In a letter to the government, Churchill claims it has been subject to unjust and unlawful actions by a number of parties including the East Kutai Regency and other Indonesian Government ministries.

“Various Indonesian parties, both government and private, seeking to expropriate its legitimate rights to develop the East Kutai coal deposit are in direct breach of both Indonesia's investment laws and Indonesia's obligations under a number of international investment treaties,” it said.

Churchill wants cooperation from senior government officials to help solve the dispute, but if “amicable resolution” cannot be achieved the firm said it will initiate international arbitration against Indonesia.

The East Kutai project is a huge resource with a JORC compliant estimate of 2.7 billion tonnes of coal and a pre-tax net present value of US$1.8 billion.

Churchill acquired the licences in 2007 through an acquisition of a 75% stake in Indonesian group Ridlatama after the previous owner Nusantra failed to extend the licences in 2006 and 2007.

Churchill subsequently discovered the coal reserves in 2008, after which the East Kutai Regency granted an extension to Nusantra’s previous licences.

In March, a tribunal ruled that Churchill and Ridlatama no longer owned the East Kutai project. 

Churchill filed an appeal against this judgement in Indonesia’s Supreme Court in September. 

The dispute relates to alledged breaches of the 2008 investors agreements, it said. 

The agreements are between Churchill's subsidiary, PT Indonesia Coal Development (ICD), and members of the Ridlatama Group.

Churchill said that ICD has received two letters from Ridlatama Group companies, PT Investmine Nusa Persada (INP) and PT Investama Resources (IR), which claim that ICD failed to make initial purchase payments. 

As a result INP and IR were seeking to unilaterally terminate the Investors Agreement with ICD, it added.

However Churchill said that ICD categorically denies the allegations made and says that all payments due for the purchase of its interest in these companies have been made in full, pursuant to the terms of the Investors Agreement. 

“ICD has also referred the two letters received from INP and IR to its solicitors in Indonesia and Singapore and received advice that the INP and IR letters have no legal merit and are ineffective,” Churchill said. 

“Accordingly ICD will take whatever action it deems necessary to fully protect its legal rights in this matter.”

Churchill explained that the IR license holds approximately 6.8 per cent of the JORC resource within the East Kutai coal project and no resources have to date been identified on the INP license.

Additionally the company said that it is continuing with the unlawful act claims against Mr Rinaldi in Indonesia in addition to arbitration proceedings in Singapore against other members of the Ridlatama Group for breaches of the investors agreements.

In yesterday’s financial results, for the twelve months ended June 30, the group revealed that it has now made a full write down of the stalled East Kutai coal project.

Chairman David Quinlivan expressed the group’s surprise at the negative ruling from the regional authorities, at a tribunal in March, which has brought the development of the world class East Kutai coal project (EKCP) to a standstill.

The regional tribunal Churchill sought to overturn a move by a local authority to revoke the licences which host the East Kutai project. The company believes the negative ruling was fatally flawed, because “it did not properly address (and in some cases did not address at all) a number of key issues raised during the hearing”.

A subsequent appeal to the Administrative High Court in Jakarta was dismissed. Churchill is now pursuing an appeal to the Indonesian Supreme Court, and it says it will continue to pursue all legal avenues available.

In today’s results Quinlivan told investors that Churchill will “continue to vigorously pursue its claim for the full reinstatement of its rights in relation to the EKCP”.

“If the company does not receive a satisfactory outcome it may ultimately pursue further claims via the international courts under bilateral investment treaties,” McGeary said in a note to clients.

“(Churchill) continues to lobby at high levels backed by its new major Indonesian shareholders and board members, Mr Rachmat Gobel and Ms Fara Luwia.”

But according to McGeary the key takeaway fact from yesterday’s results is the fact that Churchill still has a US$18 million fighting fund in the bank. 

“Going forward the company is well capitalised to continue pressing its legal case,” he added.

“At present cash burn is predominantly of a legal nature but the company has managed these costs well, utilising its high level contacts and legal teams cost effectively.”

The analyst maintains a cautious view on the stock because of the ‘very uncertain’ legal backdrop in Indonesia. 

“While we point to strong cash backing and significant inherent value of the underlying assets if title can be effectively upheld, we maintain our caution given the uncertain outcome and timeline of legal proceedings underway,” McGeary surmised.

