I was a bit slow off the mark but bought 150,000 more Churchill Mining (CHL) at around 19p on the anouncement by CHL, which came out at midday. This said that the Republic of Indonesia (ROI) has declined to put up any evidence to support its claim that CHL engaged in forging documents at the time ROI granted a licence to CHL to go for coal in Indonesia. It is reasonable to reckon that there are no other grounds to rebut CHL’s claim. Anyway, this suggests that CHL will get a favourable ruling simply by default next Wednesday 20th April.
Some will immediately remark that the coal price has collapsed and that therefore the award will be much reduced. However, the basis of computation is not on current price levels but on what obtained several years ago. This could mean an award to CHL of several hundred million pounds. Being realistic ROI, if compelled to pay, will no doubt chisel away to get a discount. Even so, CHL should end up with well over £100m net of tax in cash. This contrasts with CHL’s capitalisation of c. £25m at 18p.
Oh, and by the way, if ROI elects to duck paying, CHL can atttach its claim to any asset of ROI it encounters. Just think of all those embassy buildings and state-run aeroplanes. Even if they have been loaded with debt, CHL will still get its money.