AIM listed mining group Churchill Mining (LON:CHL) and its Indonesian partners the Ridlatama Group, have completed a feasibility study on the 2.73bn tonne East Kutai Coal Project in Indonesia. The two sides said the study had confirmed the technical and economic feasibility of the project and demonstrated that it is a world-class thermal coal deposit. The news was enough to send Churchill’s shares up by 14.5% to 141.5p during the morning.
The project’s investment evaluation, modelled over an initial 25-year period, indicates a pre-tax net present value of US$1.8bn (discount rate of 10%), an internal rate of return of 21% and a payback period of seven years. The study now forms the platform for the next stage in the development of the project and the ongoing strategic process.

Located in East Kalimantan, Indonesia, approximately 160km from the coast, the East Kutai project is ideally positioned as a strategic asset for independent power producers across Asia, particularly in India and China, as these countries expand their generating capacity and need to secure long-term supplies of thermal coal. The project has a 2.73bt JORC resource, of which 961mt has been classified as proven and probable reserves. Churchill has a 75% interest in the project with the Ridlatama Group owning the outstanding 25%.

Paul Mazak, Churchill’s managing director, said: “The completion of the East Kutai Coal Project feasibility study is a significant milestone for Churchill. With the study indicating the project has a pre-tax net present value of US$1.8bn, an internal rate of return of 21% and payback period of seven years, this confirms the project's technical and economic viability. The study demonstrates that the East Kutai Coal Project is a world-class thermal coal deposit which is ideally positioned to supply the growing energy demand from both the Chinese and Indian markets. With the study now completed, we look forward to moving swiftly into the next stage in the ongoing strategic process and bringing this large scale project into development.”

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