Churchill Mining (LON:CHL) chairman David Quinlivan today said that the legal problems the firm has encountered has brought the ability of foreign companies to invest in long-term, high value Indonesian project’s into ‘serious question’.

In today’s full year results, for the twelve months ended June 2011, the chairman expressed the group’s surprise at the negative ruling from the regional authorities, at a tribunal in March, which has brought the development of the world class East Kutai coal project (EKCP) to a standstill.

The regional tribunal Churchill sought to overturn a move by a local authority to revoke the licences which host the East Kutai project. The company believes the negative ruling was fatally flawed, because “it did not properly address (and in some cases did not address at all) a number of key issues raised during the hearing”.

A subsequent appeal to the Administrative High Court in Jakarta was dismissed. Churchill is now pursuing an appeal to the Indonesian Supreme Court, and it says it will continue to pursue all legal avenues available.

In today’s results Quinlivan told investors that Churchill will “continue to vigorously pursue its claim for the full reinstatement of its rights in relation to the EKCP”.

Churchill revealed that it has now made impairments totaling US$75 million in relation to the stalled project.

It explained that the full group carrying amount of the East Kutai Coal project has been written down to the tune of US$27.89 million, as at 30 June 2011, and it has also impaired its subsidiary investment and intercompany receivables of US$47.12 million. 

Meanwhile Churchill said it remains well funded, with US$18.1 million in bank, to pursue the legal appeal process and continue its strategy to develop value with the East Kutai project.

“In summary the company remains committed to protecting its interest in the EKCP and seeking an appropriate remedy in relation to the EKCP license for its shareholders,” Quinlivan said in today’s results statement.

“On behalf of the board I would like to thank you, our Shareholders, for your continued support and can assure you the directors will continue to work diligently in the period ahead to reclaim the value inherently owed to Churchill.”

START AUDIO

Harry Norman: Hallo. This is Harry Norman for Proactive Investors and welcome to another Proactive audio interview. 

Today is the 27th of September 2011 and I'm talking with David Quinlivan, Executive Chairman of Churchill Mining, listed on the AIM market, mining sector; stock ticker CHL; share price 16.25 pence; market cap 19.65 million pounds sterling; web address churchillmining.com. 

David thank you very much for joining us for this interview.

David Quinlivan: My pleasure Harry.

Harry Norman: Could you provide a summary of the results of the appeal to the Administrative High Court in Jakarta and was there any new information considered to support Churchill’s case?

David Quinlivan: Unfortunately the High Court affirmed the decision of the Administrative Tribunal in its entirety without providing any detailed reasons or basis for doing so. 

The High Court didn’t give its reasoning nor did it deal with the new points raised in the appeal that were not previously raised. Churchill was looking for the High Court to give its own grounds of reasoning instead of simply adopting the lower court’s decision.

Harry Norman: Who does the Administrative High Court believe owns the East Kutai Coal Project David?

David Quinlivan: Harry it was not the role of the High Court to rule on who owns the East Kutai Coal Project. 

The appeal to the High Court in Jakarta was launched to seek to overturn the decision by the Administrative Tribunal in Samarinda, East Kalimantan, in relation to the relocation of the four mining licences that comprise the East Kutai Coal Project. This is the project that Churchill has a 75% interest in. 

Both Nusantara and Churchill contend that they have licences over the East Kutai Coal Project area. There is as yet no clear legal process to resolve directly the priority between these licences. Churchill continues to believe that its claim is valid and to pursue all avenues to demonstrate this.

Harry Norman: Could you provide an update on the current appeal to the Supreme Court of Indonesia?

David Quinlivan: The company filed its notice of appeal for all four cases on the 15th of September 2011 and yesterday lodged the memorandum of appeal to the Supreme Court of Indonesia. 

The company strongly objects to the original ruling of the Administrative Tribunal in Samarinda and remains committed to protecting its interests in the East Kutai Coal Project and seeking an appropriate remedy for its shareholders.

Harry Norman: The Indonesian Supreme Court reviews all relevant information available to it and has a series of prior cases where it overruled High Court decisions. Do you feel that there is a case for Churchill in this instance?

David Quinlivan: There are three grounds for an appeal to the Supreme Court and these are that the judges at the lower courts have 1) not had the authority to hear the case, or the case exceeds their authority, 2) misapplied or violated the prevailing laws, or 3) failed to meet the requirements contained in the prevailing laws which provide for an annulment of such failure. 

