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.”