TIDMPDZ
RNS Number : 4032Y
Prairie Mining Limited
09 September 2020
PRAIRIE MINING LIMITED
NEWS RELEASE | 9 September 2020
DAMAGES CLAIM AGAINST POLAND FORMALLY COMMENCES
Prairie Mining Limited (Prairie or Company) announces that it
has formally commenced international arbitration proceedings by
serving Notices of Arbitration under both the Energy Charter Treaty
and the Australia-Poland Bilateral Investment Treaty (Treaties) on
the Republic of Poland.
The Company's international arbitration claim against the
Republic of Poland will be prosecuted through an established and
enforceable legal framework.
Prairie alleges that the Republic of Poland has breached its
obligations under the applicable Treaties through its actions to
block the development of the Company's Jan Karski and Debiensko
mines in Poland, effectively depriving Prairie of the entire value
of its investments in Poland.
Prairie's claim for damages may include, but is not limited
to:
-- The value of Prairie's historic expenditure in developing
both the Jan Karski and Debiensko mines;
-- Lost profits and damages that the Company has suffered as a
result of Poland's acts and omissions which have resulted in the
expropriation of both the Jan Karski of Debiensko mines, which is
linked to the considerable Net Present Value of both mines at the
time of Poland's international treaty breaches; and
-- Accrued interest related to any damages award and all costs
associated with pursuing the claims to arbitration.
The Company is not able to make any further comment in relation
to the potential quantum of any claim for compensation at this
point.
Prairie's CEO Mr Ben Stoikovich commented: " Following the
announcement in July that the Company had secured A$18m for
litigation funding, the filing of the Company's Notices of
Arbitration is the next step forward in its pursuit of damages
following actions and omissions by the Republic of Poland, which
have prevented Prairie from developing its world class Jan Karski
and Debiensko coking coal projects. We have had no option but to
take this action and enforce the Company's rights to recover full
value for shareholders through international arbitration. "
For further information, please contact:
Prairie Mining Limited Tel: +44 207 478 3900
Ben Stoikovich, Chief Executive Email: info@pdz.com.au
Officer
Sapan Ghai, Head of Corporate
Development
Kazimierz Chojna, Commercial
Officer
This announcement has been authorised for release by Mr Ben
Stoikovich, CEO.
BACKGROUND TO THE CLAIM
On 1 July 2020, the Company announced it had executed a
Litigation Funding Agreement for A$18m (US$12.3m) with LCM Funding
UK Limited (a subsidiary of Litigation Capital Management Limited
(LCM)). The facility has been provided for Prairie to pursue
damages claims in relation to the investment dispute between the
Company and the Polish Government that has arisen out of certain
measures taken by Poland in breach of the Treaties.
In February 2019, Prairie formally notified the Polish
Government that there exists an investment dispute between Prairie
and the Polish Government. Prairie's notification called for prompt
negotiations with the Government to amicably resolve the dispute
and indicated Prairie's right to submit the dispute to
international arbitration in the event of the dispute not being
resolved amicably. The Company remains open to resolving the
dispute with the Polish Government amicably. However, as of the
date of this announcement, the Polish Government has declined to
participate in discussions related to the dispute and as a result
Prairie was now formerly commenced with arbitration as discussed
above.
Prairie's investment dispute with the Republic of Poland is not
unique, with international media widely reporting that the
political environment and investment climate in Poland has
deteriorated since the change in Government in 2015. As a result,
there are a significant number of International Arbitration claims
being brought against Poland in the natural resources and energy
sectors with damages claims ranging from US$120m to over US$1.3bn
and includes Bluegas NRG Holding (Gas), Lumina Copper (Copper) and
InvEnergy (wind farms).
BACKGROUND TO THE JAN KARSKI MINE
The Jan Karski mine 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.
In March 2016, Prairie released the results of a JORC compliant
Pre-Feasibility Study (PFS) for the Jan Karski prepared by
independent international mining consultancies Golder Associates
and Royal HaskoningDHV. The PFS demonstrated the technical
viability and robust economics of Jan Karski to be developed as a
large scale long life strategic coal supplier. Further details
about the PFS are contained in the Company's announcement dated 8
March 2016.
BACKGROUND TO THE DEBIENSKO MINE
The Debiensko mine, is a premium 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 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.
In March 2017, Prairie released the results of a JORC compliant
Scoping Study prepared by independent international mining
consultancy Royal HaskoningDHV. The Scoping Study demonstrated the
technical viability and robust economics for the fully permitted
Debiensko mine to be a large scale, lowest cost and long life
premium hard coking coal supplier. Further details of the Scoping
Study are contained in the Company's announcement dated 16 March
2017.
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