Prairie Mining : September 2020 Quarterly Report

NEWS RELEASE | 30 October 2020

SEPTEMBER 2020 QUARTERLY REPORT

Prairie Mining Limited (Prairie or the Company) is pleased to present its Quarterly Report for the period ending 30 September 2020.

HIGHLIGHTS

• During the quarter, Prairie formally commenced the international arbitration claims (Claim) by serving Notices of Arbitration under both the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty (Treaties) on the Republic of Poland.
• • Prairie alleges that the Republic of Poland has breached its obligations under the Treaties through its actions to block the development of the Company's Jan Karski and Debiensko mines in Poland.
  • The Republic of Poland's actions have deprived Prairie of the entire value of its investments in Poland.
  • Claim for the damages may include but is not limited to the value of Prairie's historical expenditure in developing both the Jan Karski and Debiensko mines, lost profits and damages, which is linked to the net present value of both mines, and accrued interest related to any damages.
• In July 2020, Prairie announced that it had secured A$18 million of litigation funding to pursue its Claim against the Republic of Poland.
• • Prairie signed a Litigation Funding Agreement (LFA) with a subsidiary of London listed Litigation Capital Management Limited (LCM) to pursue the Claim against the Republic of Poland.
  • The LFA facility is currently being draw down and provides funding to cover legal, tribunal and external expert costs and defined operating expenses associated with the Claim.
  • A$18 million was provided as a limited recourse facility, being repayable in the event that the damages award is recovered from the Republic of Poland.
• During the quarter, Prairie completed a Share Purchase Plan (SPP) to raise A$4 million (before costs) for working capital requirements and business development opportunities.
• Prairie continues its efforts to identify and assess other suitable new business opportunities, focused on the resources sector. The Company will make announcements to the market as appropriate should an acquisition occur.

Enquiries
Prairie Mining Limited	[phone]
Ben Stoikovich, Chief Executive Officer	[e-mail]
Sapan Ghai, Head of Corporate Development

This announcement as been authorised for release by the Company's Chief Executive Officer, Mr Ben Stoikovich.

Prairie Mining Limited | LSE / ASX / GPW: PDZ | ABN: 23 008 677 852 | www.pdz.com.au

LONDON Unit 3C, 38 Jermyn Street | London | SWY1 6DN | T: +44 207	478 3900
PERTH Level 9, 28 The Esplanade, Perth WA 6000 | T: [phone] | F:	[phone]
WARSAW Wiejska 17/11 | Warsaw | 00-480

DISPUTE WITH POLISH GOVERNMENT

On 1 July 2020, the Company announced it had executed a LFA for A$18m (US$12.3m) with LCM. The facility is currently being draw down to pursue damages claims in relation to the investment dispute between Prairie and the republic of Poland that has arisen out of certain measures taken by Poland in breach of the Treaties.

On 9 September 2020, Prairie announced that it had formally commenced with the Claim by serving the Notices of Arbitration against the Republic of Poland.

Prairie's dispute alleges that the Republic of Poland has breached its obligations under the applicable Treaties through its actions to block the development of the Company's Jan Karski and Debiensko mines in Poland which effectively deprives Prairie of the entire value of its investments in Poland.

The Company's Claim against the Republic of Poland is being prosecuted through an established and enforceable legal framework, with Prairie and Poland at this stage of the process currently constituting the arbitral tribunal that will adjudicate the Company's Claim.

In February 2019, Prairie formally notified the Polish Government that there exists an investment dispute between Prairie and the Polish Government. Prairie's notification called for prompt negotiations with the Government to amicably resolve the dispute and indicated Prairie's right to submit the dispute to international arbitration in the event of the dispute not being resolved amicably. The Company remains open to resolving the dispute with the Polish Government amicably. However, as of the date of this report, no amicable resolution of the dispute has occurred, since the Polish Government has declined to participate in discussions related to the dispute and accordingly the Company has formerly submitted its Claim as discussed above.

Prairie's claim for compensation may include, but will not be limited to:

• The value of Prairie's historic expenditure in developing both the Jan Karski and Debiensko mines;
• Lost profits and damages that the Company has suffered as a result of Poland's acts and omissions which have resulted in the expropriation of both the Jan Karski of Debiensko mines, which is linked to the considerable Net Present Value of both mines at the time of Poland's international treaty breaches; and
• Accrued interest related to any damages award and all costs associated with pursuing the Claims to Arbitration.

