4 Operations Report
Operations Report Chatree Gold Mine Thailand Summary Akara Resources Public Company Limited (“Akara”), a subsidiary of Kingsgate, ceased operating the Chatree Gold Mine on 31 December 2016 in accordance with the closure order by the Thai Government. Chatree was placed on Care and Maintenance effective 1 January 2017. Approximately 31 full time staff remain at the Chatree Gold Mine to manage the ongoing Care and Maintenance and rehabilitation works.
landholders, providing environmental bonding to cover any reclamation works is not a licence to conduct mining activities. Akara was particularly pleased to report that a large number of residents located near Chatree expressed their support for the approval of the SPLs. In light of these positive developments the following options remain available to the Company:
Chatree Closure Remedies The arbitral hearings under the Thailand – Australia Free Trade Agreement (“TAFTA”) that relate to the Thai Government’s premature closure of the Chatree Gold Mine in 2016, were heard in full in Singapore, from 3 to 12 February 2020. As previously stated the TAFTA Tribunal has ordered that the proceedings are to be kept confidential, except where disclosure is required to fulfil a legal duty. While Kingsgate appreciates it is frustrating for shareholders that more than 18 months has elapsed since those arbitral hearings, Kingsgate has always maintained that it has various strategies to restore the value of Chatree for shareholders which includes a negotiated settlement. In September 2020, Kingsgate was delighted to announce that its subsidiary, Akara Resources, was granted permission by the Thai Government to sell the high value gold and silver “sludge,” that was secured at the Chatree Gold Mine, to a refinery to be processed into doré.
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The sludge refers to material cleaned from the tanks and processing plant following the closure of the Chatree Gold Mine on 31 December 2016, and has always been, and acknowledged to be, the property of Akara Resources. Akara Resources agreed terms with a Thai refinery to process the sludge pursuant to new legislation requiring Thai gold to be refined in Thailand. The sludge was processed in three separate shipments to de-risk the process. In November 2020, another positive move from the Thai Government resulted in Akara Resources being issued 44 special mineral prospecting licences (SPLs) over 397,226 rais of land in Chon Daen and Wang Pong Districts, in the Phetchabun Province. The term of the SPLs is for a period of five years until October 2025. The issuance of these SPLs which is subject to all relevant Thai mining laws including obtaining permission from
〉 Continue to seek and enforce a cash award against the Thai Government if Kingsgate is successful in its claim. As previously stated, while Kingsgate can’t guarantee this will happen, the Board maintains that the Company has excellent prospects for a successful outcome; and 〉 Agree to a negotiated settlement. Kingsgate has previously advised that it has been negotiating with the Thai Government in “good faith” in parallel to the TAFTA decision to ensure that the Company has multiple options to restore the value of the Chatree Gold Mine for shareholders. As outlined in the “TAFTA Update” release in February this year (See ASX:KCN release titled “TAFTA Update” dated 18 February 2021), there are a number of issues that Kingsgate would need to have guaranteed by the Thai Government for this to occur. These include but are not limited to: 〉 tenure around key licences and permits; 〉 investment and taxation incentives; 〉 access to significant exploration areas; and 〉 the right to freely enjoy the asset without any further obstruction.
