Churchill Mining - Determination

Churchill Mining April 25 2013 14:45

Clearly able to move on little volume. Anyone body think it's likely to be a placing at 28+. My estimation was they needed around £2M min. So perhaps they're doing it at a good enough premium for most people in the past 2 years.

Interesting Question - What's Churchill Mining worth if they lose?

Simplicity the value of cash plus other holding at the point in time that their claim is not progressing/failed.

So if it's this Nay, there's about 3 pence currently.  If it's any point thereafter I'd say a penny or thereabouts but the important part is those in before March 2012 should now be free carry. If you're not then more fool you as there's been plenty of opportunity to make significant money; even the most foolish of traders can/could have made 200% (2fold) on Churchill Mining and have significant stake/shares left. If this is not the case and you're holding out, then there's no point in even being worried about the failure as you'll just write it off.

For many, there came a perfect opportunity trade twice in the recent spike and the third time it will pay to sit tight and relax; well that's what I'm doing until post the Jurisdictional Issues (read as clarification).

Trade as and when you feel its necessary but don't rush to buy back. We've been fairly open about removing the significant risk and taking a large % of the profit. This does not mean I am not confident about the May Jurisdiction Issues or end result, more that as a prudent investor you have to take profits. Not sit there waiting for people to tell you what to do whilst it goes up and down.

A contrarian viewpoint from the Investor Show 2013

Lucian Mier at the UK Investor Show 2013 - Watch from 20 mins in to see the description of Churchill Mining's 'only' asset the reasoning behind the shorting. It's good to understand the perspective differences and with this in mind it should enable you to remove cream from the trade at opportune moments to derisk and wait.

Like other types of companies Churchill Mining is waiting on key news; initially the jurisdictional issues need resolving in a little over two weeks on the 13/14th May (Churchill Mining (AIM: CHL) reports its interim results for the six months ended 31 December 2012. (Press Control + F and type May into your search box for reference).

Now some may consider this high risk; my view having completed a mock trial with a group of people is the Jurisdictional Requirements have been met by Indonesia's Actions (or lack of) and as such the International Arbitration Panel has a duty to hear Churchill's claim. With this comes volatility in which to reposition yourself/derisk; 'just' in case there  is  a ruling against CHL in terms of jurisdiction.

When to take confidence in the process?? Is it misguided?!?! Not in our view!

RNS Number : 1080D

Oxus Gold PLC

24 April 2013

Oxus Gold plc

("Oxus Gold" or "Company")

Holdings in Company

Oxus Gold announces that it was notified yesterday that the shareholding in the Company of Mr A F Gibbons represents in excess of 7% of the issued share capital of the Company.

Following acquisitions of ordinary shares in the Company on 22 April 2013, Mr Gibbons now holds 32,241,600 ordinary shares in Oxus Gold, which represents 7.22% of the issued share capital of the Company.

Contacts:

Oxus Gold plc Richard Shead, Chairman	Tel: +44 (0) 207 907 2000
SP Angel Corporate Finance LLP Ewan Leggat/Laura Littley	Tel: +44 (0) 20 3463 2260

                

This information is provided by RNS

The company news service from the London Stock Exchange

END

HOLUSARRORASUAR

Mr Gibbons now holds 32,241,600 ordinary shares in Oxus Gold

Rurelec: Finally have investors gone through the transcripts??? Understanding the Issues including IRR? (Investment Rate of Return)

This may not be long lived, but clearly an indication people have spent sufficient time going over the transcripts. What say we to $105M Remember there's costs, so it'll work out a bit less.

Having been buying for near 2 years, anyone whom has followed an appropriate buying strategy and traded at peaks should be near 6 fold up as of today. When going through the audio-recordings did anyone spot the 'valuation that was suggested?' It was suggested around $123.3M if you do the maths...I suspect someone has done their's. 

