Akara pledges to fight gold mining ban

SET-listed Akara Resources Plc will fight to the end in a bid to avert huge losses that will be incurred from the government’s order for the company to stop mining by yearend, senior officials says.

Akara estimates stopping its mining business in Phichit province would mean losses of 39 billion baht.

The cabinet decided this week to stop renewing and issuing its licences for gold ore exploration and gold mining following a public outcry over health and environmental issues.

Akara’s creditors fear the decision could affect the company’s plan to repay its remaining debts.

The company said it will consider using not only the Thai judicial system but also an international dispute arbitration process.

Akara chief financial officer Siroj Prasertphon said the chief executive of Australiabased Kingsgate, its parent company, will visit Thailand next week to seek talks with senior government officials and ministers about the issue.

“Our CEO is very concerned about the case as we are confident that we have never broken any laws and regulations. We need a clear explanation from the government about why we have to stop our business,” said Mr Siroj.

“We are in talks with our legal department about whether to file a lawsuit through the Administrative Court or to seek a dispute solution through international arbitration.”

Mr Siroj said Akara still holds seven licences to continue mining over the next seven years. However, the government’s order has made those licences useless and caused huge financial damage.

“We estimate to have a huge loss of around 5.6 billion baht per year, or around 39 billion baht in total, as we don’t have any right to use the seven licences we have been granted,” he said.

He said the calculation was based on the current global gold price of about US$1,200 per ounce and an exchange rate of 35 baht to the dollar.

Mr Siroj said Akara had borrowed 3.8 billion baht from local banks for the company’s capital investment and had already paid a certain amount of debt to creditors.

But the company still has 2.2 billion baht of debt that needs to be paid back to creditors within three years.

“The creditors are very concerned about whether we can pay the debt and they keep asking us to update the debt payment plan,” said Mr Siroj, who declined to name the local creditors.