It will raise the issue for dispute settlement under the Thailand-Australia Free Trade Agreement (TAFTA).
Kingsgate is the parent company of Akara Resources Plc, which owns the Chatree gold mine in Phichit province. Mining activities ceased from Jan 1, 2017, by order of Prime Minister Prayut Chan-o-Cha. The cabinet handed down the order on May 10, 2016 after the government received complaints from villagers and non-governmental organisations (NGOs) regarding health concerns.
Chief executive Greg Foulis said the company will be seeking a range of remedies, including compensation, from the Thai government as the measures taken against the Chatree gold mine are in violation of TAFTA.
"As a first step, Kingsgate has today notified the Prime Minister of Thailand it wishes to engage in consultations as required under TAFTA," said Mr Foulis.
TAFTA was signed in 2004 between Thailand and Australia to promote and improve the environment for bilateral services, trade and investment. It entered into force in 2005. The agreement contains a range of provisions specifically relating to investment protection.
"These provisions guarantee certain rights to Australian investors in Thailand, including the right to seek impartial resolution of disputes with the Thai government relating to covered investments by way of arbitration before an international tribunal," said Mr Foulis.
The company realises TAFTA consultations could take up to three months, and failing a mutual outcome, any international arbitration proceedings that may follow under TAFTA can take an indeterminate amount of time to resolve, and could involve significant expenditure by Kingsgate. As a result, the company is investigating a range of funding options for the potential TAFTA arbitration process should it go ahead.
Thai authorities were not available for comment.
Kingsgate's move came after the company tried several times to seek talks with Thai authorities as well as Gen Prayut to find a solution that could allow Akara to resume its mining operations.
Last year villagers and NGOs near the mine filed complaints against Akara, saying their health was adversely affected by the mining.
The company insisted it has done everything required of it legally and that its operations have not damaged the environment or residents' health. It also sought research from university studies to argue its mining activities have not damaged villagers' health.
Akara claimed ceasing mining will mean losses of 39 billion baht for the company. Since December 2016, Akara has laid off 1,000 employees, leaving 50 employees to work on machines and equipment maintenance.
It needs to begin a rehabilitation process in all mining areas before returning the land to the Thai government, including growing more trees, he said.
Akara holds seven licences to continue mining through 2028. Based on the company's exploratory findings, an estimated 40 million tonnes of gold ore are underground.