TIDMPDZ

RNS Number : 0060H

Prairie Mining Limited

30 July 2021

PRAIRIE MINING LIMITED

   NEWS RELEASE   |   30 July 2021 

JUNE 202 1 QUARTERLY REPORT

Prairie Mining Limited (Prairie or the Company) is pleased to present its Quarterly Report for the period ending 30 June 2021.

HIGHLIGHTS

-- International arbitration claims (Claim) against the Republic of Poland under both the Energy Charter Treaty (ECT) and the Australia-Poland Bilateral Investment Treaty (BIT) (together the Treaties) continue.

-- During the quarter, Prairie filed its Statement of Claim in the BIT arbitration claiming compensation in the amount of GBP806 million (equivalent to A$1.5 billion or PLN 4.2 billion).

The Claim for compensation against the Republic of Poland includes an assessment of the value of Prairie's lost profits and damages related to both the Jan Karksi (JKM) and Debiensko mines, and accrued interest related to any damages.

The Claim for damages has been assessed by external quantum experts appointed by Prairie specifically for the purposes of the Claim.

-- The Company's Claim against the Republic of Poland is being prosecuted through an established and enforceable legal framework with both parties agreeing to apply the United Nations Commission on International Trade Law Rules (UNCITRAL) to the proceedings.

-- The Company is well funded to pursue the Claim with the US$12.3 million Litigation Funding Agreement (LFA) in place which is currently being drawn down to cover legal, tribunal and external expert costs and defined operating expenses associated with the Claim.

-- Prairie continues its efforts to identify and assess other suitable new business opportunities, focused on the resources sector. The Company will make announcements to the market as appropriate.

Enquiries

 
                                                  +44 20 7478 
 Prairie Mining Limited                                  3900 
 Ben Stoikovich, Chief Executive Officer      info@pdz.com.au 
 Sapan Ghai, Head of Corporate Development 
 Kazimierz Chojna, Commercial Officer 
 

Dispute with Polish Government

The Company's Claim against the Republic of Poland is being prosecuted through an established and enforceable legal framework, with Prairie and Poland agreeing to apply the UNCITRAL rules to the proceedings.

Both the BIT and ECT claim Tribunals have been constituted, with both Claim's being registered with the Permanent Court of Arbitration in the Hague. The BIT and ECT claim proceedings proceed at pace, with the Company now having filed a Claim for compensation against Poland with the Tribunal in the amount of GBP806 million (A$1.5 billion / PLN 4.2 billion), which includes an assessment of the value of Prairie's lost profits and damages related to both the JKM and Debiensko mines, and accrued interest related to any damages. The Claim for damages has been assessed by external quantum experts appointed by Prairie specifically for the purposes of the Claim.

In July 2020, the Company announced it had executed a LFA for US$12.3 million with Litigation Capital Management. The facility is currently being drawn down to cover legal, tribunal and external expert costs and defined operating expenses associated with the Claim.

In September 2020, Prairie announced that it had formally commenced with the Claim by serving the Notices of Arbitration against the Republic of Poland.

Prairie's dispute 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 which effectively deprives Prairie of the entire value of its investments in Poland.

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 report, no amicable resolution of the dispute has occurred, since the Polish Government has declined to participate in discussions related to the dispute and accordingly the Company has formerly submitted its Claim 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$120 million to over US$1.3 billion and includes Bluegas NRG Holding (Gas), Lumina Copper (Copper) and InvEnergy (wind farms).

CORPORATE

Business Development

A number of opportunities have been reviewed during the quarter, and the Company will continue in its efforts to identify and acquire suitable new business opportunities. The Company is currently focusing on new opportunities in the resources sector.

However, no agreements have been reached or licences granted, and the Company is not able to assess the likelihood or timing of a successful acquisition or grant of any opportunities.

Resignation of Director

Mr Tom Todd will resign as a Director of Prairie today, 30 July 2021, as he concentrates on other business and investment opportunities.

