CITIC Limited Half-Year Report 2019

49 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) (ii) Palmer Petroleum FCD Indemnity Claim (continued) Following the completion of pleadings, on 31 May 2018 the Court made orders relating to the discovery of documents by Mineralogy. Mineralogy did not seek discovery from the CITIC Parties. Mineralogy 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. On 5 November 2018, Justice K Martin heard Mineralogy’s application for an order that there be a preliminary determination of issues. On 25 January 2019, the Court handed down its ruling rejecting Mineralogy’s 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. Tenure claim The continued operation of the Sino Iron Project requires it to expand beyond the footprint it currently occupies. The need for expansion is primarily driven by the need to accommodate waste rock and tailings, which are necessary by-products of the mining process. The mining tenements upon which the Sino Iron Project is currently conducted, and those into which the CITIC Parties wish to expand in order to continue operation, are all held by Mineralogy. Without an expanded footprint, it will be necessary to suspend operations at the Sino Iron Project. The CITIC Parties commenced a proceeding against Mineralogy and Mr. Palmer in the Federal Court of Australia (“Proceeding WAD 471/2018”) in relation to the failure and refusal of Mineralogy to: – submit Mine Continuation Proposals for the Sino Iron Project to the State under the State Agreement; – grant further necessary tenure for the Sino Iron Project; – take steps to secure the re-purposing of general purpose leases for the Sino Iron Project; and – submit a Programme of Works for the Sino Iron Project to the State. Notes to the Consolidated Financial Statements