CITIC Limited Half-Year Report 2019

46 CITIC Limited Half-Year Report 2019 For the six months ended 30 June 2019 3 Critical accounting estimates and judgement (continued) (b) Mineralogy Pty Ltd (“Mineralogy”) disputes (continued) Royalty Component B Dispute (continued) On 12 January 2018, Sino Iron paid to Mineralogy the judgment sums of US$82,409,227.91, including US$7,702,492.91 interest, plus interest on that amount, in accordance with Justice K Martin’s final orders on behalf of itself. Sino Iron paid the same amount on behalf of Korean Steel. Since that time and up to the date final orders were made by the Western Australian Supreme Court of Appeal, the CITIC Parties have continued to pay Royalty Component B to Mineralogy each quarter in accordance with the judgment of Justice K Martin. The CITIC Parties appealed the consolidation orders and final orders made by Justice K Martin. These appeals were heard on 4 and 5 December 2018 by the Court of Appeal of the Supreme Court of Western Australia. President Buss and Justices of Appeal Murphy and Beech delivered their judgment in the appeal on 21 May 2019. The CITIC Parties were largely unsuccessful in the appeal. While the Court of Appeal allowed certain limited parts of the CITIC Parties’ appeal, the Court’s construction of the Disputed Phrase, which was the key issue for determination, was “broadly consistent” with the decision of Justice K Martin at first instance. Among other things, the Court of Appeal found that the Disputed Phrase should be construed as referring to the “prevailing published export market price” for Mount Newman fines and Brazilian pellets for the preceding quarter. The Court of Appeal also dismissed the CITIC Parties’ appeal against the consolidation orders. The CITIC Parties paid Royalty Component B to Mineralogy for the quarter ending 30 June 2019 in accordance with the judgment of the Court of Appeal. On 26 July 2019, the CITIC Parties filed an Application for Special Leave to Appeal to the High Court of Australia in respect of the judgment delivered by the Court of Appeal. The High Court has not yet determined whether to grant that application. FCD Indemnity Disputes Mineralogy and Mr. Palmer have commenced and threatened to commence proceedings to pursue claims pursuant to an indemnity given by the Company under the FCD to Mineralogy and Mr. Palmer. That indemnity extends to losses suffered by Mineralogy and Mr. Palmer in relation to the failure by Sino Iron and Korean Steel to perform their obligations under the project agreements. Notes to the Consolidated Financial Statements