Churchill Mining appoints CFO and forms Indonesian advisory board for East Kutai development

Churchill Mining (AIM: CHL) has appointed Paul Graus as chief financial officer and simultaneously announced it has formed an Indonesian advisory board to guide the group in the development of its flagship East Kutai coal project in the country.
 
Graus has more than 30 years accounting experience with nearly 20 years in the global mining industry, including a number of years in the Indonesian mining sector focused on coal and tin.
 
Graus has acted as an advisor to the board of directors of PT Tambang Batubara Bukit Asam, one of the largest Indonesian coal mining companies, where he assisted management with the financial and corporate restructuring of the business.
 
Before joining PT Tambang Batubara Bukit Asam, he acted as a senior advisor to the board of PT Tambang Timah TBK, one of the world's largest tin mining companies, where he was involved in all aspects of the company's management with a core focus on financial management and preparation for its listing on the London Stock Exchange.
 
Most recently, Graus was group finance manager for First Quantum Minerals Ltd (TSX: FM, LSE: FQM) an international metals and mining company with a market capitalisation in excess of C$7 billion, where he managed the group’s project accounting functions to support the rapid expansion and development of the group's assets towards production. 
 
Prior to his career in the mining industry, Graus worked for a number of leading chartered accountancy firms
 
In support of Churchill's continued development into becoming a major Indonesian coal producer, Churchill has formed a prestigious Indonesian advisory board with extensive experience in high level government positions in Indonesia.  The advisory board will provide Churchill with high level strategic counsel as well as increased access to all levels of industry and government.
 
Dr Alwi Shihab has been appointed chairman of the advisory board. He is the Indonesian president's special envoy to the Middle East, having previously held the position of foreign minister. He has extensive experience in the areas of industry and commerce, having founded a number of companies and having held numerous board positions. Dr Shihab also served as a fellow and visiting professor at Harvard University in 1998.
 
Former attorney general of Indonesia Mr Suhanjono has also been appointed to the body. He has spent over 40 years in various legal capacities with the Indonesian government. His knowledge of the legal framework is unrivalled and his network at all levels is extensive, the group said.
 
Churchill director Faroek Basrewan has been appointed secretary of the advisory board.
Basrewan has held the positions of special aide to the former president of Indonesia, H. Abdurachman Wahid, special staff to the Ministry of Defence and Security and is currently special staff of Dr Shihab.
 
Churchill CEO Paul Mazak commented: “We have been successful in drawing individuals of an extremely high calibre together to form a world-class team with the right mix of technical, corporate and government experience needed to develop the world-class East Kutai Coal Project. We continue to be well placed to accelerate our development programme and create value for our shareholders.”

Astaire Securities mentioned Churchill in its Morning Report, commenting: "Both the appointment of an experienced CFO with relevant mining industry and country experience and the appointment of an Indonesian advisory board will be well received. Both will further Churchill’s goal of becoming a major coal producer in the country."

At the end of April, Churchill signed an MOU with a state firm aimed at establishing a coal enhancement plant on Churchill’s East Kutai property and securing an additional off-take for 5 million tonnes per annum (Mtpa).

The deal was signed with PLN-Batubara (PLN-B), a subsidiary of Indonesian state electricity firm PT Perusahaan Listrik Negara (PLN).  Under the MOU, PLN-B will review the purchase of up to 5Mtpa of coal from Churchill.  This additional coal production would be over and above the 20Mtpa already planned for mining in the northern area the project, significantly increasing Churchill's forecast coal sales.

The partners will establish a joint study group to focus on the use of the PLN's coal drying and enhancement technology (Licol) for use with coal from East Kutai.  Initial testing on Churchill's coal with the Licol process has already successfully upgraded Churchill's sub-bituminous coal to coal with bituminous characteristics, increasing its value.
 
Upon successful conclusion of the review, PLN-B would build an initial commercial Licol coal enhancement plant module of 250,000tpa at its cost, to be followed by additional modules to enable the production of up to 5Mtpa of enhanced coal.

A week prior to announcing the MOU, Churchill appointed Credit Suisse as strategic advisor with regard to the development of East Kutai.  The Zurich-based group is a major player in the Indonesian market and has been involved in some massive deals involving coal assets in the country. The appointment should help turn Churchill into a major exporter of thermal coal to the expanding Asian energy market.

Credit Suisse will work with Churchill to complete a strategic review process, evaluating options for financing the project, which will include the development of East Kutai with a joint venture partner or the conclusion of a long-term off-take agreement.