The Board would like to take this opportunity to thank Mr Todd for his significant contribution to the Company and wish him well with his future business endeavours.

Balance Sheet

At 30 June 2021, the Company is in a strong financial position to pursue the Claim and continue with business development activities with the US$12.3 million LFA and cash reserves of A$4.8 million.

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.

This announcement h as been authorised for release by the Company's Chief Executive Officer, Mr Ben Stoikovich.

APPIX 1: TENEMENT INFORMATION

As at 30 June 2021, the Company has an interest in the following tenements:

 
 Location             Tenement                 Percentage      Status          Tenement Type 
                                                Interest 
-------------------  -----------------------  -----------  --------------  --------------------- 
 Jan Karski, Poland   Jan Karski Mine             100       In dispute(1)     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                 100        Granted(1)            Mining 
 Debiensko, Poland    Kaczyce 1                   100          Granted      Mining & Exploration 
                                                                                (includes gas 
                                                                                   rights) 
-------------------  -----------------------  -----------  --------------  --------------------- 
 

Notes:

(1) Prairie was commenced international arbitration claims against the Republic of Poland under both ECT and the BIT. Prairie alleges that the Republic of Poland has breached its obligations under the Treaties through its actions to block the development of the Company's JKM and Debiensko mines in Poland.

Appendix 2: Related Party Payments

During the quarter ended 30 June 2021, the Company made payments of $223,000 to related parties and their associates. These payments relate to existing remuneration arrangements (director fees, consulting fees and superannuation of ($163,000) and the provision of a serviced office and company secretarial and administration

services   ($60,000). 

Appendix 3: Exploration and Mining Expenditure

During the quarter ended 30 June 2021, the Company made the following payments in relation to exploration activities:

 
 Activity                                                      $000 
------------------------------------------------------------  ----- 
 Legal and permitting related expenditure                       167 
 Consultants - technical and Debiensko statutory operations 
  personnel                                                     108 
 Other                                                           90 
 Total as reported in the Appendix 5B                           365 
------------------------------------------------------------  ----- 
 

There were no mining or production activities and expenses incurred during the quarter ended 30 June 2021.

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

 
 Name of entity 
----------------------------------------------------- 
 Prairie Mining Limited 
 ABN                Quarter ended ("current quarter") 
---------------    ---------------------------------- 
 23 008 677 852     30 June 2021 
                   ---------------------------------- 
 
 
 Consolidated statement of cash                          Current quarter    Year to date 
  flows 
                                                                  $A'000     (12 months) 
                                                                                  $A'000 
               1.   Cash flows from operating 
                     activities 
 1.1                Receipts from customers                            -               - 
 1.2                Payments for 
                    (a) exploration & evaluation                  (365)*        (1,308)* 
                    (b) development                                    -               - 
                    (c) production                                     -               - 
                    (d) staff costs                                (169)           (583) 
                    (e) administration and corporate 
                     costs                                          (47)           (814) 
 1.3                Dividends received (see note                       -               - 
                     3) 
 1.4                Interest received                                  6              24 
 1.5                Interest and other costs of                        -               - 
                     finance paid 
 1.6                Income taxes paid                                  -               - 
 1.7                Government grants and tax                          -               - 
                     incentives 
                    Other (provide details if 
 1.8                 material) 
                     (a) Business Development                        (5)            (85) 
                     (b) Property rental and gas 
                      sales                                           69             299 
                     (c) Arbitration related expenses              (820)         (1,519) 
                     (d) Receipt of arbitration 
                      funding                                        608           1,102 
                                                        ----------------  -------------- 
                    Net cash from / (used in) 
 1.9                 operating activities                          (723)         (2,884) 
-----------------  -----------------------------------  ----------------  -------------- 
 *includes legal and permitting expenditure and payments made 
  to consultants (Debiensko technical statutory operations personnel). 
---------------------------------------------------------------------------------------- 
 2.                      Cash flows from investing 
                          activities 
 2.1                     Payments to acquire or for: 
                    (a) Entities                                       -               - 
                    (b) tenements                                      -               - 
                    (c) property, plant and equipment                  -               - 
                    (d) exploration & evaluation                       -               - 
                    (e) investments                                    -               - 
                    (f) other non-current assets                       -               - 
 2.2                     Proceeds from the disposal 
                          of: 
                    (a) entities                                      17              17 
                    (b) tenements                                      -               - 
                    (c) property, plant and equipment                241           1,288 
                    (d) investments                                    -               - 
                    (e) 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                            258           1,305 
-----------------  -----------------------------------  ----------------  -------------- 
 
