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EAST KUTAI COAL PROJECT - INDONESIA

 BACKGROUND

The East Kutai Coal Project is a world-class thermal coal deposit, with a JORC Resource of 2.730 billion tonnes (comprising measured resource of 693.3 Mt, an indicated resource of 825.1 Mt and an inferred resource of 1,211.8 Mt). A feasibility study was completed in September 2010 with the following highlights:
  • Study confirms the technical and economic feasibility of the Project and demonstrates that it is a world-class thermal coal deposit
  • Investment evaluation, modeled over an initial 25-year period, indicates a pre-tax net present value of US$1.8 Billion (discount rate of 10%), internal rate of return of 21% and payback period of 7 years
  • Pre-tax net cashflow in excess of US$500 Million per annum over the first 20 years of capacity production
  • Proposed 30Mtpa open-pit mining operation producing high-quality sub-bituminous coal over an intial 25-year period, although the reserve base would support a much longer mine life
  • Direct capital expenditure estimated at US$1.2 Billion before indirects (Engineering Procurement Construction Management ("EPCM"), insurance costs) and contingency
  • Low average strip ratio of 3.7 bcm/tonne
  • Operating cost estimated at US$25.10 per tonne FOB (excluding royalty of US$2.32 per tonne)
 
 
Churchill’s feasibility and development work has identified that planned mine facilities at the Northern Pit have the capacity to support a mining production rate of 40-45mtpa.
 
Churchill has been subjected to a negative ruling from the regional Samarinda Administrative Tribunal that sought to ratify the Bupati’s improper unilateral decision to revoke the EKCP licenses. Churchill appealed the decision to the Administrative High Court in Jakarta which dismissed this appeal and has since appealed to the Indonesian Supreme Court who has also rejected the appeal.
 
International Arbitration
Churchill has recently moved to file a claim of international arbitration against the Republic of Indonesia for breaches of Indonesia’s obligations obligations under the Bilateral Investment Treaty between the United Kingdom and the Republic of Indonesia.

GALLERY

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