has used a deepground-probing technology, from Canadian company Geotech Airborne, calledVersatile Time-Domain Electro Magnetics ("VTEM") to target the northern third ofits tenement position. The VTEM survey was flown at a line spacing of 100 metres and 30-metre groundclearance to test for sub-surface conductors. Interpretive work by Perth-basedconsultancy Resource Potentials identified 38 conductive units of which 14 werechosen for immediate follow-up exploration by a dipole-dipole inducedpolarisation ("IP") ground survey. The survey, which was conducted by specialistIP group, Zonge, found that 8 of the 14 VTEM conductors had strong chargeabilityresponses. It is well documented that some of the deposits at the Woodie WoodieManganese Mining Centre have coincident EM and IP responses. Accordingly afirst-phase 7,000 metre RC drilling programme has been designed to test these 8targets. The Disposal Given the increased prospectivity of South Woodie Woodie, and Churchill'sincreasing focus on its Indonesian coal and coal bed methane projects, theCompany has decided to sell 80% of the project to Australian company SpitfireResources Limited ("Spitfire"). Spitfire will have the option to purchase theremaining equity in the project after spending AUD$1.5 million on exploration.Spitfire plans to list on the Australian Stock Exchange ("ASX") via an AUD$4million Initial Public Offering (IPO) later this year. The Disposal will allowChurchill to focus purely on its Sendawar and East Kutai coal projects inIndonesia whilst retaining a substantial stake in Spitfire. The Consideration and Terms of the Disposal Assuming an AUD $4 million IPO, the consideration to Churchill for South WoodieWoodie will be 25 million new ordinary shares in Spitfire, making ChurchillSpitfire's largest shareholder with approximately 49 per cent of the company.Churchill will retain these shares. Churchill will also be entitled to retain a manganese production royalty shoulda mine be developed. The production royalty is price indexed so as to ensureChurchill retains substantial leverage to any future mining cash flow. The Disposal is subject to a successful listing on the ASX by Spitfire. Related Party Transaction James Hamilton and Paul Mazak are directors and shareholders of Churchill andare also directors of Spitfire. The Disposal therefore constitutes a relatedparty transaction (as defined) under the AIM Rules. After careful consideration, David Quinlivan, the independent director of Churchill, having consulted withits nominated adviser, Blue Oar Securities Plc, believes that the terms of theDisposal are fair and reasonable insofar as its shareholders are concerned. It should be noted that Mr Hamilton and Mr Mazak will receive no benefit forbeing directors of Spitfire by way of pre-IPO shares, options or warrants fromthis transaction. Commenting on the rationale for the Disposal, non-executive chairman DavidQuinlivan, said: "Owing to the fact that our primary focus recently has movedtowards our coal projects in Indonesia, we believe that the sale of South WoodieWoodie into Spitfire is a logical move and will ultimately benefit Churchillshareholders. "The City is well aware of the recent increase in the price of manganese and theconsiderable market interest in the acquisition of Consolidated MineralsLimited, which operates the Woodie Woodie Mining Centre directly north of ourground position. As a result of these factors we expect a considerable take-upof the Spitfire IPO from London and Australia which will provide Spitfire withthe funds to develop South Woodie Woodie into a high quality manganese project.This will allow Churchill to carry on developing its coal assets". Churchill's focus remains on its two key Indonesian assets - the East Kutai coalproject and the recently announced Sendawar coal bed methane project - bothlocated in Kalimantan. The Company is currently drilling at East Kutai. To register for a copy of the Spitfire Resources prospectus please look up thewebsite: www.spitfireresources.com In accordance with the AIM Guidelines, Dr Michael G Jones of LithofireConsulting Geologists is the qualified person that has reviewed the technicalinformation contained in this announcement. ENDS Enquiries: Churchill Mining Plc Blue Oar Securities Parkgreen CommunicationsPaul Mazak/ James Hamilton Romil Patel Justine Howarth+61 (0)8 9388 0377 +44(0)20 7448 4000 +44 (0) 20 7493 3713 Olly [email protected] +61 (8) 6430 1631 [email protected] Notes to editors Churchill Mining Plc listed on AIM in April 2005. Its principle operations arethe South Woodie Woodie manganese project in Australia and the Sendawar and EastKutai projects in Indonesia. South Woodie Woodie The South Woodie Woodie project covers approximately 490 square kilometres inthe East Pilbara region of Western Australia. Owned via Churchill Mining'swholly owned subsidiary, Planet Mining Pty Ltd, the project sits approximately400km southeast of Port Hedland in the highly prospective Pilbara manganeseprovince. Churchill owns the project 100%. To date much of the project area hasnever been explored due to the presence of surface cover. Churchill recentlyconducted a versatile time-domain electromagnetic (VTEM) geophysics survey todefine targets for drilling. VTEM is a leading heli-borne technology that candetect conductive mineralisation and related structures to depths of 400m belowsurface. Sendawar The Sendawar project in Kalimantan, Indonesia, covers more than 800 squarekilometres of prospective ground and lies in close proximity to two operatingopen-cut mines: Thai miner Banpu's newly commissioned Trubaindo operation andthe privately-owned Gunung Bayan mine which has been operating since 1998 andproduces approximately 3.4 million tpa. Coal from these mines is transported bybarge via the Mahakam River to the port of Samarinda. In September, Churchillannounced that its project was prospective for coal bed methane and was awardedIndonesia's CBM Joint Evaluation Agreement license. East Kutai Churchill announced on 15 February 2007 that it had signed an ExclusivityAgreement with PT Techno Coal Utama to enable it to conduct due diligence workon the thermal coal project. In May 2007 Churchill announced a sales agreementhad been entered into to purchase a 75% interest in the Project. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Cloudified Holdings Limited