Kingsgate fails to reach settlement with insurers for payout on gold mine closure
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Kingsgate Consolidated has had no joy in a legal battle over the premature closure of its Chatree gold mine in Thailand last year.
The company (ASX:KCN) was unable to reach a settlement deal with its insurers in a mediation hearing held on Tuesday and is now taking its fight to the Supreme Court of New South Wales.
Shares slipped 3 per cent to 32.5c on Wednesday morning.
Kingsgate began legal action in October over a $US200 million ($260 million) political risk insurance policy it was denied when Chatree was closed.
The mine was closed after the Thai government decided not to renew the metallurgical licence after 2016. Kingsgate’s lease for Chatree was due to run to 2028.
The decision was based on reports of environmental damage and public health impacts due to the operation – claims Kingsgate stated on numerous occasions were false.
Chatree had not been responsible for environmental incidents, pollution or health effects on local population or its workers, the company said.
Chatree was Thailand’s biggest gold mine, employing almost 1000 workers. The open-cut mine began production in 2001.
“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,” the company told investors.
Kingsgate is also pursuing the Thai government to recover “substantial” losses.
Arbitration proceedings against the government will begin on November 18, 2019 under the Thailand-Australia Free Trade Agreement (TAFTA).
TAFTA was signed in 2004 to promote and improve the environment for bilateral services, trade and investment between the two countries.
The agreement provides rights to Australian investors in Thailand, including the right to seek impartial resolution of disputes with the Thai government relating to investments by way of arbitration before an international tribunal.