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By Michael Taylor
JAKARTA, June 5 (Reuters) - London-listed coal minerChurchill Mining said on Friday that Indonesia haddropped fraud charges against it over licensing of one of theworld's biggest coal reserves, but Jakarta still believedforgery was involved in the coal asset.
Churchill has been embroiled in an international arbitrationbattle since 2012 with Indonesia over the East Kalimantan coalproject, which the British miner says is worth around $1.5billion.
The case revolves around the ownership of the 350-square-km(135-square-mile) mine site in East Kutai that is estimated byChurchill to contain 2.73 billion tonnes of coal reserves.
"They are now no longer alleging that Churchill was part ofany fraud. They haven't withdrawn their allegations that therewas somebody else involved in this fraud," company chairmanDavid Quinlivan told Reuters, citing legal documents.
Churchill's shares jumped as much as 145 percent on Thursdayduring trading in London after the company issued a statementsaying Indonesia was no longer alleging it was involved infraud.
Indonesia's attorney general's office said the officialresponsible for the case was not immediately available on Fridayto comment on fraud charges.
From late 2007 until early 2008, Churchill bought a 75percent stake in Indonesian firm PT Ridlatama, which it saysreceived four mining licences from the East Kutai government,and then spent about $50 million on the project.
But weeks after Churchill announced in May 2008 that theproject could yield substantial coal, Nusantara Group, whichoriginally held six licences in the area, was awarded extensionsto these licences, which Churchill believed had lapsed.
The Nusantara Group was unable to give an immediate commenton Churchill's statement.
Quinlan said there was no fraud involved in the issuing oflicences and permits for the coal asset.
He said Indonesia lodged an application to have Churchill'sarbitration case dismissed on the basis of forgery and thatwithout such a charge its case was weakened.
"It severely dents the Indonesian case that there was anyvalid reason for revoking the licences that Churchill had aninterest in," he said.
The arbitration tribunal in Washington has ordered adocument authenticity hearing scheduled to start in the firstweek of August, the company said.
Churchill has spent more than $10 million on its legal bidand a verdict was previously expected in 2016. (Additional reporting by Klara Virencia and Fergus Jensen;Editing by Ed Davies)