Disappointingly, only three comments on the 'issues' Evil Kinevil (Simon Cawkwell) has missed and been somewhat inaccurate in his commentary. His understanding (or lack of) on the purpose of International Arbitration is shown in his terminology and discussion of the 'facts'. One respondent is eating or has eaten a Bacon Sarnie as their prize, the other went to the pub...two were politely inform the contributors to stick this domain up our...many thanks. That is why we have moderation that cannot be avoided.

The reason why international arbitration claims are misunderstood & investors should do their own research

            Evil discusses insanity, shareholders disclosures, Churchill Mining, Rich Ricci and the races... (ref: T1PS page )

Can anyone spot the inaccurate information relating to Churchill Mining the Evil clearly doesn't understand. Likewise he's taken a short position. So in essence, he's betting on the Jurisdictional Issues Indonesia will be arguing are correct...please see the Australia BIT agreement that was posted the other day. (Australian Indonesian BIT Agreement ) Now, I'm not saying he won't profit but his reasoning behind why he's taken a short is incorrect. 

Interesting to see the naivety even by a professional investor. Ian or I (Fraser) wont be telling you answer, but I'd appreciate some people posting to show some understand. You can remain anonymous and there's no prize bar a well-done!

So Evil has gone short at 21pence...hmmmm

Hopefully Ian has worked out how to copy and paste now!

Forgot to paste this...thank you to D for the information nice to see the site working properly.

Jurisdiction & Possible Issues

From the discussion point raised regarding Jurisdiction, it's worth noting the following case and articles:

Tribunal Determines Chevron’s Ecuador Arbitration May Proceed The case overall, has similarities between Churchill's in terms of attempting to rectify the matter through the Respondents (Country's) Legal System.

What people need to read around jurisdiction as well is important, not only through previous commentary but also here: INTERNATIONAL INVESTMENT LAW AND ARBITRATION citing significant cases. It's noted Indonesia has a 'history.'

More recently there was an article by Kent Phillips a Partner at  Berwin Leighton Paisner INTERNATIONAL ARBITRATION - Churchill/Planet arbitration claims against Indonesia which covers the issues of Jurisdiction and more importantly some of the successes and failures, albeit he does not cover which cases failed to prove jurisdictional entitlement; these will be look at these at some point. It's still important to have an understanding.

Australian Indonesian BIT Agreement which covers the protection that should  have been afforded Churchill Mining. Remember they're bringing it under the Australian International Arbitration Agreement.

All of which assist in understanding the issues/including some case law in the commentary of Investment Law & Arbitration.

What is it about 'the return of licenses' or the suggestion of it?

What is it about 'the return of licenses' or the suggestion of it?

Ian, I am totally perplex with the messages/emails asking for commentary about the return of the licenses. The opportunity was within the Indonesia Legal System that was devoid of impartiality and openness. So much so they ignored their own laws, policies and mandates and ruled against what was a clear cut case.  The Government of Indonesia inventing 'issues' aided with the conspiracy or alleged fraud of parties involved with the licenses including the other company associated with a politican and former presidents daughter.

So what does this rhetoric mean? It's simple...the odds of a return of the licenses is now 'nil' due to a lack of 'trust and confidence' in the Country for Churchill to do business or be treated fairly. As a result compensation is the only way forward as Indonesia has failed to negotiate a solution, restitution will be in the form of financial compensation (my view). This is also backed up with the various legal precedence I have given out for people to refer to.

Honestly, if International Arbitration or the simplistic understanding isn't your bag, sell up take your profits and go where things are more complex. International Arbitration couldn't be easier to understand and the processes within it. Remember Rurelec didn't agree with the Jurisdiction but opted for the Hague instead..  

Yet more reasoning for why Bulletin Board's are damaging intelligence and investments; perhaps they should give out a Muppet award for post of the week/month! The irony being is if all investors worked together on various elements and issues, they could try the case and assess the viability of an investment. I have with the assistance of others...albeit I'm not legally qualified, this still gives me some faith in process and whom has been appointed to make the Churchill claim etc...

