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Churchill Mining shares suspended with crucial tribunal decision imminent

Churchill Mining said its lawyers, Clifford Chance were provided with notice of the ICSID tribunal’s intention to issue its decision on the Forgery Dismissal Application today.
Churchill Mining shares were suspended ahead of a crucial tribunal decision on its claim against Indonesia

Trading in shares of Churchill Mining PLC (LON:CHL) were suspended this morning after the firm announced that a crucial tribunal decision on its US$1bn-plus damages claim against the Republic of Indonesia is imminent.

Churchill Mining said that its lawyers, Clifford Chance were provided with notice of the International Centre for Settlement of Investment Disputes (ICSID) tribunal’s intention to issue its decision on the Forgery Dismissal Application today.

The firm added that, as a result, it has requested a temporary suspension of trading in it shares on AIM from 7.30am today, with restoration of trading to take place after the company makes an announcement on the Tribunal's decision.

Churchill said it will release its notification as soon as possible after it has had the opportunity to review the decision.

The ICSID is an international arbitration institution established in 1965 for legal dispute resolution and conciliation between international investors. The ICSID is part of and funded by the World Bank Group, headquartered in Washington DC.

The firm is seeking compensation from the Indonesian government after the expropriation of the firm's rights over the huge East Kutai coal mine in the country, which was modelled into accounts as having a hefty pre-tax net asset value of US1.8bln.

The world class project could generate 30 million tonnes of high grade thermal coal each year, for an initial 25-year life and generate cash flow of US$500mln per annum.

The legal dispute over the seized asset has been long and convoluted. Proceedings began in May 2012 when Churchill took the case to the ICSID.

Churchill’s 100%-owned Australian subsidiary Planet Mining Pty, which via its 5% shareholding in PT Indonesia Coal Development also held an interest in the East Kutai Coal Project, has also filed for arbitration at ICSID.

Churchill and Planet Mining are seeking damages of not less than US$1.05bn, excluding interest, to settle the long-running dispute.

In February 2014, the ICSID ruled in Churchill’s favour, enabling it to pursue the claim for damages against the Indonesian government.

Four months later, following an independent valuation of the project by experts FTI Consulting, Churchill filed a total claim for damages of US$1.315 bn.

The damages case centres on Churchill’s claim that following its investment in Indonesia, initially supported by the Indonesian government, it discovered substantial coal deposits after which the government took unlawful actions.

International arbitration is often the best dispute resolution choice for investors in the mining sector because it usually removes the dispute to a fair and neutral offshore arena.

In June 2015, the Indonesian government dropped its own fraud claim against Churchill after it accepted that the Ridlatama Group - Churchill’s former business partner - were the sole perpetrators of the alleged fraud at the East Kutai coal mine.

Churchill’s shares were suspended at 36.5p today, having rallied strongly in the year to date since hitting a low of 12.5p in March on hopes for a positive decision from the ICSID tribunal.


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