 3.                 Cash flows from financing 
                     activities 
                    Proceeds from issues of equity 
                     securities (excluding convertible 
 3.1                 debt securities)                                  -           4,020 
 3.2                Proceeds from issue of convertible 
                     debt securities                                   -               - 
 3.3                Proceeds from exercise of                          -               - 
                     options 
                    Transaction costs related 
                     to issues of equity securities 
 3.4                 or convertible debt securities                 (63)           (179) 
 3.5                Proceeds from borrowings                           -               - 
 3.6                Repayment of borrowings                            -               - 
                    Transaction costs related 
 3.7                 to loans and borrowings                           -            (57) 
 3.8                Dividends paid                                     -               - 
 3.9                Other (provide details if                          -               - 
                     material) 
                                                        ----------------  -------------- 
                    Net cash from / (used in) 
 3.10                financing activities                           (63)           3,784 
-----------------  -----------------------------------  ----------------  -------------- 
 
 4.                 Net increase / (decrease) 
                     in cash and cash equivalents 
                     for the period 
                    Cash and cash equivalents 
 4.1                 at beginning of period                        5,289           2,562 
                    Net cash from / (used in) 
                     operating activities (item 
 4.2                 1.9 above)                                    (723)         (2,884) 
                    Net cash from / (used in) 
                     investing activities (item 
 4.3                 2.6 above)                                      258           1,305 
                    Net cash from / (used in) 
                     financing activities (item 
 4.4                 3.10 above)                                    (63)           3,784 
                    Effect of movement in exchange 
 4.5                 rates on cash held                                1             (5) 
                                                        ----------------  -------------- 
                    Cash and cash equivalents 
 4.6                 at end of period                              4,762           4,762 
-----------------  -----------------------------------  ----------------  -------------- 
 
 
               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                                  4,762              5,289 
 5.2                Call deposits                                      -                  - 
 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)                         4,762              5,289 
-----------------  -----------------------------------  ----------------  ----------------- 
 
 
               6.    Payments to related parties of the entity    Current quarter 
                      and their associates                                 $A'000 
                     Aggregate amount of payments to related 
                      parties and their associates included in 
 6.1                  item 1                                                (223) 
                                                                 ---------------- 
 6.2                 Aggregate amount of payments to related 
                      parties and their associates included in 
                      item 2                                                    - 
                                                                 ---------------- 
 Note: if any amounts are shown in items 6.1 or 6.2, your quarterly 
  activity report must include a description of, and an explanation 
  for, such payments. 
 
 
               7.   Financing facilities                      Total facility 
                     Note: the term "facility'             amount at quarter      Amount drawn 
                     includes all forms of financing                     end    at quarter end 
                     arrangements available to                        $A'000            $A'000 
                     the entity. Add notes as necessary 
                     for an understanding of the 
                     sources of finance available 
                     to the entity. 
 7.1                Loan facilities                                  16,000*             4,288 
                                                         -------------------  ---------------- 
 7.2                Credit standby arrangements                            -                 - 
                                                         -------------------  ---------------- 
 7.3                Other (please specify)                                 -                 - 
                                                         -------------------  ---------------- 
 7.4                Total financing facilities                       16,000*             4,288 
                                                         -------------------  ---------------- 
 