Apologises for the abruptness but it's better to hear it in clear thought and mind...those inferring the likelihood of a reward of the licenses are in essence betting against the entire Arbitration System. That doesn't mean it couldn't happen as part of a negotiated settlement but is very unlikely.

No proof-reading this evening it's a late-on!  

LSE: RUR (Rurelec Plc) Hearing (audio-recordings) of 2-9 April 2013

LSE: RUR (Rurelec Plc) Hearing (audio-recordings) of 2-9 April 2013 vs. Bolivia

Will be good  to take notes whilst they go through it - cannot get close to the mill than this without being in attendance

Day 1 (02 April 2012) RUR vs. Bolivian Government - please note the negotiation / justification of claim at the start discussing investment and justification of claim. Also discussion about the issues including 'group consultation. Also laying out the process and agreeing on expert witnesses. Article 49 - Wanting a discount rate of the claim for lump sum payment and also justification about the 12% discount of claim. Also "importance" of the independent assessment of the valuation, whereby Bolivia wants the documentation to remain confidential, assuming it's not in their favour. IRR (Investment Rate of Return),

Document R44 Expropriation Insurance Policy: There has been no insurance policy, as Bolivia tried to utilise this (our view) to avoid paying sum.

Wow, they're actually stating that RUR shouldn't have invested because they knew it was a bad country (will double check this). Should the Claimant be entitled to the IRR that has been outlined. Liquid Capital Countribution and Debt: They want to know the ratio equity ratio allowing for Debt...Fairly standard housekeeping.......they're arguing why they should pay a capitalist valuation Articles 4,5,7,8 no mention of the Clause 8: Solution of debt to be resolved within 6 months which Bolivia has not completed. They're arguing the difference between energy capacity and actually demand: interest concept!

Rate of Return (Internal) and Discounted Rate of Return 25-30% would have been likely. Stating they would not have invested if the IRR wasn't 25-30%. Up to 23mins 30 seconds

Day 2 (03 April 2012) RUR vs. Bolivian Government

Day 3 (04 April 2012) RUR vs. Bolivian Government

Day 4 (05 April 2012) RUR vs. Bolivian Government

Day 5 (08 April 2012) RUR vs. Bolivian Government

Most important understanding of the case with closing arguments and review

.Day 6 (09 April 2012) RUR vs. Bolivian Government Very hard to scroll through the recording but try and get around 7 mins 35 Seconds for final pleas. "In the course of the week Bolivia's case has evaporated...." Bolivia's defence is based on the value of the company/assets being Zero (yeap they believe it was zero) so why did they nationalised it? Especially if it was worthless? No input allowed from the claimant and purely was a strategic document to utilise to settle the claim. Totally impartially (NOT) confidential document that should not be revealed. Basically a secret report (For Bolivian Government) to help them in negotiations and 'claims' a value of ZERO. Bolivia abandoned their own report of the valuation of zero (couldn't make it up). Fair market value compensation, "the standard for measurement is the 'willingness of the buyer'. Most elements are irrelevant to and immaterial to the case, the liquidity issues (cashflow) are clearly showing a valuation C224 (Accounts), profits were $12.6M Dollars in 2011. Claimants provided witness of facts rather than opinion; mainly RUR associated parties.

Scroll forward to 4hr 14mins with various suggestions of misrepresentation of final claims and incorrect projections. (Bolivian Government Counsel) They're suggesting that the 'demand' is immaterial and then wished (wanted) to cross examine the witnesses 'after' their opportunity.

Carbon credits are now $50 a tonne, previously $14 a tonne. Seems Bolivia have put forward a case that's more one to blur the issues rather than acknowledge the pertinent issues and resolution.

Bolivia Government forecasts black outs but in 2018 so should disregard certain forward looking statements, hilarious! So in essence, don't invest in Bolivia, everything is worthless? Even Bolivia have admitted that Guarachi was viable, but suggest turbines are worth nil?? 

