PERTH (miningweekly.com) – ASX-listed Kingsgate Consolidated has launched a claim against the Thai government under the Australian-Thailand Free Trade Agreement (Tafta), claiming that measures taken by the Thai government against the company’s Chatree gold mine were in violation of this agreement.

Production at the mine ceased at the end of December last year, in compliance with the requirements of the Thailand government. The government gave no reason for the closure order.

Kingsgate on Tuesday said that, as a first step, the company had now notified the Prime Minster of the Kingdom of Thailand that it wished to engage in consultation as required under the Tafta.

CEO Greg Foulis pointed out in a statement to shareholders that, over the past 11 months, the company had made sustained, good faith efforts to engage with the Thai government in relation to the measures imposed against the Chatree gold mine, which ultimately resulted in the mine’s closure.

“Regrettably, Kingsgate has now reached a position where it believes that the only option to resolve the situation is to exercise its rights as a protected Australian investor under Tafta,” Foulis said.

Tafta, which was signed in 2004, contains a range of provisions specifically related to investment protection, including provisions that guarantee certain rights to Australian investors in Thailand, including the right to seek impartial resolution of disputes with the Thai government relating to covered investment, by way of arbitration before an international tribunal.

The Tafta consultation could take up to three months and, failing a mutual outcome, any international arbitration proceeding could take an undetermined time to resolve, Foulis said. He also warned shareholders that it could involve significant expenditure by Kingsgate.

He said on Monday that the company was investigating a range of funding options for the potential Tafta arbitration process, should it proceed.

The miner has previously said that in order to resume operations at Chatree, a significant amount of time and capital expenditure would be required, as well as the granting of additional licences and approvals.