CITIC Limited Half-Year Report 2020

44 CITIC Limited Half-Year Report 2020 For the six months ended 30 June 2020 Notes to the Consolidated Financial Statements 3 Critical accounting estimates and judgement (continued) (b) Mineralogy Pty Ltd (“Mineralogy”) disputes (continued) Option Agreement Dispute (continued) On 26 February 2020, Justice K Martin ordered there be no further amendments to the pleadings without the leave of the Court. On 27 May 2020, Justice K Martin heard Mineralogy’s application for leave to amend its defence and counterclaim to introduce, among other things, a claim that the Joint Development Agreement (“JDA”) is in force and effect. The JDA is one of the project agreements for the Sino Iron Project. Justice K Martin reserved his decision on proposed amendments introducing the JDA pending determination of the CITIC Parties’ strike out application of 18 May 2020 in the Mine Continuation Proposals/Tenure proceeding. In its latest amended defence and counterclaim, Mineralogy makes allegations of breach, repudiation, frustration and termination of the Option Agreement on various grounds, among other allegations. Mr. Palmer relies on the matters pleaded by Mineralogy. Mineralogy’s counterclaim seeks damages of US$205,000,000 (which it says is the purchase consideration for the further company), damages equating to the royalties that would have been payable by the further company to Mineralogy on the amount of magnetite ore required to produce six million tonnes of iron ore concentrate, and damages for the value of the lost opportunity to receive royalties payable on the additional one billion tonnes of ore. The CITIC Parties, Mineralogy and Mr. Palmer must complete discovery by 31 August 2020. The proceeding has been listed for a ten day trial, commencing on 7 December 2020. The trial is limited to issues of liability only. 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 Fortescue Coordination Deed (“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.