TIDMPDZ
RNS Number : 5474B
Prairie Mining Limited
31 January 2020
PRAIRIE MINING LIMITED
NEWS RELEASE | 31 January 2020
DECEMBER 2019 QUARTERLY REPORT
Highlights during, and subsequent to the quarter end,
-- Prairie continued to:
Assess its options in relation to the investment dispute between
Prairie and the Polish Government that has arisen out of certain
measures taken by Poland in breach of the Energy Charter Treaty,
and the Australia-Poland Bilateral Investment Treaty
Work with its lawyers (including international arbitration legal
experts) to finalise arrangements for commencing international
arbitration claim(s) against Poland
Strongly defend its position and take relevant actions to pursue
its legal rights regarding both the Debiensko and Jan Karski
projects
Identify and assess other suitable business opportunities in the
resources sector
-- On 31 December 2019, Bogdanka announced that the Polish
Government had awarded Bogdanka a mining concession for the K6-7
coal deposit in Lublin. The K6-7 deposit forms an integral part of
Prairie's Lublin concession at the Jan Karski project
-- Subsequent to the quarter end, Prairie received a favorable
judgement from the Polish Administrative Court that found the
Ministry of Environment had violated provisions of law in refusing
to grant Prairie the Debiensko concession amendment. The court
judgement formally revokes the Ministry of Environment's April 2018
decision denying the Debiensko concession amendment, and requires
the body to reconsider Prairie's application
-- There have been no discussions between the Company and JSW
with respect to potential co-operation regarding Prairie's Polish
coal projects during and subsequent to the December 2019 quarter.
The Company will continue to comply with its continuous disclosure
obligations regarding any potential co-operation with JSW and make
announcements as required
Enquiries
Prairie Mining Limited +44 20 7478 3900
Ben Stoikovich, Chief Executive info@pdz.com.au
Officer
Sapan Ghai, Head of Corporate
Development
This announcement as been authorised for release by the
Company's Board of Directors.
Debiensko Mine
The Debiensko Mine ("Debiensko"), is a hard coking coal project
located in the Upper Silesian Coal Basin in the south west of the
Republic of Poland. It is approximately 40 km from the city of
Katowice and 40 km from the Czech Republic.
Debiensko is bordered by the Knurow-Szczyglowice Mine in the
north west and the Budryk Mine in the north east, both owned and
operated by Jastrz bska Spó ka W glowa SA ("JSW"), Europe's leading
producer of hard coking coal.
The Debiensko mine was historically operated by various Polish
mining companies until 2000 when mining operations were terminated
due to a major government led restructuring of the coal sector
caused by a downturn in global coal prices. In early 2006 New World
Resources Plc ("NWR") acquired Debiensko and commenced planning for
Debiensko to comply with Polish mining standards, with the aim of
accessing and mining hard coking coal seams. In 2008, the Polish
Ministry of Environment ("MoE") granted a 50-year mine license for
Debiensko.
In October 2016, Prairie Mining Limited ("Prairie") acquired
Debiensko with a view that a revised development approach would
potentially allow for the early mining of profitable premium hard
coking coal seams, whilst minimising upfront capital costs.
Debiensko Concession
In December 2016, following the acquisition of Debiensko,
Prairie applied to the MoE to amend the 50-year Debiensko mining
concession.
The purpose of the concession amendment was to extend the time
stipulated in the mining concession for first production of coal
from 2018 to 2025. In April 2018, Prairie received a final "second
instance" decision from the MoE that has denied the Company's
amendment application. Prairie appealed this MoE decision to
Poland's Administrative Court and during November 2019 the
Administrative court ruled in Prairie's favour confirming that the
MoE's denial of Prairie's concession amendment application violated
provisions of Polish law, and that the MoE's decision was
defective. The Court indicated that the MoE had not established
legal grounds justifying rejection of Prairie's amendment
application. The court verdict formally revokes the MoE's April
2018 decision denying the concession amendment, and requires the
MoE to reassess the concession amendment application in light of
the various defects in the MoE's original decisions as indicated by
the Court. The MoE now has the right to appeal this decision to
Poland's Supreme Administrative Court. Despite Prairie holding a
valid environmental consent decision enabling mine construction,
the actions of the Polish Government have effectively blocked any
pathway to production for Prairie at Debiensko therefore making it
impossible for the Company to continue with development at
Debiensko.
