Churchill Mining PLC (AIM: CHL) announced its maiden reserve for the flagship East Kutai coal project (EKCP) in Indonesia, in which it holds 75 percent, putting the JORC compliant probable in-situ reserve of 956 million tonnes of thermal coal. The news lifted shares in the group by nearly 5 percent in early London trade.
This reserve statement follows the resource upgrade in August 2009 of 1.33 billion tonnes of coal into measured and indicated categories under JORC. A further 1.148 billion is in the inferred category, and 618 million tonnes is to undergo additional work to bring it into inferred status.
Completion of a project feasibility study - currently 80 percent completed – is expected by the end of the 2009 calendar year.
Tenders have been issued for all the main components of the project including the port and its facilities, the conveyor system, service road and power plant, along with all the relevant requirements at the mine site. All bids are expected to be in and reviewed before the end of 2009 so that the feasibility can be completed and the JORC proven reserve defined, the group said.
The reserve report also describes a comparatively low cumulative average strip ratio of 3.6:1, which should result in excellent project economics. Churchill is planning to develop East Kutai into a bulk mining operation producing up to 20 million tonnes of coal per annum.
Its wholly owned subsidiary, PT Indonesia Coal Development, has been selected as a prospective thermal coal supplier to Indonesia's PT Cirebon Electric Power, which is building a 660 MegaWatt power plant in West Java which is due to start operations in 2011.
In today’s statement Churchill did not mention details on approaches it has received for the company and its projects. When it reported full year results last week, on October 22, it said it was still in talks with a number of investment and project financing institutions.
At the end of September it confirmed it had received three separate and unconnected non-binding approaches, all of which at various stages. Two of these approaches related to the possible acquisition of specific projects within Churchill, and the third related to a possible offer for the company as a whole. At the same time it did, however, deny press speculation linking it to BHP Billiton PLC (ASX: BHP; LSE: BLT).