CITIC Limited Half-Year Report 2019

48 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 (continued) On 5 November 2018, Justice K Martin heard the plaintiffs’ application for an order that there be a preliminary determination of issues. On 25 January 2019, the Court handed down its ruling rejecting the plaintiffs’ application. However, the Court did identify a different preliminary issue that it may be prepared to entertain. Neither party chose to pursue this preliminary issue. There continues to be differences between the parties as to the relevance of the categories of discoverable documents sought by the CITIC Parties. The issue will be determined by Justice K Martin following a hearing scheduled on 22 October 2019. No trial date has been set for this proceeding. (ii) Palmer Petroleum FCD Indemnity Claim On 16 February 2018, Mineralogy commenced another proceeding against the CITIC Parties in the Supreme Court of Western Australia (“Proceeding CIV 1267/2018”) in which it claims damages in the sum of AUD2,675,400,000. The statement of claim pleads that Mineralogy had agreed to provide: (a) from December 2009, funding; and (b) in or about 2013, all future working capital, to its wholly owned subsidiary, Palmer Petroleum Pty Ltd (now named Aspenglow Pty Ltd) (“Palmer Petroleum”). As the CITIC Parties had not paid Royalty Component B from the fourth quarter of 2013 to the second quarter of 2016, it is claimed that Mineralogy did not, and was unable to, provide the funds to Palmer Petroleum. Mineralogy alleges that as a result, Palmer Petroleum was wound up in insolvency. The statement of claim pleads that Palmer Petroleum subsequently lost rights to a Papua New Guinea petroleum prospecting licence and suffered a diminution in value, equivalent to the sale value of oil that allegedly would have been recoverable under that licence. Mineralogy claims that it suffered a loss equivalent to the diminution in value of its shareholding in Palmer Petroleum. On 24 April 2018, the CITIC Parties filed and served their defence, which is in similar terms to their defence in Proceeding CIV 2072/2017. The CITIC Parties have pleaded a number of defences including that there has been no breach of the project agreements, construction arguments, causation and mitigation. Notes to the Consolidated Financial Statements