                    Unused financing facilities available at 
 7.5                 quarter end                                                        11,712 
                                                                              ---------------- 
 7.6                Include in the box below a description of each facility 
                     above, including the lender, interest rate, maturity date 
                     and whether it is secured or unsecured. If any additional 
                     financing facilities have been entered into or are proposed 
                     to be entered into after quarter end, include a note providing 
                     details of those facilities as well. 
-----------------  --------------------------------------------------------------------------- 
                    On 30 June 2020, the Company executed a Litigation Funding 
                     Agreement (LFA) for US$12.3 million (*now worth A$16 million 
                     with the appreciation of the A$ compared to the $US) with 
                     LCM Funding UK Limited a subsidiary of Litigation Capital 
                     Management Limited (LCM), to pursue damages claims 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 
                     (BIT). LCM will provide up to US$12.3million (A$16 million), 
                     denominated in US$, in limited recourse financing which 
                     is repayable to LCM in the event of a successful Claim 
                     or settlement of the Dispute that results in the recovery 
                     of any monies. If there is no settlement or award, then 
                     LCM is not entitled to any repayment of the financing 
                     facility. In return for providing the financing facility, 
                     LCM shall be entitled to receive repayment of any funds 
                     drawn plus an amount equal to between two and five times 
                     the total of any funds drawn from the funding facility 
                     during the first five years, depending on the time frame 
                     over which funds have remained drawn, and then a 30% interest 
                     rate after the fifth year until receipt of damages payments. 
----------------- 
 
 
               8.    Estimated cash available for future operating                $A'000 
                      activities 
                     Net cash from / (used in) operating activities 
 8.1                  (item 1.9)                                                   (723) 
 8.2                 (Payments for exploration & evaluation classified 
                      as investing activities) (item 2.1(d))                           - 
 8.3                 Total relevant outgoings (item 8.1 + item                     (723) 
                      8.2) 
 8.4                 Cash and cash equivalents at quarter end                      4,762 
                      (item 4.6) 
 8.5                 Unused finance facilities available at quarter               11,712 
                      end (item 7.5) 
                                                                                 ------- 
 8.6                 Total available funding (item 8.4 + item                     16,474 
                      8.5) 
                                                                                 ------- 
 
 8.7                 Estimated quarters of funding available 
                      (item 8.6 divided by item 8.3)                                 >10 
                                                                                 ------- 
  Note: if the entity has reported positive relevant outgoings 
   (ie a net cash inflow) in item 8.3, answer item 8.7 as 
   "N/A". Otherwise, a figure for the estimated quarters 
   of funding available must be included in item 8.7. 
 8.8                 If item 8.7 is less than 2 quarters, please provide answers 
                      to the following questions: 
  8.8.1 Does the entity expect that it will continue to 
   have the current level of net operating cash flows for 
   the time being and, if not, why not? 
 --------------------------------------------------------------------------------------- 
  Answer: Not applicable 
 --------------------------------------------------------------------------------------- 
  8.8.2 Has the entity taken any steps, or does it propose 
   to take any steps, to raise further cash to fund its operations 
   and, if so, what are those steps and how likely does it 
   believe that they will be successful? 
 --------------------------------------------------------------------------------------- 
  Answer: Not applicable 
 --------------------------------------------------------------------------------------- 
  8.8.3 Does the entity expect to be able to continue its 
   operations and to meet its business objectives and, if 
   so, on what basis? 
 --------------------------------------------------------------------------------------- 
  Answer: Not applicable 
 --------------------------------------------------------------------------------------- 
  Note: where item 8.7 is less than 2 quarters, all of questions 
   8.8.1, 8.8.2 and 8.8.3 above must be answered. 
 --------------------------------------------------------------------------------------- 
 

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. 
   Date:                30 July 2021 

Authorised by: Company Secretary

(Name of body or officer authorising release - see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow 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 cash flow 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.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee - eg Audit and Risk Committee]". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee".

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

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