Jan Karski Mine
The Jan Karski Mine ("Jan Karski") is a large scale semi-soft
coking coal project located in the Lublin Coal Basin in south east
Poland. The Lublin Coal Basin is an established coal producing
province which is well serviced by modern and highly efficient
infrastructure, offering the potential for low capital intensity
mine development. Jan Karski is situated adjacent to the Bogdanka
coal mine which has been in commercial production since 1982 and is
the lowest cost hard coal producer in Europe.
Key benefits for the local community and the Lublin and Chelm
regions associated with the development, construction and operation
of Jan Karski have been recognised as the following:
-- creation of 2,000 direct employment positions and 10,000
indirect jobs for the region once operational;
-- increasing skills of the workforce through the implementation
of International Standard training programmes;
-- stimulating the development of education, health services and
communications within the region; and
-- building a mine that creates new employment for generations
to come and career paths for families to remain in the region.
K6-7 Concession Awarded to Bogdanka
In April 2018, Prairie filed a civil law claim against the MoE
due to its failure to grant Prairie a mining usufruct agreement
over the Jan Karski concessions (which included the K6-7 deposit)
in order to protect the Company's security of tenure over the
project.
The Company had been awarded the Priority Right to apply for a
mining concession at Jan Karski in 2015 following its full
compliance with Poland's Geological and Mining Law ("GML").
Subsequent to Prairie's filing of the civil law claim discussed
above, the Polish District Court granted Prairie an injunction
preventing the MoE from granting prospecting, exploration or mining
concessions and concluding usufruct agreements with any other party
until full court proceedings were concluded.
In April 2019, an Appeal Court in Warsaw overturned the District
Court's decision and lifted the injunction. Prairie believes that
the Appeal Court's decision is fundamentally flawed. On 31 December
2019, Lubelski W giel BOGDANKA S.A ("Bogdanka") announced that the
MoE had granted Bogdanka a mining concession over the disputed K6-7
deposit which has been confirmed following receipt of official
communication from the MoE. This Polish government decision is
effectively an expropriation of the Jan Karski project from
Prairie.
The MoE's decision to grant a mining concession over the K6-7
deposit to Bogdanka is further evidence of the unfair and
inequitable treatment faced by Prairie as a foreign investor in
Poland and these and other measures directed against Prairie by the
Polish Government, with respect to the Company's permitting process
and licenses, have entirely blocked Prairie's pathway to any future
production from Jan Karski. As a result of this latest action by
the Polish government, the Company has taken the decision to
discontinue the ongoing environmental permitting procedure for the
Jan Karski mine which has been formally communicated to the RDOS in
Lublin, the regional government body responsible for the
Environmental Consent decision for the Jan Karski mine. The Company
continues to take all actions necessary to pursue its legal rights
regarding Jan Karski.
Corporate
Possible Co-Operation between Prairie and JSW
There have been no discussions between the Company and JSW with
respect to potential co-operation regarding Prairie's Polish coal
projects during and subsequent to the December 2019 quarter. The
Non-Disclosure Agreement ("NDA") between the Company and JSW
expired at the end of September quarter 2019. The Company will
continue to comply with its continuous disclosure obligations
regarding any potential co-operation with JSW and make
announcements as required.
Dispute with the Polish Government
In February 2019, Prairie formally notified the Polish
Government that there exists an investment dispute between Prairie
and the Polish Government.
Prairie's notification calls for prompt negotiations with the
Government to amicably resolve the dispute and indicates Prairie's
right to submit the dispute to international arbitration in the
event the dispute is not resolved amicably. The dispute arises out
of certain measures taken by Poland in breach of the Energy Charter
Treaty and Australia-Poland Bilateral Investment Treaty. The
Company remains open to resolving the dispute with the Polish
Government amicably. As of the date of this report, no amicable
resolution of the dispute has occurred, since the Polish Government
has declined to participate in discussions related to the
dispute.
The decision by the Polish Government to grant Bogdanka a mining
concession over the K6-7 deposit to Bogdanka provides the Company
with further evidence of the unfair and inequitable treatment
it has faced as a foreign investor in Poland.
Accordingly, Prairie is currently working with its lawyers
(including international arbitration legal experts) to finalise
arrangements for commencement of international arbitration claim(s)
against Poland.
Prairie can confirm that it is taking all necessary actions to
pursue its legal rights regarding its investments in Poland.