Sounding like a claim of $110M-$142M settlement...??!?

Just a note from my perspective and having spoken with Fraser, it's noted there was some 'suggestion' that defence Counsel had changed because of a conflict of interest on the boards. Our view is that person was just making statements or trying to manipulate the process or information for their own benefit or at the very least had the information totally wrong. This is a lesson about BB commentary...

All that glitters is not gold

From Fraser when we were discussing Mining Stocks. I thought it was excellent analysis and as a far better trader than I - I thought id share his views

What the market missed about the latter end of 2011, was the degree of leverage over Gold & Silver physical derivatives and other exchange traded products. When looking at the price of a product, the 'only' true price is one that meets demand with "true" speculation built in (meaning unleveraged). Gold has for a long time had a declining leverage, for which most people/funds have ignored for whatever their reasons.  The final elements leveraged to buy gold are closing quicker than planned, thus the drop…this also presents an opportunity to long as these positions close, albeit catching a falling knife.

When leverage starts to decline and margins need to be increased, or funds are margined out or put under-stress generally the speculators a) cut their losses and close positions b) close positions to protect profits or c) increase their margins. The latter is a point of denial, for which the likes of Paulson are now suffering. Having chosen to ignore all the indicators that he suggested were evident within the financial system, it's now showing he doesn't understand the indicators of "gold stabilisation" and a real price being determined for precious metals.

Not only does the Gold drop have an impact on speculators, it also promotes people to 'run' to safer stocks that infer dividends. Gold, it has been assumed will show vast returns and people have naively invested in gold companies assuming those returns will come in the form of profits. When in reality there is a stark differential between Gold and a Gold Miner, 90%+ of all the risk is with the Miner with little of the upside.

Why people have opted and become fixated with Gold Mining Companies is anyone's guess, perhaps a misguided belief that if gold is going up, then Gold Miners should. History has rarely shown this to be the case, with monies leveraged during "commodity" gold rushes. The danger is for those leveraged and with higher cash costs that they are unable to see any form of financial return.

Very little work is put into companies analysis of 'true capital and cash costs' where they find themselves in a bear/falling market having bet on a leverage asset that will struggle in the depreciating environment.

Paulson believes gold is an inflation protector, this is at the very least naive and best a weak justification for large exposure. The only elements that truly protect against inflation are items grown for food or industry. So people should have been purchasing land rather than gold as this is the base model.

When people realise the difference between a Miner and a Commodity, they'll perhaps essentially admit why they should not have been in the Miners since late 2010. Hindsight is a wonderful thing, but generally the 'signposts' for those not in denial is clear very early on. All the signposts were there…leverage reducing, costings increasing, supply increasing and demand reducing…Including other items such as “more cash required for day-to-day living” thus less to invest in the likes of gold. Remember investments are based on a hierarchy of needs, as Maslow suggested, but with a few twists!

I fail to see why people are investing in companies with such poor Investment Rate of Returns. There are good companies out there with 25%+ IRR but not often commented on and avoided by speculations betting on high risk (but without the ability to assess what is high risk). Petropavlovsk (LSE:POG) being a prime example. Investors or Funds don’t understand the model, because most are only moderately qualified to do so. This is why I prefer more historic results and higher returns towards the 80+ percentile per annum including investment in International Arbitration Claims.

Likewise, people need to look at essential products and minerals, such as Iodine and Lithium etc...where demand is outstripping supply significantly.

Possible upside to Oxus Plc

Kyrgyzstan starts sale of disputed gold deposit As reminded to me today by CN, appreciated! Found here: Oxus Plc Final Results for the year ended 31 December 2011 please look under 36. Contingent asset...quoted below

"In May 2007 the Group disposed of its interests in Kyrgyzstan (the Jerooy project), Turkey and Romania to KazakhGold Group Limited. KazakhGold is contracted to pay additional consideration of up to $80 million conditional upon KazakhGold or a nominee acquiring a licence to mine, or acquiring a Company or entity that has the benefit of a license to mine, the Jerooy deposit and commencing development or production at this site. No amounts have been recognised in these financial statements for this contingent asset. There have been no changes to this position known to the Company."