The company’s position in the first place is that the Bupati has misapplied the Minerba Law and good corporate governance. 

This is also a ground for the current appeal. The Samarinda Administrative Court and the Jakarta High Administrative Court have misapplied the same law in rendering their decisions. 

While it’s difficult to anticipate the Supreme Court’s decision we believe Churchill has a credible case to submit to the Supreme Court. 

Harry Norman: How confident are you that the company will be successful in the Supreme Court and do you have an idea on the likely timeframe for a decision?

David Quinlivan: Harry the company strongly disagrees with the original Administrative Tribunal decision and has sought and followed legal advice of international and Indonesian counsel in relation to protecting its interest in the East Kutai Coal Project. 

While it’s difficult to anticipate the Supreme Court’s decision following its assessment of the facts, Churchill maintains its argument that the [Bupati] has misapplied the Minerba Law and good corporate governance in revoking the licences and we’re hopeful that the Supreme Court will agree with Churchill’s position. 

At this point we don’t have any indication on the likely timeframe but will keep shareholders advised as appropriate.

Harry Norman: For the appeal do you intend to follow the same strategy for the Supreme High Court as you did for the Administrative High Court? And if yes do you think the outcome will be different and if so why?

David Quinlivan: The strategy is essentially the same. That is we will be rebutting all decisions of the Samarinda Administrative Court and the Jakarta High Court. 

It’s difficult to predict the outcome. However since the judges at the Supreme Court are generally more senior and have more experience than the judges at the lower court we’re hopeful that they will come to a different conclusion than the lower courts. 

Harry Norman: Is there a successful precedent for your case?

David Quinlivan: Harry we’re not aware of any precedents that are similar to our case from a mining perspective. However there is precedent for plaintiffs who’ve won at the Supreme Court despite the fact that they’ve lost in the lower courts.

Harry Norman: Who are Nusantara and can they now legally take possession of and develop the East Kutai Coal Project David?

David Quinlivan: Harry we understand Nusantara is an Indonesian group that held exploration KPs over similar areas to the East Kutai Coal Project and that these Nusantara licences had expired prior to the granting of the licences to Ridlatama. These are the licences that Churchill has a 75% interest in. 

More recently the [Bupati] issued exploration IUPs to Nusantara which are valid for two years with one year granted for exploration phase and one year granted for construction phase. 

There appears however to be a period of over two years during which the Nusantara Group does not appear to have had any valid licences around the East Kutai Coal Project area. 

It appears that Nusantara was granted some type of extension to the original licence in 2008; two years after Nusantara’s original licence had expired. 

Churchill believes that its licences relating to the East Kutai Coal Project take priority over Nusantara and the extension granted to Nusantara in 2008 should not have been issued. Churchill continues to consider appropriate avenues to address this point. 

Irrespective of this the company still has a presence at the East Kutai Coal Project site and regular involvement with the local community.

Harry Norman: If the appeal to the Supreme Court is unsuccessful, what’s next? Is there any possibility of claims using a bilateral international treaty?

David Quinlivan: Should the company be unsuccessful the company would look to be seeking a judicial review of the Supreme Court decision. 

The company would also review its options in relation to international arbitration and where necessary instruct international counsel to conduct a thorough and detailed review of the company’s investments in Indonesia to determine if it’s a qualifying investment under the relevant bilateral investment treaty.

Harry Norman: On the more important note of restoration of licences, is there still some possibility that this would – or could – be settled out of court? If so, is this still the case?

David Quinlivan: Harry at this point there’s no progress on any out of court settlement but we’ll certainly keep shareholders informed if there is any such development. 

Harry Norman: Are Churchill’s new Indonesian shareholders assisting with the legal processes and with any processes outside the courtroom David?

David Quinlivan: Harry our new Indonesian shareholders and Churchill board members, Rachmat Gobel and Fara Luwia, have been assisting the legal process and advising various levels of government in relation to the issues that Churchill faces. They continue to be active in supporting the work towards a favourable outcome for Churchill in the East Kutai Coal Project. 

Harry Norman: Could you provide more information in relation to the legal dispute with the Ridlatama Group? What have they allegedly done wrong?

