LONDON (Alliance News) - Churchill Mining PLC on Tuesday said two ongoing disputes resulted in increased spending during the first half of its current financial year, widening its loss, as the company continues to fight its corner the government of Indonesia and the London Stock Exchange.
Churchill's sole asset was the East Kutai coal project in Indonesia, but the government revoked those licenses, leaving the company focused on its attempts to recover the asset and on securing payment for damages.
The company also is fighting a case brought against the company by the London Stock Exchange, which in July accused Churchill Mining of breaching AIM rules between August 2010 and March 2011.
Churchill reported a pretax loss of USD1.9 million in the six months to the end of 2015, widening from the USD1.1 million loss booked a year earlier, as a result of its administrative expenses increasing during the period due to increased legal costs.
The mining licenses that covered the East Kutai coal project were revoked by authorities in Indonesia, meaning Churchill and its local partner, the Ridlatama Group, could not progress the project as planned.
Churchill considers the measures taken by the Indonesian government as "unlawful" and is pursuing its claim against the country in an attempt to secure USD1.31 billion, plus interest, in damages.
The Indonesian government claims that the licenses covering the project were never owned by Churchill or its partner, saying the documents related to the licenses were forged and that the areas of land covered by the licenses were, at all times, owned by companies belonging to the Nusantara Group, an Indonesian firm that is involved in numerous infrastructure projects in the country.
The current state of the case is that Churchill has submitted its latest responses to claims made by the government in December, and on Tuesday Churchill reiterated that the company "expressly deny" claims that it has engaged in any acts of criminality and continues to dispute allegations that its partner engaged in any criminal acts.
Churchill's troubles do not stop there. The London Stock Exchange brought a separate case against the company back in July 2015, and a hearing was held earlier this month concerning allegations that the company breached certain AIM rules between August 2010 and March 2011.
Churchill has not provided details on the case, but the AIM rules supposedly broken are 11 and 31. AIM rule 11 requires companies to notify the market without delay about new developments in the company, whilst rule 31 covers compliance of a company and its directors.
Churchill said Tuesday it disputes the contentions raised by the LSE, and said it has maintained a GBP90,000 provision in its accounts to cover any potential fines resulting from the case, but conceded any fine that may or may not be issued could be considerably higher or lower than that provision.
Both ongoing cases forced the company to raise funds from the market earlier this month.
Churchill shares were trading up 0.9% to 14.00 pence per share on Tuesday. The stock has traded as high as 59.00p in the past 52-weeks.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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