Unlikely to be recovered any time soon in my view, however potential upside, say 3 years down the road?

Press Commentary about Churchill Mining

Churchill Mining shares lifted as arbitration proceedings move on (Proactive Investors) - Came in via Google Alerts 

The recent sharp increase in the share price of Churchill Mining (LON:CHL) suggests investors are now dialling into the potential of what could be a bumper pay-out for the mining company if arbitration proceedings go its way. 

Our view is it has nothing to do with new investors 'dialling' into the arbitration proceedings. If you look at how the stock is held, there's nothing much under 40 pence and even allowing for derivative impact of long and short contingent, the stock is tightly held. Even a small position of 400K would move the share price significantly. 

Shares trebled in value since the middle of last month to reach a high of 33.25p. 

Yes indeed and also enabled people to take cream off the table and add it again in a matter of days!

They started their journey upwards after an interim results statement at the tail end of last month, which updated investors on the primary focus of all the company's current energy: its ongoing claim against the Republic of Indonesia.

Nothing to do with the Interim Results, just a mere coincidence and a good push!

"The firm is seeking compensation from the Republic after the expropriation of the firm's rights over the huge East Kutai coal mine in Indonesia, which has been modelled as having a pre-tax net asset value of a whopping US1.8 billion. The project could generate 30 million tonnes of high grade thermal coal each year, for an initial 25-year life and generate cash flow of US$500mln per annum. The legal dispute over the asset has been long and convoluted and the stock exchange statement on March 22 outlined the key moments in the case past, present and ahead." Old hat but at least it's a good reminder

People are urged to read the issues outline in the March 22 statement Churchill Mining Interim results for the six months ended 31 December 2012

...edited noise out...

Notably, the case is now entering a "critical phase", says house broker Northland, and a key hearing will be one in Singapore beginning May 13 that will deal with the challenge from the Republic that the arbitration tribunal does not actually have jurisdiction to hear the firm's claim for compensation.

Amazed at the lack of editorial comment about the Arbitration Jurisdiction... links awhile back include how Bolivia opted for another option.

If this milestone hearing goes Churchill's way then the chance of recovering funds for shareholders improves, the broker reckons.

Wow, you would think it's that easy wouldn't you!?!?! How are Indonesia going to challenge the jurisdictional elements? For the lesser versed, it would pay to read all the cases that have been provided previously.

Other significant factors are that the company's Australian subsidiary Planet Mining Pty, which holds an interest in the coal project, has now also filed for arbitration at ICSID, and the case is now a single proceeding.

As stated awhile back that the cases would be joined.

For the six months to December 31 last year, Churchill posted a loss before tax of US$4.5mln, compared to a loss of US$ 6.4mln in the same period a year earlier.

It remains well funded to pursue the arbitration, having US$6.2 million in the bank.

Estimate (pending on cashflow) is around $2M short, which CHL should do as an open offer so everyone can benefit!

"The board will continue to focus on seeking a suitable remedy for shareholders and I thank shareholders for their continued support and will update on the company's progress during the second half of the year."

The world class East Kutai Coal project has a JORC resource of 2.730 billion tonnes, which consists of a measured resource of 693.3mln tonnes (Mt), indicated of 825.1 Mt and inferred of 1,211.8 Mt. Old hat again

Feel free to comment further...

What does not need to be known about International Arbitration Claims

Good Morning *Assuming Ian posts this in the morning. As you've no doubt guessed, this isn't Ian this morning: I've compiled this and emailed it to Ian after some silly questions from idiots emailing me about Rurelec. Silly because they're rather immaterial and treated with some sarcasm...