The Company is not able to make any further comment in relation to the potential quantum of any claim for compensation at this point. Please refer to ASX announcements dated 26 April 2018, 28 May 2018, 18 January 2019, 13 February 2019, 4 April 2019 and 31 December 2019 for further details regarding the Company's dispute with the Republic of Poland.

Prairie's investment dispute with the Republic of Poland is not unique, with international media widely reporting that the political environment and investment climate in Poland has deteriorated since the change in Government in 2015. As a result, there are a significant number of International Arbitration claims being brought against Poland in the natural resources and energy sectors with damages claims ranging from US$120 million to over US$1.3 billion and includes Bluegas NRG Holding (Gas), Lumina Copper (Copper) and InvEnergy (wind farms).

Background to the Jan Karski Mine

The Jan Karski Mine (Jan Karski) is a large scale semi-soft coking coal project located in the Lublin Coal Basin in south east Poland. The Lublin Coal Basin is an established coal producing province which is well serviced by modern and highly efficient infrastructure, offering the potential for low capital intensity mine development. Jan Karski is situated adjacent to the Bogdanka coal mine which has been in commercial production since 1982 and is the lowest cost hard coal producer in Europe.

Key benefits previously identified for the local community and the Lublin and Chelm regions which would have been associated with the development, construction and operation of Jan Karski were recognised as the following:

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• creation of 2,000 direct employment positions and 10,000 indirect jobs for the region once operational;
• increasing skills of the workforce through the implementation of International Standard training programmes;
• stimulating the development of education, health services and communications within the region; and
• building a mine that creates new employment for generations to come and career paths for families to remain in the region.

In March 2016, Prairie released the results of a JORC compliant Pre-Feasibility Study (PFS) for Jan Karski prepared by independent international mining consultancies Golder Associates and Royal HaskoningDHV. The PFS demonstrated the technical viability and robust economics of Jan Karksi to be developed as a large-scale long life strategic coal supplier. Further details about the PFS are contained in the Company's announcement dated 8 March 2016.

Background to the Debiensko Mine

The Debiensko Mine (Debiensko), is a premium hard coking coal project located in the Upper Silesian Coal Basin in the south west of the Republic of Poland. It is approximately 40 km from the city of Katowice and 40 km from the Czech Republic.

Debiensko is bordered by the Knurow-Szczyglowice Mine in the north west and the Budryk Mine in the north east, both owned and operated by Jastrzębska Spółka Węglowa SA, Europe's leading producer of hard coking coal.

The Debiensko mine was historically operated by various Polish mining companies until 2000 when mining operations were terminated due to a major government led restructuring of the coal sector caused by a downturn in global coal prices. In early 2006 New World Resources Plc acquired Debiensko and commenced planning for Debiensko to comply with Polish mining standards, with the aim of accessing and mining hard coking coal seams. In 2008, the Polish Ministry of Environment (MoE) granted a 50-year mine license for Debiensko.

In October 2016, Prairie acquired Debiensko with a view that a revised development approach would potentially allow for the early mining of profitable premium hard coking coal seams, whilst minimising upfront capital costs.

In March 2017, Prairie released the results of a JORC compliant Scoping Study prepared by independent international mining consultancy Royal HaskoningDHV. The Scoping Study demonstrated the technical viability and robust economics for the fully permitted Debiensko mine to be a large scale, lowest cost and long life premium hard coking coal supplier. Further details of the Scoping Study care contained in the Company's announcement dated 16 March 2017.

CORPORATE

Busines Development

A number of opportunities have been reviewed during the quarter, and the Company will continue in its efforts to identify and acquire suitable new business opportunities. The Company is currently focusing on new opportunities in the resources sector.

However, no agreements have been reached or licences granted and the Company are not able to assess the likelihood or timing of a successful acquisition or grant of any opportunities.

Share Purchase Plan

During the quarter, the Company completed a SPP to raise A$4 million before costs for working capital requirements and business development opportunities.

As at 30 September 2020, the Company is in a strong financial position to pursue the Claim and continue with business development activities with the A$18 million LFA and cash reserves of A$5.8 million.

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Date of Annual General Meeting

The Company advises that its Annual General Meeting will be held in the coming months and a formal announcement confirming the date will be made in due course.

Forward Looking Statements

This release may include forward-looking statements. These forward-looking statements are based on Prairie's expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Prairie, which could cause actual results to differ materially from such statements. Prairie makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.

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