CITIC Limited Half-Year Report 2019

47 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) FCD Indemnity Disputes (continued) (i) Queensland Nickel FCD Indemnity Claim On 29 June 2017, the final day of the trial of Proceeding CIV 1808/2013, Mr. Palmer commenced a proceeding against the Company in the Supreme Court of Western Australia (“Proceeding CIV 2072/2017”) claiming damages in the sum of AUD2,324,000,000 (now reduced by an amended statement of claim to AUD1,806,438,000). This amount is alleged to represent the reduction in the value of the assets of the joint venture business carried on by the Queensland Nickel group of companies controlled by Mr. Palmer. The joint venture business was a nickel and cobalt refinery located at Yabulu in North Queensland. As Sino Iron and Korean Steel had not paid amounts sought by Mineralogy on account of Royalty Component B, Mr. Palmer claims that Mineralogy did not, and was unable to, provide the funds to Queensland Nickel Pty Limited to enable it to continue managing and operating the joint venture business. Mr. Palmer alleges that Queensland Nickel Pty Limited was subsequently placed in administration, followed by liquidation, because it did not receive those funds from Mineralogy. After commencing this proceeding, Mr. Palmer joined Mineralogy as a second plaintiff and Sino Iron and Korean Steel as second and third defendants. On 16 April 2018, the CITIC Parties filed an Amended Defence, which pleaded a number of defences, including that there has been no breach of the project agreements, construction arguments, causation and mitigation. Following the completion of pleadings, on 31 May 2018 the Court made orders relating to the discovery of documents by Mineralogy and Mr. Palmer. Mineralogy and Mr. Palmer did not seek discovery from the CITIC Parties. Mineralogy and Mr. Palmer proposed that various issues concerning the scope of the indemnity in the FCD be determined on a preliminary basis before discovery is given. The CITIC Parties opposed that course on the basis that a preliminary determination of issues would have limited utility and would lead to a disjointed proceeding. Notes to the Consolidated Financial Statements