Question: When will the settlement be paid?

Answer: It doesn't matter, stop worrying about what is really unnecessary as the Market will price the award in and then its time to sell and move on. If the market doesn't price the award in, then continue buying as per previous arrangements, don't get greedy! That's what I'll be doing...but you don't have to! After all it's your money not mine!

Question: What if Bolivia don't pay?

Answer: Not one country has gone against the Arbitration Ruling and not paid. It's a huge big sign around a Country's neck about Bond Prices, confidence to do business/invest and latterly any assets outside the country can be seized. This makes trading very difficult default unlike government bonds.

Question: What about other information we don't know? Such as the amount? 

Answer: Well work on a worst case scenario and price that in per share and if it offers 100% upside or more then it's viable as a risk/reward.

Further commentary includes...but I've waited ages? Can I wait until the end result to buy and what happens if it fails. 

They're all simple...all investments take time unless you're chasing a ponzi type scheme. You may be able to wait until the award is announced (ruling) but the risks of paying are a higher price for having more known variables are not always worth it. Finally, if it fails, the company becomes a shell company and you've pretty much lost what you've put in. Simple due diligence reduces the likelihood of this though...and trading the stock before proceedings are finalised is useful. They're rarely settled by compromise agreement...there's a possibility on CHL though!

I was reading the post as well, its good to see people paying an interest in this type of investment. 

Personally I've been buying and selling RUR over the time frame because it was clearly not in Bolivia's vested interest to settle early. Why would they, it's clear they nationalised the business (more certainties than CHL) it's clear  they have to pay, the only 'risk' is the amount of the award (in my view). So work on the basics and it's really simple...unless of course you want to make it complex by looking for questions and statements that HAVE NO BEARING ON A CASE. For me, I'll explain...I personally believe that RUR is worth around £95M post settlement. On the news I dare say if it spikes I'll take some and then if it goes stupid, I'll sell all. I wont have regrets at making stupid amounts of returns over the 3 years.

Remember, anything you read here is NOT an offer or invitation to buy, it's sad that I/Others have to put the Dumb Dumb statements on, but all the same it's important buyers/sellers take responsibility for their own purchases and sales. Likewise, challenge what is being said, research it, do your own so to speak. Don't forget prices go down more than they go up! Likewise, this is my opinion which is based on my own reading and isn't to be taken as a guarantee.

Atb Fraser

Stocks referred to are LSE: RUR (Rurelec) & LSE: CHL (Churchill Mining)

Rurelec's Filings

Hope everyone had a good weekend! I had a few friends visit in London to christen my new pad! It certainly was christened, today I'm suffering the cobweb effects of Alcohol to excess.

So what's happening in the world of International Arbitration for AIM today: http://www.investegate.co.uk/rurelec-plc--rur-/rns/transcripts-of-the-final-hearing-against-bolivia/201304150700103134C/

Now, I've reliably worked out that the payment should be in full...however what I work out and the reality may be very different. The Carbon Emissions Credits may not stand the test in Court but were worth claiming, because it was a secondary business and will depend on whether Bolivia were claiming them...

Now there's a lot of misconceptions for Rurelec's claim, arising mainly because people don't actually understand the process. When at panel/court, there has not been one case where the assets (unless saleable/moveable such as capital Equipment) have been returned to the Claimant (Rurelec) by the Respondent (Bolivian Government). Now what concerns me is, people are inferring this may happen...perhaps even is more likely. They have a belief that RUR in this case is suing for their assets back...that option expired by the time they got to court, so not it's a straight financial settlement. Well you could argue it expired when Bolivia did what they did...showing a clear illegal act in BIT terms.

I spent sometime going through the board commentary with a friend, some may have read his BB years back before idiots started reading, FJP73/Fraser. The chaps unfortunately known me 31 years this September. Fraser, he now works for a small company that use his derivatives expertise in the mining sector. He may comment from time to time in my name, having been attending and studying International Arbitration claims in detail since before Rurelec and attends most conferences on it...enough of blowing smoke up him! 