David Quinlivan: The dispute relates to alleged breaches of the investors’ agreements entered into between Churchill’s subsidiary PT Indonesia Coal Development and members of the Ridlatama Group. 

Churchill believes that the Ridlatama Group has breached various provisions of the investors’ agreements including warranties in relation to the East Kutai Coal Project not being the subject of any third party claims. 

Churchill will pursue legal action in both Indonesia and Singapore against the Ridlatama Group, its shareholders and its principals, in accordance with the dispute resolution provisions contained in the investors’ agreements. 

While Churchill’s claims against Ridlatama relate in part to information that emerged in the Administrative Tribunal hearing earlier this year, the claims do not prejudice the appeal of the Administrative Tribunal decision that’s currently in progress. 

Harry Norman: Have all relationships now broken down with the Ridlatama Group completely?

David Quinlivan: Harry Churchill and Ridlatama have both rejected the conclusions of the Administrative Tribunal and continue to work together in relation to the current appeal to the Supreme Court of Indonesia.

Harry Norman: If Churchill Mining is successful in its action with the Ridlatama Group what outcome will actually be achieved and have you any idea how long this may take?

David Quinlivan: Churchill has sought to recover monetary compensation against the Ridlatama Group. If successful, Churchill would be able to enforce any award or judgment for monetary compensation against the various members of the Ridlatama Group. 

Proceedings before Indonesian courts and arbitral tribunals in Singapore may take up to one year to conclude and for decisions to be obtained.

Harry Norman: What is the approximate cash burn on the legal cost and what is Churchill Mining’s current cash position?

David Quinlivan: Harry the company has incurred legal expenses of approximately 1.4 million US Dollars for the period from January to June 2011 in relation to the Administrative Tribunal action and subsequent appeals. 

The company remains well funded with 19.7 million US Dollars cash on hand as at 19th September 2011. 

Harry Norman: Could you advise on what is happening with the project and with securing land between the proposed mine and the port? Are there any current activities at site or is everything on hold David?

David Quinlivan: Harry we continue to look at the various options in relation to securing land between the proposed mine and the port but there’s been no substantive progress on this. 

The company still has a presence at the East Kutai Coal Project site and regular involvement with the local community but there are currently minimal operational activities at the East Kutai Coal Project site.

Harry Norman: Can you explain to shareholders why options at 50p were awarded to the directors and management of Churchill?

David Quinlivan: Harry the issue of incentive options to directors and management has always been and will continue to be part of our normal remuneration policy. 

The directors have included a reasonable premium over the prevailing share price and the level of options issued as a percentage of shares on issue remain well within institutional and investor guidelines.

Harry Norman: While the legal proceedings continue is Churchill mining evaluated any other projects or assets David?

David Quinlivan: Harry the company remains open to considering other projects or assets but has not conducted any recent evaluation with management’s time being currently focused on resolving the issues with the East Kutai Coal Project.

Harry Norman: Remember Proactive Investors is not an investment advice service. Make sure you register at proactiveinvestors.co.uk for our weekly newsletter which will keep you informed about our articles, interviews, and events. Thank you for listening. 

END AUDIO

The group’s primary asset is its 75 per cent stake in the ‘world class’ East Kutai coal mine development project in Indonesia’s Kalimantan region.

The future of the project, which hosts 2.73 billion tonnes of coal resources, is in uncertain because local authorities say that Churchill do not have the right to develop the project, after the East Kutai Regent requested that the firm’s licences are cancelled.

The planned East Kutai mine would have a net asset value of around US$1.8 billion, however at the current share price Churchill’s market value is just under £25 million. 

After two failed appeals in Indonesian courts - first in a regional tribunal and then in the High Court of Jakarta – Churchill is now planning an appeal to the Indonesian Supreme Court.

Today the group loaded an English translation of a report relating to the High Court Decision onto its website. The report spiked interest among investors and the share price gained 2p a share, over 10 per cent, to trade at 21p.

Separately in a note to clients Andrew McGeary, analyst at Churchill’s house broker Northland Securities, maintained a cautious stance on the stock but pointed out the stock’s potential for a rebound.

“The £23m market cap (prior to today's rise) reflects a modest £9.6 million premium to cash at £13.4 million suggesting there is potential for a strong rebound if the company is able to alter the verdict at the Supreme Court, or if some sort of compromise can be reached on the assets.”

