24/11/2017 - 16:13

Citic assessing options after Palmer awarded $US149m

24/11/2017 - 16:13

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Chinese group CITIC is evaluating its options after the Supreme Court ruled on Friday that it owed Clive Palmer nearly $US150 million in royalties on its Sino Iron project in the Pilbara.

Chinese group CITIC is evaluating its options after the Supreme Court ruled on Friday that it owed Clive Palmer nearly $US150 million in royalties on its Sino Iron project in the Pilbara.

Citic said it was disappointed with the Supreme Court Judgment, but was guarded in its response.

“The Judgment is lengthy, addressing a number of complex issues,” the company said in a statement to the Hong Kong stock exchange.

“The company is carefully considering the judgment and its implications.

“If any appeal is commenced against the Judgment and/or there are any material developments, the company will issue further announcements as and when appropriate.”

In a 212 page-ruling, justice Kenneth Martin found Citic was liable to pay $US149.4 million ($A199.2 million) in royalties to Mr Palmer’s company, Mineralogy.

This relates to the period from the December 2013 quarter, when local subsidiary CITIC Pacific Mining commenced production at the Sino Iron project, to the March 2017 quarter.

The judgement implies Citic is also obliged to continue paying royalties to Mr Palmer.

Friday’s ruling adds to a string of legal disputes and court cases between Mineralogy, which owns the tenements that underpin the Sino Iron project, and project operator Citic.

The royalty dispute related to an agreement struck in 2006, giving Citic the right to mine 2 billion tonnes of magnetite ore on Mineralogy's tenements, in return for a one-off payment of $US415 million and two royalty streams.

Royalty A is based on the amount of ore extracted, and is being paid.

Friday’s ruling related to royalty B, which is based on the amount of concentrate produced and its market value.

Citic had argued royalty B was not payable because (among other things) it was based on a defunct pricing benchmark.

Justice Martin found it was payable, with the amount based on spot iron ore prices.

His judgement also shed light on the scale of Citic’s investment in the Sino Iron project and the amount of revenue it has earned.

“It is also uncontroversial that to the date of trial in 2017, the Citic defendants have now invested over $US12 billion to establish what is a massive magnetite ore processing project at Cape Preston - the largest of its kind in the southern hemisphere,” the judgement stated.

Citing expert evidence at the trial, justice Martin said the value of magnetite concentrate exported by Citic from December 2013 to March 2017 was $US1.3 billion. 

 

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