Alara Resources Limited

Published : May 19th, 2016

Khnaiguiyah Zinc-Copper Project - Legal Update

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Keywords :   Copper | Georgia | Gold | Judge | Oman | Precious Metals | Saudi Arabia | Zinc |

Khnaiguiyah Zinc-Copper Project - Legal Update

928f31ae-a129-49f9-8c23-d9b7d05ebfd7.pdf

ASX/MEDIA RELEASE

Wednesday, 18 May 2016

KHNAIGUIYAH ZINC-­‐COPPER PROJECT - LEGAL UPDATE

Alara Resources Limited (ASX: AUQ) (Alara or Company) provides this update on the case brought by United Arabian Mining Company LLC ('Manajem') against an Alara subsidiary before Saudi Arabia's Board of Grievances ("BOG") (the 'Case'). The Case involves disputes between the parties arising from the failed Alara-­‐Manajem joint venture for the Khnaiguiyah Zinc-­‐Copper Project in Saudi Arabia, incorporating a 26Mt JORC Ore Reserve (3.3% Zinc, 0.24% Copper) (the 'Project').

On 3 May 2016, Alara issued an update providing an overview of the Project, including an outline of the rise and fall of the earlier joint venture with Manajem, and insight into new avenues that have opened up for the Company relative to the Project. As indicated in that announcement, the Case continues to work its way through to a conclusion.

At the most recent hearing in the Case the judge asked Alara to provide an evidence brief connecting the dots between each of the documents Alara has submitted in support of its US$3,266,000 counterclaim against Manajem.

  • In 2010 and 2011 Alara made payments of US$3,266,000 to Manajem, this was over and above the

    >US$23,000,000 which Alara later invested on the Project, including the cost of the Definitive Feasibility Study.

  • Alara's counterclaim seeks the return of the US$3,266,000 it paid to Manajem for the transfer of the khnaiguiyah mining licence to the Alara-­‐Manajem joint venture company, i.e. Khnaiguiyah Mining Company ('KMC').

  • After Alara paid the US$3,266,000, Manajem reneged on its commitment to transfer the mining licence to KMC and this default eventually resulted in the undoing of the joint venture, as without the mining licence, KMC was unable to move the Project forward, notwithstanding the existence of a bankable, Definitive Feasibility Study completed by Alara per its commitments under the original 50:50 joint venture agreement with Manajem.

  • In response to the judge's direction, counsel for Alara are preparing an additional evidence brief explaining the purpose of the US$3,266,000 payments (i.e. consideration for transferring the mining licence) which are supported by banking receipts and other documents.

For its part, Manajem submitted a brief: (1) reiterating, but again failing to offer any evidence substantiating allegations of contractual breaches on Alara's part; and (2) requesting that BOG order the cancellation of the KMC Shareholders' Agreement and commercial/company registration.

Manajem may be seeking these cancellations to prevent Alara from claiming repayment of loans Alara made to KMC to enable KMC to operate. At this stage, with advice of counsel, Alara has chosen to defer any such claim and to focus the court's attention on Manajem's core breach. Alara achieves this by focusing its

counterclaim on a request for a judgment requiring Manajem to repay the US$3,266,000 it was paid to transfer the Project mining licence to KMC.

The next court date is scheduled for 25 May 2016.

For further information, please contact:

Justin Richard T | +61 8 9481 0389

Managing Director E | [email protected]

Elizabeth Hunt T | +61 8 9481 0389

Company Secretary E | [email protected]

About Alara Resources

Alara Resources Limited (ASX: AUQ) is an Australian-­‐based minerals exploration company with a portfolio of projects in Saudi Arabia and Oman. Alara has completed a Definitive Feasibility Study on the Khnaiguiyah Zinc-­‐Copper Project in Saudi Arabia, an Advanced Scoping Study on the Daris and Al Hadeetha Copper-­‐Gold Projects in Oman and a Feasibility Study for the Al Hadeetha Project, Washihi deposit. The Company is transitioning to establish itself as a base and precious metals mine development and production company. For more information, please visit: www.alararesources.com.

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Data and Statistics for these countries : Georgia | Oman | Saudi Arabia | All
Gold and Silver Prices for these countries : Georgia | Oman | Saudi Arabia | All

Alara Resources Limited

CODE : AUQ.AX
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Alara Resources LTD is based in Australia.

Alara Resources LTD is listed in Australia. Its market capitalisation is AU$ 7.1 millions as of today (US$ 4.3 millions, € 4.0 millions).

Its stock quote reached its highest recent level on January 14, 2011 at AU$ 0.48, and its lowest recent point on June 05, 2015 at AU$ 0.01.

Alara Resources LTD has 595 689 984 shares outstanding.

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Project news of Alara Resources Limited
8/12/2016Project Updates
Corporate news of Alara Resources Limited
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7/12/2016Letter to Ineligible Shareholders
7/8/2016Prospectus - Renounceable Issue
7/8/2016Letter to Optionholders - Renounceable Issue
7/8/2016Further Information & Project Update - Al Hadeetha Project
6/13/2016Further Information - Mineralisation at Al Hadeetha Project
6/8/2016Oman Project Update
5/31/2016Project Updates
5/19/2016Khnaiguiyah Zinc-Copper Project - Legal Update
5/11/2016Oman Project Update
4/13/2016Board Appointment and Appendix 3X
4/1/2016Feasibility Study Update
1/18/2016Option Expiry
12/23/2015Potential Breakthrough on Khnaiguiyah Project
12/18/2015Project Update - Oman
12/1/2015Results of Meeting
11/24/2015Recent Developments in Saudi Arabia
11/18/2015Listing Rule Compliance
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