Prairie will continue to update the market in relation to this
matter as required.
Forward Looking Statements
This release may include forward-looking statements. These
forward-looking statements are based on Prairie's expectations and
beliefs concerning future events. Forward looking statements are
necessarily subject to risks, uncertainties and other factors, many
of which are outside the control of Prairie, which could cause
actual results to differ materially from such statements. Prairie
makes no undertaking to subsequently update or revise the
forward-looking statements made in this release, to reflect the
circumstances or events after the date of that release.
APPIX 1 - EXPLORATION TENEMENT INFORMATION
As at 31 December 2019, the Company has an interest in the
following tenements:
Location Tenement Percentage Status Tenement Type
Interest
------------------- ----------------------- ----------- -------- ---------------------
Jan Karski, Poland Jan Karski Mine 100 Granted Exclusive Right
Plan Area (K-4-5, to apply for
K6-7, K-8 and K-9)(1) a mining concession
Debiensko, Poland Debiensko 1(2) 100 Granted Mining
Debiensko, Poland Kaczyce 1 100 Granted Mining & Exploration
(includes gas
rights)
------------------- ----------------------- ----------- -------- ---------------------
Notes:
(1) In July 2015, Prairie announced that it had secured the
Exclusive Right to apply for a Mining Concession for Jan Karski as
a result of its Geological Documentation for the Jan Karski deposit
being approved by Poland's MoE. The approved Geological
Documentation covers areas of all four original Exploration
Concessions granted to Prairie (K-4-5, K6-7, K-8 and K-9) and
includes the full extent of the targeted resources within the mine
plan for Jan Karski. The K-4-5, K-8 and K-9 Exploration Concessions
expired in November 2018 but these were separate to and had no
bearing on the Company's access to land and the Exclusive Right
(tenure) to apply for a mining concession at Jan Karski, however as
noted below, this position is the subject of Prairie's Mining
Usufruct Agreement proceedings in front of the Civil Court and the
award of a mining concession of K6-7 to Bogdanka. As a result of
the Exclusive Right, Prairie was the only entity with a legal right
to lodge a Mining Concession application over Jan Karski for the
period up and until 2 April 2018.
The approval of Prairie's Geological Documentation in 2015 also
conferred upon Prairie the legal right to apply for a Mining
Usufruct Agreement over Jan Karski for an additional 12-month
period beyond April 2018, which should have precluded any other
parties being granted any licence/concession over all or part of
the Jan Karski concessions. Under Polish law, the MoE is strictly
obligated, within three months of Prairie making an application for
a Mining Usufruct Agreement, to grant the agreement. It should be
noted that the MoE confirmed Prairie's priority right in two
written statements (i.e. in a final administrative decision dated
11 February 2016 and in a formal letter dated 13 April 2016).
Prairie applied to the MoE for a Mining Usufruct Agreement over Jan
Karski in late December 2017. As of the date of this report the MoE
has still not made available to Prairie a Mining Usufruct Agreement
for Jan Karski, therefore breaching the three-month obligatory
period for the agreement to be concluded. Advice provided to
Prairie concludes that failure of the MoE to grant Prairie the
Mining Usufruct Agreement is a breach of Polish law. Accordingly,
the Company commenced legal proceedings, which remain ongoing,
against the MoE through the Polish courts in order to protect the
Company's security of tenure over the Jan Karski concessions. Since
the MoE has not provided a decision within three months regarding
Prairie's Mining Usufruct Agreement application, the Polish civil
court has the power to enforce conclusion of a Usufruct Agreement
in place of the MoE. In the event that a Mining Usufruct Agreement
is not made available to the Company on acceptable terms or the
Company does not enter into a Mining Usufruct Agreement for any
other reason, other parties may be able to apply for exploration or
mining rights for all or part of the Jan Karski concession area. In
April 2018, the Civil Court approved Prairie's motion for an
injunction against the MoE, which prevented them from entering into
a usufruct agreement or a concession with any other party besides
Prairie. A decision by an Appeal Court in Warsaw has since
overturned the injunction in place against the MoE. Prairie
believes that the Appeal Court's decision is fundamentally flawed.
