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LONDON (Alliance News) - Churchill Mining PLC Tuesday said it continues to be locked in a court case with the Indonesian government over assets in the country, with the next development not due to take place until August, and said it is also now in a regulatory spat after the London Stock Exchange PLC accused the company of breaching AIM rules.
The company reported a USD1.1 million pretax loss for the six months ended December 31, wider than the USD904,000 loss it reported a year earlier, caused by a USD123,000 foreign exchange loss due to the weakening of the pound and Australian dollar against the US dollar, partially offset by a reduction in administrative costs.
Churchill does not currently generate any revenue and is locked in an international arbitration against the Republic of Indonesia at the International Centre for Settlement of Investment Disputes in Washington, US.
The arbitration is related to the Indonesian government's decision to revoke the mining licenses that made up the East Kutai coal project in East Kalimantan, Indonesia, in which Churchill and its wholly owned subsidiary, Planet Mining Pty Ltd, held a 75% interest.
The licenses were revoked after Churchill had taken the discovery through to feasibility in readiness for funding and the start of construction, and the company had appeals against the decision rejected by the Administrative High Court in Jakarta and the Indonesian Supreme Court.
Churchill then moved to file a claim of international arbitration against the Republic of Indonesia for breaches of Indonesia?s obligations under the Bilateral Investment Treaty between the UK and the Republic of Indonesia.
In August, Churchill and representatives from the Indonesian government met to inspect original documents related to the mining licenses to inspect their validity. However, on the same day Indonesian police raided the company's offices in Jakarta and seized a number of documents, computers and back-up drives as part of an investigation into alleged forgery of the documents by Churchill.
Churchill has categorically denied that any forgery has taken place, and said the raid "was strategically timed to harm and prejudice the company's case currently being heard by the tribunal," and filed applications to receive all the material back.
In September, the Indonesian government then made a formal application to dismiss Churchill's claims in the case on the basis of forgery, which Churchill again called it an attempt to "delay and derail" the proceedings.
On Tuesday, Churchill said there will be a hearing to look at the authenticity of the documents in August 2015.
"With regard to Indonesia's allegations of document forgery, the company again categorically denies that it ever participated in or that it was ever in any way involved in the forgery of any documents," said Churchill.
In addition to that dispute, the London Stock Exchange has also commenced proceedings against Churchill amid claims the company breached AIM rules, something that Churchill denies and said the alleged breaches took place "over four years ago".
"Whilst the company disputes the contentions raised by the Exchange and will be defending the disciplinary action which is based upon alleged breaches of the AIM rules which are disputed and alleged to have occurred over 4 years ago, the company has, as a matter of prudence and based on recent history, included within the interim accounts a provision of USD140,000 in relation to any potential fine," said the company.
The matter will now go before the AIM Disciplinary Committee and the company said any final decisions that are made made can be appealed. Churchill said it has been advised that the Exchange will seek to fine and issue a public censure, which is a formal, public reprimand for an infraction or violation.
Churchill said it has been accused of breaking AIM rule 11, which states that a company must alert markets without delay if there's any change in its financial condition, sphere of activity, business performance or its expectations of performance, and AIM rule 31, which states it must have sufficient resources and procedures in place to make sure it can comply with the rules, ensure that all its directors take responsibility for compliance, and it ensures adequate communication with its nominated adviser.
Churchill said the USD140,000 provision made for the Indonesian case may also cover a fine from the Exchange, if issued, but said it may also be higher.
Churchill shares fell 11.5% to 11.50 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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