Kingsgate Receives Settlement Monies from Insurers
Kingsgate receives settlement monies from Insurers
Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is delighted to announce that it has now received in full US$55 million from its Political Risk Insurers after settling proceedings against them last month.1
Executive Chairman of Kingsgate, Mr Ross Smyth-Kirk, today said “it marks a real turning point for the Company.
“It enables us to clear all our corporate debt, carefully consider our strategy around our Nueva Esperanza Project in Chile, and work together with the Insurers to fully prosecute the TAFTA2 Claim.”
Ross Smyth-Kirk
Executive Chairman
Kingsgate Consolidated Limited
Notes
- Kingsgate had a Political Risk Insurance Policy in place at the time it is alleged that the Government of Thailand illegally expropriated its Chatree Gold Mine in May 2016; and
- The Australia – Thailand Free Trade Agreement (“TAFTA”).
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Kingsgate settles PRI Claim for more than A$82 million
Kingsgate settles Political Risk Insurance proceedings for more than A$82 million
Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is delighted to announce that it has settled proceedings against its Political Risk Insurers (“Insurers”) by entering into a legally binding Heads of Agreement (“HOA”).
Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is delighted to announce that it has settled proceedings against its Political Risk Insurers (“Insurers”) by entering into a legally binding Heads of Agreement (“HOA”).
Kingsgate had a Political Risk Insurance Policy in place at the time it is alleged that the Government of Thailand illegally expropriated its Chatree Gold Mine in May 2016. (“TAFTA Claim”)1
The HOA provides for a settlement to Kingsgate worth more than A$82 million2 comprising:
- A cash payment of US$55 million to be made to Kingsgate by mid-April 2019;
- A requirement for the Insurers to contribute up to US$3.5 million of future costs towards the TAFTA Arbitration. The Insurers funding contribution will be paid on a pro-rata basis with Kingsgate; and
- A sharing arrangement between Kingsgate and the Insurers for future distributions of TAFTA Claim proceeds.3
Executive Chairman of Kingsgate, Mr Ross Smyth-Kirk, today said “I realise that it has been a long recovery process for our loyal shareholders, but this settlement transaction provides material upside for our Company, namely:
- Sufficient funds to pay out in full the Corporate Debt Facility;
- Liquidity to give the Company time to maximise the value of the Nueva Esperanza project through further development or sale, and remain aspirational for other development opportunities;
- Kingsgate no longer requires litigation funding to pursue its PRI Claim nor its TAFTA Claim; and most importantly,
- The Insurers’ pro-rata funding commitment under the HOA means that Kingsgate and the Insurers will be working together to fully prosecute the TAFTA Claim.”
“I would also like to thank our dedicated legal team at Clifford Chance that helped deliver this excellent outcome, and especially Investec Australia Limited, whose rock solid support has enabled us to pursue both the PRI and TAFTA claims,” Mr Smyth-Kirk said.
Ross Smyth-Kirk
Executive Chairman
Kingsgate Consolidated Limited
Notes
- The Australia – Thailand Free Trade Agreement (“TAFTA”);
- A$82,000,000 is based on an AUD-USD exchange rate of 0.71, and includes an estimate of the insurer’s share of the TAFTA legal fees of US$3.5million; and
- The Insurers are only entitled to the amount of their original financial contribution incl. interest – Kingsgate keeps any TAFTA Claim proceeds in excess of that contribution.
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Request for Trading Halt
Request for Trading Halt by Kingsgate Consolidated Limited (ASX: KCN)
Kingsgate Consolidated Limited (ASX: KCN) (“Kingsgate” or the “Company”) advises that a request for Trading Halt has been sent to ASX. The content of the request is detailed below.
Dear Sir/Madam,
We request a Trading Halt to be applied to our securities under ASX Listing Rule 17.1, and set out below the following information:
We would like the Trading Halt to commence immediately.
Reasons for the Trading Halt: to make an Announcement in relation to proceedings in the New South Wales Supreme Court against Zurich Insurance Australia Ltd, and other named insurers, under a Political Risk Insurance Policy that was held by the Company when the Thai Government expropriated the Chatree Gold Mine in May 2016.
How long will the Trading Halt last: the Trading Halt will last until the close of trading tomorrow (Friday 15 March 2019) at the latest.
The event we expect to happen that will end the Trading Halt: an Announcement from the Company updating its position with respect to the aforementioned proceedings.
Other information necessary to inform the market about the Trading Halt, or that ASX has requested: there is no such information.
We confirm that we are not aware of any reason why the Trading Halt should not be granted.