Prairie has now received official notification from the Polish
government that the K6-7 deposit, which forms an integral part of
Prairie's Jan Karski project, has been granted to Bogdanka. Despite
multiple applications by Prairie to the MoE to be admitted as a
party of interest to Bogdanka's K6-7 mining concession proceedings,
the MoE has denied Prairie the status of party of interest which
effectively prevents Prairie from appealing the award of the K6-7
mining concession to Bogdanka. These events provide further
evidence of the unfair and inequitable treatment faced by Prairie
as a foreign investor in Poland and these and other measures
directed against Prairie by the Polish government, with respect to
the Company's permitting process and licenses, have entirely
blocked Prairie's pathway to any future production from Jan Karski.
Prairie has formally notified the Polish government that there
exists an investment dispute between Prairie and the Polish
Government. The dispute arises out of certain measures taken by
Poland in breach of the Energy Charter Treaty and the
Australia-Poland Bilateral Investment Treaty as discussed above.
Prairie's notification calls for prompt negotiations with the
government to amicably resolve the dispute, and indicates Prairie's
right to submit the dispute and lodge a claim to international
arbitration in the event the dispute is not resolved amicably.
Prairie will continue to take relevant actions to pursue its legal
rights regarding Jan Karski. Prairie is currently working with its
lawyers (including international arbitration legal experts) to
prepare submissions and finalise funding arrangements for
international arbitration claim(s) against Poland
(2) Under the terms of the Debiensko Mining Concession issued in
2008 by the MoE (which is valid for 50 years from grant date),
commencement of production was to occur by 1 January 2018. In
December 2016, following the acquisition of Debiensko, Prairie
applied to the MoE to amend the 50 year Debiensko Mining
Concession. The purpose of the concession amendment was to extend
the time stipulated in the Mining Concession for first production
of coal from 2018 to 2025. In 2018 Prairie received a final "second
instance" decision from the MoE that denied the Company's amendment
application. Prairie appealed this MoE decision to Poland's
Administrative Court and in November 2019 the Administrative court
ruled in Prairie's favour confirming that Prairie's concession
amendment application fulfilled all formal requirements under
Polish law and that the MoE was obliged to grant Prairie the
requested concession amendment. The court verdict indicated that
the MoE had not established legal grounds justifying rejection of
Prairie's amendment application. The MoE now has the right to
appeal this decision to Poland's Supreme Administrative Court.
Nevertheless, Prairie also holds a valid environmental consent
decision enabling mine construction and continues to have valid
tenure and ownership of land at Debiensko. Not meeting the
production timeframe stipulated in the concession does not
automatically infringe on the validity and expiry date of the
Debiensko mining concession, which is June 2058. However, the
concession authority now has the right to request the concession
holder to remove any infringements related to non-compliance with
the conditions of the mining concession and determine a reasonable
date for removal of the infringements. Nevertheless, the actions of
the Polish government have effectively blocked any pathway to
production for Prairie at Debiensko therefore making it impossible
for the Company to continue with development at Debiensko. The
Company will consider any actions necessary to pursue its legal
rights regarding Debiensko. For this and other reasons, Prairie has
formally notified the Polish government that there exists an
investment dispute between Prairie and the Polish Government. The
dispute arises out of certain measures taken by Poland in breach of
the Energy Charter Treaty and the Australia-Poland Bilateral
Investment Treaty. Prairie's notification calls for prompt
negotiations with the government to amicably resolve the dispute,
and indicates Prairie's right to submit the dispute and lodge a
claim to international arbitration in the event the dispute is not
resolved amicably.
+Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity
quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97,
01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity
-----------------------------------------------------
PRAIRIE MINING LIMITED
ABN Quarter ended ("current quarter")
--------------- ----------------------------------
23 008 677 852 31 December 2019
----------------------------------
Consolidated statement of cash Current quarter Year to date
flows $A'000 (6 months)
$A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (587) (1,441)
(b) development - -
(c) production - -
(d) staff costs (254) (486)
(e) administration and corporate
costs (237) (539)
1.3 Dividends received (see note - -
3)
1.4 Interest received 21 57
1.5 Interest and other costs of - -
finance paid
1.6 Income taxes paid - -
1.7 Research and development refunds - -
Other (provide details if
1.8 material)
(a) Business development costs (27) (48)
(b) Property rental and gas
sales 96 153
---------------- -------------
Net cash from / (used in)
1.9 operating activities (988) (2,304)
----- ------------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant and equipment - (3)
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.2 Proceeds from the disposal
of:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.3 Cash flows from loans to - -
other entities
2.4 Dividends received (see note - -
3)
2.5 Other (provide details if - -
material)
---------------- -------------
Net cash from / (used in)
2.6 investing activities - (3)
------- ----------------------------------- ---------------- -------------
3. Cash flows from financing
activities
3.1 Proceeds from issues of shares - -
3.2 Proceeds from issue of convertible - -
notes
3.3 Proceeds from exercise of - -
share options
3.4 Transaction costs related
to issues of shares, convertible
notes or options - -
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related - -
to loans and borrowings
3.8 Dividends paid - -
3.9 Other (provide details if - -
material)
---------------- -------------
3.10 Net cash from / (used in)
financing activities - -
------- ----------------------------------- ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 5,301 6,620
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (988) (2,304)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) - (3)
4.4 Net cash from / (used in)
financing activities (item
3.10 above) - -
Effect of movement in exchange
4.5 rates on cash held 1 1
---------------- -------------
Cash and cash equivalents
4.6 at end of period 4,314 4,314
------- ----------------------------------- ---------------- -------------
5. Reconciliation of cash and Current quarter Previous quarter
cash equivalents $A'000 $A'000
at the end of the quarter
(as shown in the consolidated
statement of cash flows) to
the related items in the accounts
5.1 Bank balances 1,314 1,302
5.2 Call deposits 3,000 4,000
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---------------- -----------------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 4,314 5,302
---- ----------------------------------- ---------------- -----------------
6. Payments to directors of the entity and Current quarter
their associates $A'000
Aggregate amount of payments to these parties
6.1 included in item 1.2 (200)
-----------------
6.2 Aggregate amount of cash flow from loans
to these parties included in item 2.3 Nil
-----------------
6.3 Include below any explanation necessary to understand
the transactions included in items 6.1 and 6.2
------ ---------------------------------------------------------------------
Payments include executive remuneration, director fees, superannuation
and provision of a fully serviced office.
7. Payments to related entities of the entity Current quarter
and their associates $A'000
7.1 Aggregate amount of payments to these parties -
included in item 1.2
----------------
7.2 Aggregate amount of cash flow from loans -
to these parties included in item 2.3
----------------
7.3 Include below any explanation necessary to understand
the transactions included in items 7.1 and 7.2
---- ----------------------------------------------------------------
Not applicable
8. Financing facilities available Total facility Amount drawn
Add notes as necessary for amount at quarter at quarter end
an understanding of the position end $A'000
$A'000
8.1 Loan facilities - -
------------------- ----------------
8.2 Credit standby arrangements - -
------------------- ----------------
8.3 Other (please specify) - -
------------------- ----------------
8.4 Include below a description of each facility above, including
the lender, interest rate and whether it is secured or
unsecured. If any additional facilities have been entered
into or are proposed to be entered into after quarter
end, include details of those facilities as well.
---- -------------------------------------------------------------------------
9. Estimated cash outflows for next $A'000
quarter
9.1 Exploration and evaluation (400)
9.2 Development -
9.3 Production -
9.4 Staff costs (250)
9.5 Administration and corporate costs (200)
Other (provide details if material)
9.6 (a) Business development costs (50)
-------
9.7 Total estimated cash outflows (900)
---- ------------------------------------ -------
10. Changes in tenements Tenement reference Nature of Interest Interest
(items 2.1(b) and location interest at beginning at end
and 2.2(b) above) of quarter of quarter
10.1 Interests in - - - -
mining tenements
and petroleum
tenements lapsed,
relinquished
or reduced
----- --------------------- ------------------- ---------- -------------- ------------
10.2 Interests in - - - -
mining tenements
and petroleum
tenements acquired
or increased
----- --------------------- ------------------- ---------- -------------- ------------
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
[lodged electronically without signature]
Sign here:
............................................................ Date:
31 January 2020
(Director/Company secretary)
Print name: Dylan Browne
Notes
1. The quarterly report provides a basis for informing the
market how the entity's activities have been financed for the past
quarter and the effect on its cash position. An entity that wishes
to disclose additional information is encouraged to do so, in a
note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with
Australian Accounting Standards, the definitions in, and provisions
of, AASB 6: Exploration for and Evaluation of Mineral Resources and
AASB 107: Statement of Cash Flows apply to this report. If this
quarterly report has been prepared in accordance with other
accounting standards agreed by ASX pursuant to Listing Rule 19.11A,
the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCWPUBUGUPUUAG
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