Churchill Mining: Rumours & the Silent Oxus Plc

The value of rumours is often misguided. Tullow's more recent alleged buyout by Statoil is a) very unlikely and b) after significant drops in the Tullow share price.

Its alleged in Indonesia, that Churchill's Jurisdiction isn't something they can leverage off and it was merely utilised to impact on costings for Churchill and play the 'game'. There's a number of people expecting news very soon, some have said this week, but I'm sure Churchill, like Rurelec, would let the market know if they had been informed of a decision. For me, the position or news will present another trading opportunity, this is a long game and trading the stock offers more opportunities to increase position or derisk whichever is your tonic!

What appears totally under the radar is the Oxus Plc Case, there's a number of impacts upon Oxus, not only are the shares verging on Confetti and the issuance is on a regular basis rather than doing a one off placing, admittedly their administrative expenses are low with around 75K per month but I'm curious why they are this high with 3 Directors/Senior Management. I do hope their broker fees are minimal and all other costings, such as PR, as there's not exactly much work required.

Oxus is due its hearing for International Arbitration this year, as per Oxus Plc's Preliminary Results announced on 17th May 2013  they state early 2014, I assume by that they mean Q1 of 2014. The company, whether I like the funding arrangement or not, have no issues save for the Lease Agreement and Convertible bond. The Lease agreement (Atlas Copco Customer Finance AB for exploration equipment) is due for review this Month (Jan 2014 for those that need to look at their watch). Interest is 7.5%, so assuming a rolling over of this agreement. The interest rate was reduced from 8.7% but  the cost of the lease agreement should be reclaimable as well. I am surprised there is not a claim on insurance for this equipment as it amounts to Theft, so is one to assume that one million dollars worth of equipment was not insured?

The main consideration is the repayment of the notes $16,886,000 (copying and paste from Oxus Gold PLC Half Yearly Report 12th September 2013), if not converted at 12p per share, is the earlier of 14 December 2015, or the date on which the proceeds of an award, settlement or other realisation for value in the arbitral proceedings are received by the Company, or 60 calendar days from the date on which the proceedings conclude or terminate in the case where no payment is receivable by the Company. Interest payable at UK LIBOR + 3% per annum and falling due on or after 6 July 2012 is accruing but remains unpaid, and is convertible at the option of the note holder at the average closing middle market price of the Company's ordinary shares for each separate 6 month interest period to which that portion of interest relates. 

Oxus's case is like Rurelec's in that they had an asset that was taken away and as such due compensation. The case it terms of difficulty isn't that problematic, what will be is establishing the value in light of the current gold price. After all discounts there's still upside, on the current SP. 

Any award has the near $17.977M to deduct before Oxus can pay shareholders, excluding the litigation funding %'s, so we'll call that $23M in total to date (excluding the third party funders percentage of claim). So there's a long way to go before shareholders get a return but there should be a significant piece of the action left. 

Atb Fraser