Ross Coyle
Company Secretary
Kingsgate Consolidated Limited
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December 2018 Quarterly Report
Quarterly Report
For the period ending 30 December 2018
KEY ISSUES:
Chile:
- Kingsgate has appointed a corporate advisor to identify options to monetise the Nueva Esperanza Project.
- A number of parties are completing due diligence and the Company expects to provide a further update soon.
Corporate
- Political Risk Insurance Claim (“PRI”) – In October 2017, Kingsgate commenced proceedings in the New South Wales Supreme Court against Zurich Insurance Australia Ltd, and other named insurers, under a Political Risk Insurance Policy (with a maximum liability of US$200 million) that was held by the Company when the Thai Government expropriated the Chatree Gold Mine in May 2016.
- On 6 July 2018, a Directions Hearing was held in the Supreme Court of New South Wales for the Company’s PRI claim.
- The Court listed the Proceedings for trial, for up to fifteen days commencing on 3 June 2019.
- Kingsgate remains open to achieving a settlement, but in the meantime will continue to prosecute its claim against the insurers in the Supreme Court of New South Wales.
- TAFTA Claim – The Tribunal has adopted a Procedural Calendar which provides that the merits of the TAFTA (“Australia Thailand Free Trade Agreement”) Claim will be heard on 18 November to 29 November 2019.
- However, the Tribunal has also ordered that the proceedings are to be kept confidential, except where disclosure is required to fulfil a legal duty.
- Kingsgate remains committed to seeking a settlement of the matter with the Thai Government.
Financial:
- In May 2018, Kingsgate drew down a $15.0 million Standby Loan Facility (“SLF”) in order to ensure continuing funding of its activities.
- The SLF is on normal commercial terms for a loan of this nature, and includes a utilisation fee under the SLF which has been satisfied by the issuance of 2,641,003 Kingsgate shares. (See ASX:KCN “Appendix 3B – Issue of Shares” dated 7 May 2018).
- Investec Australia Finance Pty Limited (“Investec”) has agreed to increase the SLF limit from A$15 million to A$20 million, (of which $18.75 million had been advanced as at 31 December 2018) and the maturity date of the loan while originally scheduled for February this year, is currently being re-negotiated. A further $1.25 million has been drawn down in January 2019.
- In addition to the monetisation of Nueva Esperanza, Kingsgate is investigating a range of alternative funding options to secure its future.
- Cash at 31 December 2018 totalled A$1.1 million.
- Corporate debt at 31 December 2018 is A$18.75 million.
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Chairman’s Address to Shareholders – 2018 AGM
Chairman’s Address
2018 Annual General Meeting
The year under review has been an eventful one with, unfortunately, much of the work going on behind the scenes.
I’d just like to take a few minutes to recap where we are at the present time.
As you are all aware the Royal Thai Government refused to renew our metallurgical licence and ordered the closure of the very successful Chatree gold and silver mine in Thailand in May 2016. We were given until December 31, 2016 to cease production.
Whilst the order was specifically aimed at the Chatree mine, it was variously reported that all gold mining in Thailand was to cease by this date. The fact that Chatree was the only operating gold mine in Thailand at the time ensured that nobody could be in any doubt as to the discriminatory intent of this action.
The Government has since introduced as legislation a new Mining Act and a new Gold Policy with even more onerous conditions than previously and seemingly a contradiction of many of the statements made at the time of closure.
During 2017 we commenced international arbitration to recover your company’s losses resulting from expropriation of our assets under the Thailand Australia Free Trade Agreement (TAFTA). During the year the Tribunal has been established, and has agreed to sit in Hong Kong (previously Singapore, but this was changed at the Tribunal’s request in the last few days) under Singapore law jurisdiction and established a timetable for the hearing of the matter. The date for the final hearing has been set for November, 2019.
The matter is subject to confidentiality orders by the Tribunal, so I am unable to provide details of how the matter is proceeding, but I can say that the matter is progressing well towards the hearing date…
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2018 AGM Results of Meeting
Results of 2018 Annual General Meeting
The Company advised that all the resolutions as set out in the Notice of Annual General Meeting and considered at the Annual General Meeting held on 29 November 2018 were passed on a poll. The Notice of Annual General Meeting was lodged with the Australian Securities Exchange on 18 October 2018.
In accordance with ASX Listing Rule 3.13.2 and Section 251AA of the Corporations Act, details of proxy votes and the votes cast on the poll for each resolution are attached.
This is to advise Chairman’s Address for the Company’s 2018 Annual General Meeting held today is available on the Company’s website at www.kingsgate.com.au.
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