Churchill Mining (CHL:AIM) has lost a $1bn legal challenge for damages regarding a coal mining project in Indonesia where its licence was revoked in 2010.
An international tribunal threw out the miner’s appeal and ordered it to pay just shy of $9.5m in costs.
There are doubts as to whether Churchill can pay this amount given it only had $1.47m cash on its balance sheet at its 30 June year end.
Churchill had been seeking damages from the Indonesian government after losing the rights over the East Kutai coal deposit.
Investors had piled into the stock earlier this year in the hope that Churchill would win its legal challenge and receive a payment significantly in excess of its market cap.
It was a similar situation in 2015 when Oxus Gold tried to fight the government of Uzbekistan for the loss of a project - and it too lost. The former AIM-quoted business went into administration earlier this year.
Churchill’s shares were suspended on 6 December pending the tribunal’s decision. They remain suspended while Churchill clarifies its financial position.
The miner believes there are grounds to annul the decision. It is working with lawyers Clifford Chance to determine the best way to move forward.
Last year, the miner was cleared of attempting to defraud the state while applying for mining licenses by allegedly forging documents.
The tribunal has now found that 34 disputed documents were not authentic, although there were no findings that Churchill or its officers were involved in any forgery.
The tribunal says the forger of the documents was most likely acting on behalf of Churchill’s Indonesian partner, the Ridlatama group, in collusion with someone from the East Kutai Regency.
It has also found the miner’s due diligence during the acquisition of the licences was insufficient.
