Churchill to produce 20MTPA from E. Kalimantan coal mine

UK Churchill Mining PLC announced on Tuesday that Feasibility Study work on its East Kalimantan Coal Project (EKCP) is complete and has identified the potential to exploit the project's thermal coal reserves at an annual production rate of 20 million tonnes per annum.

Churchill anticipates project construction work at EKCP will start in 2010 and will take two years to complete. It has applied for all the necessary licences and permits with the relevant Central, Provincial and Regional Indonesian Governments to expedite development.

?Churchill's feasibility work found that EKCP is best exploited at a preferred rate of 20 million tonnes per annum. The coal will be transported from the mine, ultimately made up of three open pits, using a 160 kilometre overland conveyor system comprising eight flights at a speed of 5 metres per second,? it said.

Churchill has put the project's infrastructure items (mine stockyard, overland conveyor, port/ship loader and 75-MW power station) out to tender and this process is well advanced, it said. ?To date the bids received have been well under predicted costs due to the resurgence in global manufacturing and engineering capabilities following the Global Financial Crisis downturn,? it said.

Churchill anticipated completion of its tender process and final review/evaluation of the bids by the end of January 2010.

Churchill?s representatives also recently visited 17 companies on India's East Coast to discuss the project and potential off-take agreements. Churchill came away highly encouraged by the growth profile of future Indian coal demand - it was established that India will need a minimum of 100 million tonnes per annum of new EKCP-styled coal to meet expected future energy needs, it said.

The company also said it was reviewing options for the project. "Churchill is still evaluating how best to generate value for shareholders. Our options include the sale of the project or company, the development of EKCP with a joint venture partner or the financing and implementation of the EKCP by Churchill itself. We continue to have discussions with a number of interested parties and the Company hopes to be position next year to announce the results from these negotiations."

Churchill has 75 percent stake at EKCP, which has a 2.481 billion tonnes JORC resource of which 956 million tonnes has been classified as a JORC Probable reserve. Its Indonesian partners the Ridlatama Group hold the remaining balance. (denny)