Churchill Mining up 146% as cleared of fraud

After almost five years spent trying to protect potentially lucrative assets in Indonesia, Churchill Mining finally has some good news. The government there no longer accuses the British company of trying to defraud the state during the application process for four mining licenses linked to the East Kutai coal project in East Kalimantan.

Churchill has spent heavily on coal exploration in Indonesia and had identified a world class thermal coal deposit at East Kutai. But it has struggled to keep a grip on its 75% stake in the project.

Still going through the arbitration process, Churchill had been accused of forging documents, and Indonesian officials claimed that the applications had been rejected at an early stage. Now, however, Indonesian "no longer alleges that Churchill participated in the alleged scheme to defraud the State".

Indonesia's position now is that Churchill's former Indonesian business partners, the Ridlatama Group, were the sole perpetrators of the allegedly fraudulent scheme. "We are pleased that Indonesia is no longer alleging that Churchill participated in any scheme to defraud the State," said Churchill's Chairman David Quinlivan.

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"The results of the production of documents by Indonesia reinforces our view that there is no substance to the fraud and forgery allegations made by the Republic of Indonesia and we look forward to having this issue dealt with so we can move ahead with having our claims determined."

Churchill kicked off an administrative review in September 2010, aimed at protecting the legal standing of the four mining licenses. It was to address "ongoing irregular actions and misrepresentations" by third parties in Indonesia.

In February 2011, the share price collapsed by almost 90% and has sprung to life only sporadically since. However, on Thursday, the shares rocketed from 24p to as much as 59p as the Indonesians dropped fraud charges.

Next step in the arbitration process is simultaneous answers to comments on document inspection and other documents on 3 July, cross-examining of witnesses on 9 July, and a hearing of document authenticity which begins on 3 August.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.