Churchill Mining (LON:CHL) told investors that it has delivered a ‘notice of dispute’ to its minority partner, the Ridlatama group, and several related individuals.

It said that the dispute relates to alleged breaches of agreements between Churchill's subsidiary, PT Indonesia Coal Development, and members of the Ridlatama Group.

“Churchill believes that the Ridlatama Group has breached various provisions of the investors agreements.  Ridlatama now has the opportunity to resolve the dispute within 30 days,” the company said.

“If there is no resolution within 30 days, Churchill will pursue legal action in Singapore against the Ridlatama Group, its shareholders and its principals in accordance with the dispute resolution provisions contained in the investors agreements.”

The AIM-listed firm owns a world class coal mine development, the East Kutai project, but it has stalled in recent months due to a legal dispute with local authorities – who tried to cancel the four licenses that host the project. 

In March a regional tribunal rejected Churchill’s attempt to have the cancellations officially expunged from the record.  

The following month Churchill told investors that Ridlatama received letters of rejection, for applications for two of the four licences, back in 2010 however Churchill had not been made aware of this prior to the tribunal.

An appeal will be heard by the Administrative High Court in Jakarta.

This morning Churchill said that the claims against Ridlatama, which relate in part to information that emerged in the Administrative Tribunal hearing earlier this year, do not prejudice the appeal.  

“Churchill and Ridlatama have both rejected the conclusions of the administrative tribunal,” the company reiterated.

The group recently brought on-board two influential Indonesian businessmen, Rachmat Gobel and Fara Luwiam, through a share subscription. The two new investors have also taken seats on the board. 

The stock purchase was viewed as a significant endorsement of the company and the potentially world-class East Kutai coal project. 

In June chairman David Quinlivan said: “Although Churchill is already well funded, the constructive injection of capital, and the associated premium paid, demonstrates their support for the project.  In addition, we are excited that Mr. Radke is joining the board and bringing to Churchill the depth and breadth of his corporate, legal and market expertise."

                 ------------------Adds share price and broker commentary----------------

Churchill Mining (LON:CHL) told investors that its new Indonesian investors have been appointed to the board of directors.

Between them the two Indonesian executives, Rachmat Gobel and Fara Luwia, have bought just over 19 million new shares in the company. 

They were purchased at 40 pence each – a 60 percent premium at the time of the agreement – and the deal means the pair own around 16 per cent of Churchill.

The stock purchase is viewed as a significant endorsement of the company and the potentially world-class East Kutai coal project – which has become entangled in legal problems.

"We remain delighted to gain the reach and experience of Mr. Gobel and Ms. Luwia as they join us, both as investors and board members,” chairman David Quinlivan said.

“Although Churchill is already well funded, the constructive injection of capital, and the associated premium paid, demonstrates their support for the project.  In addition, we are excited that Mr. Radke is joining the board and bringing to Churchill the depth and breadth of his corporate, legal and market expertise."

The placing of new shares with the two new investors raised £7.7 million, which will be put towards the development of the East Kutai project.

The cash will see the company through a tricky period of its development as it fights a legal rearguard over its East Kutai coal project in the East Kalimantan region of the country. Indeed analysts believe the two influential business people Churchill has brought on board could provide some much needed local expertise. 

Rachmat Gobel controls a well-known and highly respected Indonesian company, called PT Gobel International, which has an impressive track record of partnering international companies, Churchill said.

Gobel a director for several companies and he is also vice chairman of the Advisory Board of the Indonesian Chamber of Commerce and Industry, the vice chairman of the Employers' Association of Indonesia.

Luwia is the president of PT Goldkey Property, which handles large commercial property and land deals in Indonesia.  

Churchill also revealed that Pala Investments – one of Churchill's largest shareholders – has appointed Gregory Radke to represent it on Churchill’s board. Radke will be a non-executive director.

The market’s response to today’s update was positive, with the shares rising 2.5 pernce, or just over 5 per cent, to 50 pence. It builds on a rally that has seen the stock almost double in value in the past three months.

“Whilst Churchill had previously established an advisory board, the direct involvement, in a non-executive capacity, of Mr Gobel and Ms Luwia in particular adds more direct local experience,” said Andrew McGeary, an analyst at City broker Northland Securities. 

“This looks to be key in resurrecting confidence and driving the project forward. 

“Given the additional shares, the company looks to have a market cap of around £58 million, which represents a good recovery from its lows of £18 million. 

