TIDMPDZ
RNS Number : 7216R
Prairie Mining Limited
31 October 2019
PRAIRIE MINING LIMITED
NEWS RELEASE | 31 October 2019
SEPTEMBER 2019 QUARTERLY REPORT
Highlights during, and subsequent to the quarter end,
-- Prairie continued to:
Ø Assess its options for international arbitration 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
Ø Work with its lawyers (including international arbitration
legal experts) to prepare submissions for the international
arbitration claim(s)
Ø Assess corporate options for its investments in Poland and
will strongly defend its position and continue to take relevant
actions to pursue its legal rights regarding both the Debiensko and
Jan Karski projects
Ø Identify and assess other suitable business opportunities in
the resources sector
-- As previously advised, Mr Daniel Ozon, CEO of JSW, was
dismissed in June 2019, following his appointment in 2017. Mr W
odzimierz Here niak has since been appointed as JSW's new CEO
-- There has been no material discussion with JSW since Mr
Ozon's dismissal. The Company will update the market regarding any
potential co-operation with JSW as necessary and in accordance with
continuous disclosure obligations
-- Prairie has cash reserves of A$5.3 million on hand placing it
in a strong financial position
Enquiries
Prairie Mining Limited +44 20 7478 3900
Ben Stoikovich, Chief Executive info@pdz.com.au
Officer
Sapan Ghai, Head of Corporate
Development
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. 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 Lubelski W
giel BOGDANKA S.A.'s ("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.
Positive Rulings in Supreme Administrative Court
Poland's Supreme Administrative Court has finally and fully
rejected Bogdanka's administrative complaints against Poland's MoE
regarding the refusal of Bogdanka's 2013 application for a mining
concession over the K-6-7 deposit at Jan Karski.
This Supreme Administrative Court decision is final, cannot be
appealed and has upheld the 2016 Regional Administrative Court
decision that confirms the original 2015 decision, which denied
Bogdanka's mining concession application. It has been concluded
that granting a mining concession to Bogdanka would be a serious
violation of the provisions of Poland's Geological and Mining Law
("GML") and would be contrary to the rule of law as embodied in the
Polish constitution.
In a second ruling, the Supreme Administrative Court has upheld
the 2016 Regional Administrative Court decision that obliged the
MoE to approve Prairie's submitted Addendum No.3 for the K-6-7
deposit. Addendum No.3 is a detailed resource estimate for the
K-6-7 deposit according to Polish geological reporting standards
and is based on the results of Prairie's exploration program at the
deposit. This complaint was bought against the MoE by Prairie in
2015.
The Court's ruling has been passed back to the MoE, and the
Company is now waiting on the MoE to reassess the original decision
taking into account the court's verdict.
The Supreme Administrative Court's rulings re-affirm, beyond
doubt, that Bogdanka's 2013 claims over K-6-7 are without merit and
inadmissible.
Injunction against Poland's Ministry of Environment has been
over-turned
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 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 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. The Appeal
Court's decision 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 blocked Prairie's pathway to any future production
from Jan Karski. The Company is therefore considering all actions
necessary to pursue its legal rights regarding Jan Karski.
Corporate
Possible Co-Operation between Prairie and JSW
In February 2019, Prairie and JSW signed an extension to a
Non-Disclosure Agreement ("NDA") in order to discuss a deal
structure and commercial terms for any co-operation or transaction
and for the adaption of mine plans for both Debiensko and Jan
Karski to align with JSW's development concepts and to maximise
potential synergies at Debiensko. However, the term of the NDA
expired during the quarter.
Further, in June 2019, Mr Daniel Ozon, CEO of JSW, was dismissed
following his appointment in 2017. Mr W odzimierz Here niak has
since been appointed as the new CEO of JSW. There has been no
material discussion with JSW since Mr Ozon's dismissal nor since
the expiry of the NDA discussed above. The Company will continue to
comply with its continuous disclosure obligations regarding any
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 substantive discussions related to
the dispute.
Prairie is currently working with its lawyers (including
international arbitration legal experts) to prepare submissions and
finalise funding arrangements for the international arbitration
claim(s).
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.
Financial Position and Balance Sheet
Prairie has cash reserves of A$5.3 million placing it in a
strong financial position.
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 30 September 2019, the Company has an interest in the
following tenements:
Location Tenement Percentage Status Tenement Type
Interest
------------------- ------------------------------------ ----------- -------- ------------------------------------
Jan Karski, Poland Jan Karski Mine Plan Area (K-4-5, 100 Granted Exclusive Right to apply for a
K-6-7, K-8 and K-9)(1) 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, K-6-7, 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. 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 precludes any other parties being
granted any licence 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 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 now overturned the injunction in place
against the MoE. Prairie believes that the Appeal Court's decision
is fundamentally flawed. Prairie will continue to take relevant
actions to pursue its legal rights regarding Jan Karski.
(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. Prairie has now received a final "second
instance" decision from the MoE that has denied the Company's
amendment application. However, 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. 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 30 September 2019
----------------------------------
Consolidated statement of cash Current quarter Year to date
flows $A'000 (3 months)
$A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (853) (853)
(b) development - -
(c) production - -
(d) staff costs (232) (232)
(e) administration and corporate
costs (301) (301)
1.3 Dividends received (see note - -
3)
1.4 Interest received 35 35
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) (21) (21)
(a) Business development costs 57 57
(b) Property rental and gas
sales
---------------- -------------
Net cash from / (used in)
1.9 operating activities (1,315) (1,315)
----- ------------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant and equipment (3) (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)
------- ----------------------------------- ---------------- -------------
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 6,620 6,620
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (1,315) (1,315)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (3) (3)
4.4 Net cash from / (used in)
financing activities (item
3.10 above) - -
4.5 Effect of movement in exchange
rates on cash held - -
---------------- -------------
Cash and cash equivalents
4.6 at end of period 5,302 5,302
------- ----------------------------------- ---------------- -------------
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 1,302 1,120
5.2 Call deposits 4,000 5,500
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) 5,302 6,620
---- ----------------------------------- ---------------- -----------------
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 (172)
----------------
6.2 Aggregate amount of cash flow from loans Nil
to these parties included in item 2.3
----------------
6.3 Include below any explanation necessary to understand
the transactions included in items 6.1 and 6.2
----- -----------------------------------------------------------------
Payments include executive remuneration (including bonuses),
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 (500)
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 (1,000)
---- ------------------------------------ --------
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 October 2019
(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
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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
DRLMBBBTMBTJMJL
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