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Churchill Mining plc MOU signed with PLN subsidiary

Mon 26th April, 2010 7:00am

RNS Number : 7276K
Churchill Mining plc
26 April 2010

26 April 2010

("Churchill" or the "Company")

Memorandum of Understanding signed with PLN subsidiary

Churchill Mining Plc (AIM: CHL) is pleased to announce that it has signed a
Memorandum of Understanding ("MOU") with a subsidiary of PT. Perusahaan Listrik
Negara (PLN), the Indonesian state electricity firm. Under the MOU,
PLN-Batubara (PLN-B) will review the purchase of up to five million tonnes per
annum (5Mtpa) of coal from Churchill.This additional coal production would be
over and above the 20Mtpa already planned for mining in the northern area the
project, significantly increasing Churchill's forecast coal sales.

A Joint Study Group will be established to focus on the use of the PLN's coal
drying and enhancement technology ("Licol") for use with coal from the East
Kutai Coal Project. Initial testing on Churchill's coal with the Licol process
has already successfully upgraded Churchill's sub-bituminous coal to coal with
bituminous characteristics, increasing its value.

Upon successful conclusion of the review, PLN-B would build an initial
commercial Licol coal enhancement plant module of 250,000tpa at its cost, to be
followed by additional modules to enable the production of up to 5Mtpa of
enhanced coal.

The MOU with PLN-B is part of the PLN's plans to enter into strategic
arrangements to assist the owners of coal concessions to develop their projects,
as stated by the President Director of the PLN, Mr. Dahlan Iskan, "We offer
direct partnerships to develop coal concessions. In this venture PLN will
provide capital expenditure and royalties to [mining rights] owners."

The current plan for production at the East Kutai Coal Project is for a 20Mtpa
mining operation from the 400Mt of JORC Reserve in the planned northern pit.
The other 600Mt of Churchill's 1 Billion Mt JORC Reserve is located in the
planned central and southern pits. Coal supply to PLN-B would come from the
southern pit.

Churchill Mining M.D. Paul G. Mazak commented:

"We are extremely pleased to have signed an MOU with PLN-B. We view PLN as a
very valuable government partner in Indonesia. Additionally, this provides
Churchill with an opportunity to significantly scale up production plans at the
East Kutai Coal Project by a further 5Mtpa, building on our plans to produce
20Mpta. Importantly, a supply agreement with PLN-B would also mean that
Churchill would achieve its Domestic Market Obligation to supply coal into the
Indonesian market."

"This represents a considerable opportunity for Churchill, as the Company seeks
to assess strategic opportunities to move forward with its EKCP project and fast
track development."

For further information, please contact:
| | | |
| Churchill Mining Plc | Astaire | Pelham Bell |
| Managing Director - Paul | Securities | Pottinger |
| G. Mazak | Shane Gallwey | James MacFarlane / |
| +62 81510539186 / | / | Charles Vivian |
| +62 21 39832398 | Toby Gibbs | +44 (0) 20 7337 1533 |
| +61 8 6382 3737 | +44(0)20 7448 | or |
| | 4400 | +44 (0) 7894462114 |
| | | |
| | | |

This information is provided by RNS
The company news service from the London Stock Exchange


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