What would be interesting for Churchill holders is to review the documentation and issues that RUR have. Remembering that there's a difference in claim between CHL/RUR. Now remember, there's a risk CHL have their license returned at this stage, unlike RUR, whose chances of having their assets returned are 'near to nil' as the faith and confidence in the country has been eroded by the Bolivian Governments actions (please note the Terminology).

Now when looking at the similarities, there's a stark difference that CHL attempted to utilise the local law process to have the assets returned to them. So there's an argument they have a weaker case, however, my view is that it strengthens their claim as they tried to resolve the matter utilising the Native process available which further compounds their claim/the fraud or alleged wrong-doings.

Once the jurisdictional issues have been resolved, then CHL's claim becomes 'safer' there are a few issues at hand or should I say risks. That no investor has been able to review the licenses directly, however I'm sure CHL's legal team have and would have advised no further action if CHL couldn't prove entitlement to licenses etc...

So I'm taking the CHL evidence in good faith, knowing/believing they have excellent legal representation and if it can be shown they have a claim to the licenses then they'll win. It's as simple as that...likewise Indonesia protesting too much I have to take as a sign of...ermmmm...guilt (perhaps?).

When people have had time to review RUR's claim and positives negatives, I'll cover more on it... 

Rurelec & the Overlap

There appears to be significant overlap between Rurelec investors and Churchill.

Assuming Rurelec hit the Twenty Pence Mark or thereabouts I envisage some further exposure for Oxus Plc and Churchill Mining. My reasoning is simple, investors will gain a better understanding of the process and have more faith (read as blind faith for a few idiots on BB's).

For clarity, I have been involved with Third party Litigation Funding directly and in directly for a number of years. I would encourage people to look at What Calunius, Juridica and Burford do and also review their results. I'm biased as I have a shareholding there as well...

I'll have a moan for awhile as well..what is up with Bulletin Boards? There used to be a quality about them, analysis, discussion and a belief in discussing risks. It is appalling to see trollers, rampers/derampers and people that post purely without being risk aware. 

Consider the above, then answer me this question...when has a Company failed in its Arbitration Claim that's 'rights have been impacted by a Government's inefficiency either by Nationalisation, lack of protection of rights or a deliberate failure to enable 'freedom to do business? I'm not going to answer it because when people learn the risks, they'll actually realise how good International Arbitration Claims are for an investor! 

For the limited readers I have, which is nice, I actually want you to consider the above properly...I'd also like you to consider when BB's have lost you money and why they should not be used...have a good evening!

Why the price movement up to 10th April 2013?

This is from someone that I invest with and whom understands litigation stocks very well. Not legally qualified in International Arbitration but an excellent investor. Information about Indonesia I have supply. As a reminder, this is not an invite to buy, sell or make financial decisions on information in this blog. It's merely my view point...sad that caveats have to be applied to common-sense but required for ones own protection.

It's quite hard valuing 'litigation or Indonesian stocks'; you could pick a point on the CHL chart below and argue any valuation in the past 3 years. Just look at BUMI Plc. What exactly was their boardroom level investigation into 'cash issues' really about? Was it a motivation to assert blame for the dire performance of the company?? Or is Indonesia so corrupt even the majors find it hard to do business there even with 'an alleged' good Indonesia Partner?

So from the price movement, people (whether Institutional or Private Investors) believe CHL has a value above the previous 2 years and is identical to what happened to Oxus Plc (LSE: OXS) *(whom we also have significant exposure from 0.7p). Volume is well up, so perhaps people are understanding these stocks more. With Rurelec in the news, as well as Oxus there's likely to be a knock on across similar types of companies. 