“While we welcome the move we retain our caution on the shares given the uncertainty surrounding the on-going legal case over the title of the East Kutai assets.”

Churchill Mining (LON:CHL) told investors that its new Indonesian investors have been appointed to the board of directors.

Between them the two Indonesian executives, Mr Rachmat Gobel and Ms Fara Luwia, have subscribed for just over 19 million new shares in the company. The shares were priced at 40 pence each – a 60 percent premium at the time of the agreement – and they represent around 16 percent of the enlarged share capital.

The subscription was viewed as a significant endorsement of the company and the potentially world-class East Kutai coal project – which has become entangled in legal problems.

"We remain delighted to gain the reach and experience of Mr. Gobel and Ms. Luwia as they join us, both as investors and Board Members,” chairman David Quinlivan said.

“Although Churchill is already well funded, the constructive injection of capital, and the associated premium paid, demonstrates their support for the project.  In addition, we are excited that Mr. Radke is joining the board and bringing to Churchill the depth and breadth of his corporate, legal and market expertise."

The placing raised £7.7 million in new capital, which will be put towards the development of the East Kutai project.

The cash will see the company through a tricky period of its development as it fights a legal rearguard over its East Kutai coal project in the East Kalimantan region of the country. Indeed analysts believe the two influential business people Churchill has brought on board could provide some much needed local expertise. 

Rachmat Gobel controls a well-known and highly respected Indonesian company, called PT Gobel International, which has an impressive track record of partnering international companies, Churchill said.

Gobel a director for several companies and he is also vice chairman of the Advisory Board of the Indonesian Chamber of Commerce and Industry, the vice chairman of the Employers' Association of Indonesia.

Luwia is the president of PT Goldkey Property, which handles large commercial property and land deals in Indonesia.  

Churchill also revealed that Pala Investments – one of Churchill's largest shareholders – has appointed Gregory Radke to represent it on Churchill’s board. Radke will be a non-executive director.

Churchill Mining (LON:CHL) has confirmed that its appeal has now been filed to the Administrative High Court in Jakarta.

The group has been caught up in a major legal battle over the future of its flagship East Kutai coal mine development after an attempt by regional authorities to cancel the licenses that host the project.

Previously the East Kutai Regent (Bupati) - an authority that governs the East Kutai administrative region of Indonesia's East Kalimantan Province - had purported to have cancelled the four mining licenses. 

Churchill subsequently referred the matter to administrative tribunal in Samarinda – the capital city of the East Kalimantan province. It was an attempt to have the original cancellations officially expunged from the record because they considered that the Bupati had violated a number of administrative protocols.

In March the Samarinda tribunal ruled against Churchill.

This morning Churchill confirmed that its Indonesian partner Ridlatama has filed Memoranda of Appeal with the Administrative Court in Samarinda and the appeal will be heard by the Administrative High Court in Jakarta.

Churchill said that the Administrative High Court will advise the parties of its decision in due course.

Meanwhile, Churchill said it will continue to monitor the appeal process and it will make announcements to investors as and when it becomes aware of further developments.

The AIM-listed firm’s chances at appeal received a major vote of confidence recently as two new Indonesian partners invested £7.7 million and subscribe for shares in the company.

Analysts believe the two influential business people Churchill has brought on board could provide some much needed local expertise. 

Northland Securities analyst Andrew McGeary said that Churchill shares are still trading at good ‘recovery levels’ under the circumstances.

“The company has rallied strongly since its private placement with a local investor raised £7.7m. We welcomed this move which provided a much needed fillip,” McGeary said in a note to clients.

“However, we view the legal process as high risk and therefore maintain caution on the shares which, despite some weakness yesterday, are trading at good recovery levels under the circumstances.”

Shares in Churchill Mining shot up more than 40 per cent in opening deals after it was revealed that the group is bringing on board two Indonesian partners who are subscribing for £7.7 million-worth of shares.

Paul Mazak is stepping down as managing director of Churchill Mining  (LON:CHL)  to focus on the company’s Administrative High Court appeal in Indonesia, it was revealed today.

David Quinlivan moves from non-executive to executive chairman and will take day-to-day control of the company.

It has been a turbulent two-and-a-half-weeks for the company which has been fighting a legal rearguard in Indonesia.  

