Home / Corporate / Zurich helps pursue Thailand gold mine claim
25 March 2019
Australian mining company Kingsgate and Zurich-led insurers will work together to pursue a trade agreement claim against the government of Thailand over the expropriation of the Chatree gold mine.
Kingsgate and Zurich last week settled a long-running political risk insurance claim and will now focus on the company’s demand for compensation under the Thailand-Australia Free Trade Agreement (TAFTA).
The Sydney-based miner started proceedings in 2017 against Thailand, with the matter still continuing and a hearing scheduled for November.
“Kingsgate and the insurers will be working together to fully prosecute the TAFTA claim,” the company said.
The insurance settlement includes a cash payment of $US55 million ($76.8 million) to be made to Kingsgate by the middle of next month.
Insurers will also contribute up to $US3.5 million ($4.9 million) towards the TAFTA arbitration costs and have agreed to a sharing arrangement for distributions of any proceeds.
The Chatree open-pit mine, about 280km north of Bangkok, started commercial operations in 2001 and produced more than 1.8 million ounces of gold and 10 million ounces of silver before it was expropriated by the Thai Government in 2016.
Kingsgate also experienced a disruption the year before as it addressed disputed environmental issues, and raised its policy cover from $US30 million ($41.8 million) to $US200 million ($279 million).
A claim lodged after the Thai Government ordered the mine’s closure was originally denied by the Zurich-led syndicate of Australian and international providers, leading to proceedings in the Supreme Court of NSW as Kingsgate sought the maximum liability cover under the policy.
Kingsgate Executive Chairman Ross Smyth-Kirk says the settlement is an “excellent outcome” and provides funds to pursue other development opportunities.
“I realise it has been a long recovery process for our loyal shareholders, but this settlement transaction provides material upside for our company,” he said.
A Zurich spokesman told insuranceNEWS.com.au the company will not comment on the claim settlement.