My view point in valuation is; can the company show they had a 'legal right to own the asset.' Contrary to the crap you read around Bulletin Boards, which are predominantly by Trollers or over-exposed idiots, it's very simple. Did the company clearly show they had a legal right to own, development and eventually operate the asset(s)? Remembering, that in most foreign countries it's a Commercially Operation Service agreement or similar. Whereby the asset or right to mine is retained by the Government and not the company. The company (CHL) merely apply to 'prove up the asset' (Exploration License or similar), then if feasible, apply for a Mining License (Operation or Service License). You'll note Churchill were exploring and not mining nor logging (as one court Judge would have you believe). 

It's my view, Indonesia know they have done wrong and should have protected the rights of Churchill Mining and related associates/parties. The Government has knowingly tried to sweep it under the carpet, with a final attempt at 'gagging' Churchill to stop informing 'others.' The reason being the Government of Indonesia knew full well what damage they have done to their mining business; with projects stalled, postponed or abandoned together. Australia Companies are reminded regularly to 'be aware of the risks.' Similar in essence to the UK and US contingent. Now why would you want 'Churchill Gagged'; they don't want people knowing what the Indonesian Government have done? Surely not...

So to put it simply (I am simple); Churchill Mining have lost their licenses despite there being clear cut evidence to show they were entitled and legally the rightful owners (albeit not 100% share). Churchill attempted to protect their 'rights to these mining licenses in an Indonesian Court to licenses with clear cut evidence but failed even on appeal.' The Government has allowed this to happen and not protected the Investment of a Foreign Company's Rights to do business (Key component of a BIT Claim). Now to add insult to injury, the Government of Indonesia have allowed the licenses to be "given" back to the Nusantra Group. This is despite there being clear evidence Nusantra relinquished their right to the licenses previously...does it sound 'fishy' to you?

Strange isn't it that once Churchill Mining had found a 'vast' resource of Coal, that Nusantra Group (and/or Subsidiary) suddenly 'starts protesting' that it was theirs all along. They couldn't even evidence that they were appropriately proving up a resource, had any intention of mining nor had legal right to the licenses. By the actions of a few Indonesian's, Churchill had their licenses 'stolen' from under their feet and now they've been re-awarded to an Indonesian's Ex-Politician's Company, whom strangely is married to a daughter of a previous president? So for me the proof is already there, albeit it's assumed...I am sure CHL can show they had legal right to the licenses and as such the Government should not have awarded to any other company, but protected in their legal right to do business.

Valuation is a tricky one, as I do not see $2B being paid but would be happier with say $300-500 million (£200-£330 million $1.5 to £1 rate). The risk is 'if' Churchill can't show they had a legal right to the licenses etc...which I the legal Due Diligence at the very start of the case would have established; as this is a primary part of a claim. So in assuming that 'legal are well-qualified and good advice has been received' then going to International Arbitration is the only way of asserting their legal rights for Churchill.

There are rumours that Indonesia want to settle, figures hear are around $300 million but more than likely it's the exposure in the papers whetting the appetite of international arb risk takers. I envisage another spike upon Rurelec's (LSE: RUR) settlement for the Nationalisation of the Combined Cycle Power Station in Bolivia (a much simpler case that CHL's as the asset was developed, producing and more importantly, the company was called back in after the Bolivian's blew it up (not quite but damaged it). Likewise, Oxus isn't far off a ruling either!

I won’t be discussing the "what if the Government doesn't pay the awarded compensation" as the damage to the Country would be more significantly damaging than the 'act of re-appropriation / re-allocation of Churchill's Licenses.' The same with Rurelec and Oxus...likewise it’s clear what the downside risk is…my view is £6-9M Market Cap as a shell company with tax benefits.

Currently valued today at £40M (Mkt Cap) or 32 pence a share...the longer time buyers should be 3-4 fold in profit with cream off the table after the last spike!

April 2013 Churchill Mining.

Churchill Mining

Posts to Date: Churchill Mining

Churchill Mining March 2013