Churchill Mining (LON:CHL) – SPECULATIVE BUY: Full year results
Market Cap: £42m; Current Price: 28.6p
LBT widens and further details on ICSID proceedings
LBT increased to US$3.2m in FY16 from US$2.8m in FY15, largely due to an increase in administrative expenses.
Net cash totalled US$1m in FY16 compared to US$1.2m in FY15.
In its letter of 9 September 2016 the ICSID Tribunal referred to the 2014 ICSID case of Minnotte v. Poland and invited the parties to comment on this decision and provide views on; (i) the admissibility in international law of claims tainted by fraud or forgery where the alleged perpetrator is a third party; (ii) the lack of due care or negligence of the investor to investigate the factual circumstances surrounding the making of an investment; and (iii) the deliberate "closing of eyes" to indications of serious misconduct or crime, or an unreasonable failure to perceive such indications. The Parties were asked to provide submissions based only on the evidence currently on the record and limited to 15 pages in response to the above questions by 23 September 2016.
Churchill believes that the fundamental principle of international law that underlies paragraph 163 of the Minnotte decision is good faith. This explains why the Minnotte tribunal held that an investor's failure to make enquiries that might (or might not) have detected third-party wrongdoing does not automatically deprive that investor of treaty protection as an investor can fail to make such inquiries whilst still acting in good faith. This also explains why the Minnotte tribunal held that, if the proven facts clearly show that the investor did more than fail to make such inquiries, and instead deliberately closed its eyes to serious third-party criminal wrongdoing, that may vitiate the investor's claim because it may mean the investor was not acting in good faith.
Churchill also believes paragraph 163 of the Minnotte decision cannot however be viewed in isolation. Paragraphs 129 to 140 explain the basis on which the Minnotte tribunal reached the above conclusions.
In response to the Tribunal's first question, Churchill believes that in circumstances where jurisdiction has previously been determined (Churchill's case) a claim can only be found to be inadmissible on some ground other than jurisdiction or the ultimate merits of the case. Accordingly the parameters for the Tribunal to consider in regards Indonesia's objection to admissibility are (i) if any ground of Indonesia's objection goes to jurisdiction, that ground cannot form a basis for a finding of inadmissibility as jurisdiction has already been determined and (ii) if any ground of Indonesia's objection goes to the ultimate merits of Churchill's claims that ground cannot form a basis for a finding of inadmissibility either.
In response to the Tribunal's second question, in looking to determine where the level of due diligence should sit in relation to any investment, Churchill believes that the appropriate commercial benchmark is what a reasonably prudent investor would do in the circumstances. Due diligence is also about reasonably foreseeable risks at the time an investment is made. The record shows firstly that Churchill conducted extensive due diligence (well in excess of that conducted by the investors in Minnotte) including multiple legal reviews on their investments prior to making any investment and secondly that the risk that signatures on mining licences could be forged was not foreseeable throughout the process of applying for and obtaining the Ridlatama licences. Although forensic document authenticity testing may be on an Indonesia due diligence checklist today, there is nothing to suggest that this level of due diligence was required at the time Churchill made its investment in East Kutai.
In response to the Tribunal's third question, Churchill believes that, whilst not defined in Minnotte, the deliberate closing of eyes might be akin to the concept of wilful blindness as it is understood in some national legal systems. For wilful blindness to be established, a very high legal threshold must be met and proven. Firstly it must be proven that the individual person subjectively believes that there is a high probability that a fact exists and secondly it must be proven that the individual concerned took deliberate actions to avoid learning that fact. The record shows that far from closing its eyes to indications of serious misconduct or taking deliberate actions to avoid learning of such indications, Churchill actively pursued all challenges to its mining licences by instigating such actions as police investigations and fully supporting the investigations being undertaken by statutory government bodies such as BAWASDA.
Both parties filed their respective reply submission as requested. In its reply submissions, Churchill argued that Indonesia's Forgery Dismissal Application has devolved to a point where it can no longer credibly be labelled an "admissibility" challenge (as it originally was). Churchill argued that Indonesia's motion is, instead, a broad-ranging objection comprising elements of jurisdiction (which have already been decided), liability and quantum (which are for later stages), underpinned by baseless allegations of forgery, fraud, and corruption. Churchill also addressed the many other legal authorities that Indonesia relied upon in its submission.
Once the Tribunal has considered the Parties' further submissions and replies, the Tribunal will proceed to finalise and issue its decision in respect of Indonesia's Forgery Dismissal Application.
Thor Mining (LON:THR) – CORP: Molyhil update
Market Cap: £1.9m; Current Price: 0.025p
From yesterday: Assay results confirm XRF analysis
Assay results reinforce the prospectivity of the Cattle Track, Gap Track and Think Big targets following the completion of the RAB drill programme at the Molyhil Tungsten Project, located in Australiana.
The Company identified both prospective geology and geochemical anomalies during the programme.
Thor plans additional drilling on each of the three targets in due course.
At Thor’s Pilot Mountain Project, located in the US, an efficient route to increase the in-situ resource at the Project has been identified.
NORTHLAND CAPITAL PARTNERS VIEW: Thor Mining’s assay results have confirmed what the XRF analysis indicated, demonstrating the presence of elevated tungsten at two to three times background levels in the vicinity of the Cattle track target and along the southern margin of the Gap Track target. At Gap Track target, a larger spread of data was collected and an elevated tungsten trend appears to be related to the elevated magnetic response. These results can be considered particularly promising because of the low chemical reactivity and high physical density of tungsten means it does not disperse in the soil and weathered rock profile like more reactive metals such as copper, so the presence of tungsten is positive.
Botswana Diamonds (LON:BOD) – SPECULATIVE BUY: PL135 update
Market Cap: £1.4m; Current Price: 4.8p
Drilling commences
The Botswana Diamonds and Alrosa joint venture has commenced the first phase of a four hole drill programme has commenced on PL135, in the Gope Region of Botswana.
Results are expected in c. twelve weeks.
NORTHLAND CAPITAL PARTNERS VIEW: Prospecting licences 135 is considered a high priority target for new kimberlites by Botswana Diamonds and Alrosa based on geochemical and geophysical anomalies, and has not previously been drilled.