PROJECTS
INVESTMENTS
EAST KUTAI COAL PROJECT
BACKGROUND
In May 2007, Churchill reached agreement to purchase a 75% interest in the East Kutai Coal Project from PT Techno Coal Utama. This followed on from an exclusivity agreement which was signed in March 2007 and subsequent due diligence carried out by Churchill.
The original East Kutai Coal Project (EKCP) area covered an area of approximately 575km2, (made up of four blocks), situated 110 kilometres west from the main population centre of Sangatta.
In April 2008, the Company acquired a 75% interest in an additional 200km2 of coal tenements immediately abutting the western boundary of the EKCP, and in particular, adjacent to the current area of intensive drilling and resource calculation work being carried out by the Company. The newly extended East Kutai Coal Project now covers an area of approximately 775km2.
PROJECT HISTORY
The initial project focus was intensive exploration and resource development to confirm the potential of the East Kutai Project as a discovery of medium calorific coal of world-class size.
Drilling initially commenced on 500 metre spaced centres to a depth of between 100 metres and 150 metres, rapidly defining a large north/west-south/east trending coal corridor.
Following the completion of the £10 million capital raising in November 2007, exploration was significantly accelerated with in-fill drilling commencing on 250 metre centres across a 10km by 4km high priority zone. A total programme comprising 65,000 metres of drilling was planned, with an initial objective of delineating 100 million tonnes in reserves and 400 million tonnes in resources by the end of 2008.
The new drilling programme was undertaken with a mix of open hole and core drilling, utilising three drilling rigs and 200 support personnel. The programme was managed by Jakarta-based consultants PT GMT, led by ex-pat Australian, Brett Gunter.
INITIAL 250Mt JORC RESOURCE
In April 2008, Churchill released its first JORC Code compliant Mineral Resource statement for the East Kutai Project - significantly ahead of schedule.
The 250 million tonne JORC coal resource exceeded the Company's initial target of 100 million tonnes by 150%.
Churchill's drilling programme and exploration data was modeled by SMG Consultants under the direction of Senior Geologist, Mr Stephen Barber.
Subsequent to the end of the 2008 Financial Year, continued drilling to the south, within the RTM block, intersected a very thick coal seam with the best intercept being 33.86 metres in thickness in drill hole RTM-098. This follows up previously reported seam intercepts of up to 25 metres in thickness in the same area.
In September 2008 the company announced a new updated JORC resource of 1.412 billion tonnes. The updated resources comprises a Measured Resource of 118Mt (up from 44Mt), an Indicated Resource of 322Mt (up from 73Mt) and an Inferred Resource of 972Mt (up from 133Mt).
2009 YEAR TO DATE (Jorc Resource doubles)
In May 2009 Churchill Mining announced that the global resource at the East Kutai Coal Project (“EKCP”) had more than doubled again to 3.18 billion tonnes of thermal coal. Included in this global resource was the previously reported JORC compliant resource of 1.4 billion tonnes. The balance is expected to be upgraded into JORC compliant categories shortly.
Churchill has now defined a coal system 18 kilometres long and approximately 3 kilometres wide. To date only 30% of the EKCP area has been drilled and the existing resource remains open along strike.
The latest resource update was derived from a total cumulative drilling of 40,900 metres, including 14,200 metres of open hole and 26,700 metres coring in 287 drill hole locations. The drilling focused in the north-eastern areas of the Investama Resources block and the north-western areas of the Ridlatama Tambang Mineral block.
Coal quality in the latest round of drilling is similar to previous drill samples with the coal defined as medium calorific, with low sulphur and low ash content. Churchill believes, given the potential world-class size of the EKCP resource, that the project now has the scale to be of strategic value to major Asian power groups – particularly those in Indonesia, India and China.
Churchill Mining also confirmed that it had recently obtained its approvals and mining licenses from the Indonesian Government.
Due to the large size of the deposit, Churchill is now focusing its mine and infrastructure planning to create a bulk mining operation producing up to 20 million tonnes of coal per annum. The Company has also set a new JORC reserve target of 500 million tonnes to support this production level; the original target was 150 million tonnes.
To date the Company has completed many of the preliminary technical and Indonesian statutory procedural requirements to ensure mining can go ahead. This technical build-up will continue for the balance of 2009 so that the EKCP is ready for project development financing and/or joint venture partnership next year. The Company recently raised another GBP 5 million with sophisticated investors to help finish this build-up.