A  regional administrative tribunal  ruled against the company, which has been trying to protect the legal standing of its mining licences for the East Kutai coal project – a 2.73 billion tonne coal resources. 

Churchill has already announced it is appealing the decision.

In a short statement to the stock exchange this afternoon it said: “Churchill wishes to announce the following changes to its board of directors and management structure.

“Mr Paul G Mazak will step down as Managing Director and from the Board to initially focus on assisting Churchill and its Indonesian partners prepare for the upcoming Administrative High Court appeal.

“Mr David Quinlivan, currently non executive chairman of Churchill, will take over the day to day running of the company as executive chairman.”

No further details were given. 

However in a recent interview with Proactive Investors, Quinlivan said: “We have always maintained, and have Indonesian legal advice to the effect, that the EKCP licences remain valid at this point in time.”    

The bounce saw the stock recoup some of the lost ground from Friday’s session, in which it slumped from 90.25 to as low as 26.75 pence a share, after it revealed the details of a legal setback to the development of the world class East Kutai coal project in Indonesia (Read More).

This afternoon it told investors that it is not aware of any specific reason for today’s share price movement.

Meanwhile it reiterated that it continues to evaluate its legal options, including an appeal to the Administrative High Court in Jakarta.

Additionally it also reminded investors that it continues to talk to prospective partners for the development project (Read More).

At 15:20 on London's AIM market, Churchill shares were up 10.5 pence, about 40 percent, changing hands at 37.25 pence each. 

The East Kutai Regent (Bupati) - the authority that governs the East Kutai administrative region of Indonesia's East Kalimantan Province - had purported to have cancelled the four mining licenses in 2010, Churchill revealed.

It had subsequently referred the matter to an administrative tribunal in Samarinda, as an attempt to have the original cancellations officially expunged from the record because they considered that the Bupati had violated a number of administrative protocols. Churchill said today the tribunal ruled against the company.

Churchill stressed that it strongly disagrees with the decision and it is evaluating options to remedy the situation - including an appeal to the State Administrative Tribunal in Jakarta. 

“At no time during this process has Churchill considered the EKCP licenses cancelled or invalid,” the company said.

Importantly Churchill also said that proceedings before the Samarinda Administrative Tribunal ‘do not constitute an action that will immediately affect the substantive rights of the owners of the EKCP Licenses.

The decision by the Samarinda Administrative Tribunal is not final and binding as a matter of law until after all appeal avenues have been exhausted, it said.

Churchill went on to say that the validity of the licences has been confirmed on at least two separate occasions.

Firstly it said that an independent state agency, known as The BPK, and the East Kutai Police have upheld Ridlatama and Churchill's mining rights in relation to the licenses.

Secondly it said that: “the Administrative Tribunal, the Ministry of Energy and Mineral Resources' Head of Legal and Legislative Affairs gave expert testimony that the ministry continued to regard the EKCP partners' licenses as legally valid and enforceable, as no cancellation decree has ever been lodged with the ministry as is required by administrative protocol.”

“Though disappointed by the Administrative Tribunal's decision, Ridlatama and Churchill remain committed to remedying this unfortunate situation and will perform a serious and exhaustive evaluation of legal options,” Churchill added.

“The Administrative Tribunal has only concluded in the last couple of hours, and there is currently only a verbal report from the Company's counsel available.”

Churchill will update investor once it has received a written report from the tribunal and it has reviewed this information in conjunction with its lawyers.

Giving details, Churchill said the issue centres around a letter from the Ministry of Forestry to the Regent, which advised of the cancellation of the licenses after it received reports from residents that the partners had carried out mining activities leading to the damage of forestry areas.

However Churchill said that it ‘strongly protests’ this and it emphasised that neither partner has ever done any mining at the EKCP site.

Furthermore it said that the communities around the site have never made such a complaint.

Churchill highlighted that the company's claim was substantiated by a sworn Ministry of Forestry affidavit from the chief of the local Dayak cultural council that affirmed that local land owners have found the partners to have never performed any illegal activities and to have acted responsibly at all times.

“This evidence was presented during the Administrative Tribunal proceedings.

Finally, Ridlatama and Churchill note that the licenses that make up the EKCP, which were issued by the same Regent in 27 March 2009, lie outside forestry areas, and therefore are not subject to Ministry of Forestry oversight,” Churchill added.