Cloudified Holdings Limited Regulatory News (CHL)

30 Oct 2006 09:36

Churchill Mining plc30 October 2006 CHURCHILL MINING PLC ("Churchill" or "the Company") Preliminary Results for the period 1 July 2005 to 30 June 2006 Highlights Financial - £5.25 million institutional placing (April 2006) Sendawar - Acquired the Sendawar coal project, in Kalimantan, Indonesia (April 2006) - SRK Consulting appointed as Technical Supervisor (June 2006) - Established regional headquarters to service the Sendawar project in Jakarta. South Woodie Woodie - Completed 100% ownership of the South Woodie Woodie project by acquiring final 20% (December 2005) - Completed large airborne geophysics programme (June 2006) - Confirmed drilling of Enacheddong Creek to start in July 2006 Post period highlights - PT Maxidrill contracted to drill an initial 5,000m of diamond core and open holes at Sendawar - Drilling program at Sendawar accelerated with a second drill rig commissioned (September 2006) David Quinlivan, Chairman of Churchill commented, "The programme at the SendawarProject has been aggressive due to the highly prospective targets identified todate. Alongside this, work continues at the South Woodie Woodie project. Thelast 12 months have been extremely active for Churchill and we look forward tothis continuing in the year ahead." Enquiries:Churchill Mining Plc Corporate Synergy Parkgreen CommunicationsPaul Mazak / James Hamilton Olly Cairns Brendan McNamara / Justine Howarth+61 (0)8 9388 0377 +44 (0) 20 7448 4400 +44 (0) 20 7493 3713paul.mazak@churchillmining.comjames.hamilton@churchillmining.com Chairman's Statement It is with great pleasure that I present the preliminary results for Churchillfor the period ended 30 June 2006. When I first wrote to you at this time last year Churchill was a newly-listedCompany looking to grow shareholder value in two ways - first, by exploring itsSouth Woodie Woodie manganese project in Western Australia and secondly,targeting the acquisition of niche resource opportunities in Asia. Twelve months on and Churchill has delivered on both of these objectives. Notonly has your Company continued to explore and refine targets at South WoodieWoodie in preparation for drilling but it has acquired a world-class coalexploration project called Sendawar in Kalimantan, Indonesia. The acquisition of the Sendawar project in April 2006 was coupled with theinjection of new monies into the Company via a well-supported £5.25 millionplacement to London institutional investors. This capital injection ensuresChurchill can support a dedicated physical presence in Indonesia and at the sametime aggressively drill a tenement package covering more than 1000 squarekilometres. Given that Kalimantan is one of the fastest growing coal provinces in the world,Churchill has been careful to fully resource its exploration efforts. TheCompany has established a headquarters in Jakarta, built a modern field camp atsite and now has 15 geologists and 50 support personnel actively traversing theSendawar region. At the time of writing the Company's first drill rig had beencommissioned and a second drill rig and more support personnel were beingreadied for deployment. Churchill's management team has also been careful to put realistic staged goalsin front of the Company. Whilst our geological advisors are very optimisticabout the high value coal exploration prospectivity of the Company's Sendawarproperties, Churchill's first target hurdle is a modest five million tonnes. Atthis threshold the Company believes it can start a profitable trial miningoperation, income from which would be used to further accelerate its drillingprogramme. Most encouraging for the Sendawar coal project is the fact that the outlook forthe thermal coal market has rarely looked better. China and numerous other Asiannations are keenly looking for new sources of supply. Indonesia, via its minesin Kalimantan, is perfectly positioned to fulfill this demand given itsadvantages of proximity to market and superior coal quality. Given thesepositive factors Churchill believes there is much to look forward to in the yearahead. In summary, this past year has been an immensely rewarding period for Churchill- a time in which the Company has grown rapidly on multiple fronts and in doingso has firmly positioned itself to become a future supplier of coal to an energyhungry world. Finally, on behalf of the Directors I would like to thank you for your ongoingsupport of the Company's activities. I would also like to thank our jointManaging Directors, James Hamilton and Paul Mazak, for their untiring efforts. David QuinlivanChairmanChurchill Mining Plc Operating Review BACKGROUND Churchill's business plan is to find leverage points to the rampant economicgrowth being experienced by China and India. In particular, the Company is focused on giving investors exposure to theburgeoning steel and energy sectors of the world's most populated nations. Consequently, in April 2006 after many months of due diligence, Churchillexecuted on this corporate vision and acquired the Sendawar Coal Project in EastKalimantan, Indonesia. The Sendawar project takes in a very large tenement holding (more than 1000square kilometres) in a world-renowned coal province whose production output hasbeen estimated to be growing at approximately 20% per annum. The reasons for this production boom in Kalimantan and the consequent appeal forthe Company are multiple including: - Coal demand for both metallurgical and thermal coal has risen sharply due to unprecedented demand from many parts of Asia. - Governmental mandates to substitute existing oil-fired power stations with coal-fired power stations. - Kalimantan coal has become increasingly attractive to purchasersbecause of its low ash and low sulphur content along with Indonesia's closeproximity to markets; and - Exploration, mining and transport logistics are well understood andnow catered for given the major domestic and international coal mininginvestments made in Kalimantan during the first half of the 1990s and onwards. TRANSACTION & CAPITAL RAISING To acquire the Sendawar Coal Project, Churchill and its wholly-owned subsidiaryPlanet Mining Ltd, acquired the shares of PT Indonesia Coal Development (ICD), aprivate Indonesian Company. ICD controls 80% of five companies which have tenements totaling 106,000hectares in the Kalimantan coal province. The residual 20% interest is freecarried to Bankable Feasibility Study after which the minority owner must eithercontribute or dilute. The consideration paid by the Company was GBP2.75 million which was met via theallotment of 100 million Churchill shares at 2.5 pence per share with theremainder in cash. The Company also paid a commitment fee of US$ 200,000 priorto the acquisition. The shares issued are subject to a one year lock-in period. To adequately fund development plans for the new acquisition the Company raisedGBP5.25 million via the issue of 210 million shares at 2.5p. The Company thencompleted a 1 for 10 share consolidation, resulting in the Company currentlyhaving 44.58 million shares in issue. DIVIDEND The Directors do not propose a dividend. PROJECT LOCATION & NEIGHBOURS The Sendawar Coal Project is located within the Mahakam River area of theKalimantan Coal Province. In the past, most Kalimantan coal developments havetaken place near the southern and eastern coasts. However, near-coastopportunities have thinned as ground positions shrink or are broken-up toaccommodate existing and smaller new local miners. Consequently, larger miners have begun a consolidated push inland, roughlyfollowing the Mahakam River looking for prospective positions large enough toprovide the necessary economies of scale. The Sendawar Coal project is anexample of this; however, it has the advantage of being near proven, world-classmines and in the right geological setting. The project itself lies 50km south of the Mahakam River about 190km inland fromthe coast. The project is located in the same geological setting as theimmediately adjacent Gunung Bayan mine which produces approximately 3.4 milliontonnes of coal per annum ("Mtpa"). The project is also in close vicinity to the newly commissioned six MtpaTrubaindo mine operated by listed Thai miner Banpu Public Company Ltd. Banpu hasbuilt a 20Mtpa coal load-out facility on the Mahakam River to service Trubaindoand another discovery made by the Company called Ekatama. These nearby mines produce high quality thermal coal with high energy (6,000 to8,000kcal/kg) and low ash (