Mining minnowChurchill Mining(LSE: CHL) issued an update today regarding the progress of its arbitration caseagainst the Government of Indonesia.
The updateconcerned the recentdocument authenticity hearing, which was heldbetween the 3rd and 10th August. The hearing included a number of expert witnesses and oral presentations. All ofthe witnesses for Churchill and related parties whomIndonesia requested for cross-examination attended the hearing.
However, not all of the witnesses for Indonesia whom Churchill requested attend the meeting showed up. One of Indonesias key witnesses,IsranNoor, declined to attend the proceedings, and as a result, theTribunal ordered that Mr Noors witness statement be struck out and disregarded.
Now the Tribunal hearing has been completed, there will be the presentation of post-hearing briefs by both sides and theTribunal will deliver its decision in due course. There is no set date for the Tribunal todeliver its decision on Indonesias dismissal application, although the decision is unlikely to be handed down for some months.
Key development
The decision byIsranNoor not to attend the hearing is a surprising development. Mr Noorheld the office ofBupati(the head of local government) ofEast Kutai before his recent resignation. As a result, Mr Noor was considered to be one ofIndonesias key witnesses his non-attendance could help sway the Tribunal.
Next steps
This months document authenticity hearing is a key stage of Churchills battle against the Indonesian government.
Churchill is fighting theGovernment of Indonesia over the unlawful revocation of the East Kutai Coal Project inEast KalimantanIndonesia,in which Churchill and its partner, Planet Mining Pty Ltd. held a 75% interest.
The Government of Indonesia has been trying to throw outChurchills claims against the mineon the grounds of document authenticity. When the results of the document authenticity hearingare finally released, they should settle the debate and allow Churchills claims against the government progress further.
And there is a lot at stake here. Churchill spent $67m on exploration and feasibility studies at the East Kutai Coal Project, arriving at a potential resource estimate of 3.1bt. The companys damages have been independently assessed at $1.3bn, around 833m. At time of writing, Churchills market cap isonly44m.
Binary bet
As Ive said before, Churchills shares are a binary bet right now. City analysts believe that if the companyreaches a settlement with the Indonesian government, it could receive a cash lump sum ofaround $9.70per share. Or, in sterling terms, approximately 670p per share.
Nevertheless, it could take years for Churchill to reach a settlement, and the companys cash balance is running out. Churchillscash balance has dwindled over the past four years toonly3m, down from 22m four years ago as the drawn out legal battle has sapped resources.
High risk, high reward
All in all, Churchill is a high-risk/high-reward play. If the company reaches a settlement, its shares could rocket. However, there’s a high risk that Churchill could fail tonegotiate a deal, run out of cash and become insolvent.
So, Churchill’s certainlynot a company that’s suitable for widows and orphans.
With that in mind, if you’re looking for a reduced risk opportunity, The Motley Fool’s top analysts have recently identified a company that they consider to be one of the market’s“top small caps”.
All is revealed inour new free reportentitled“Is This Stock Tomorrow’s Big Winner?”
Don’t delay, download thefree report today— but hurry, it’s only available for a limited time.
Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.