Intrepid in fight over Tujuh Bukit

By Peni Pedriawan

ASX and TSX listed Intrepid Mines Limited recently stated it "intends to vigorously exercise its rights to acquire shares in PT Indo Multi Niaga," having paid a total of US$95 million to the company and its shareholders or almost double than the agreed original funding commitment.

In a report to shareholders also submitted to the Australian Stock Exchange, Intrepid said the letter is to provide clarity in light of recent unsubstantiated media reports circulating in the market.

IMN, a Kuasa Pertambangan (KP) holder company for Tujuh Bukit tenements since 2006, entered into an alliance agreement with Intrepid in 2008, which stipulated that the latter will provide funding for the Tujuh Bukit project, and a foreign direct investment company would be formed between both companies to provide mining services to IMN, and that if the Mining Law changed to allow for foreign investment in companies holding mining licenses, the parties would implement a structure to secure direct equity for Intrepid in the company holding the mining license.

A follow up alliance agreement was signed in 2009 and 2010, which were amended on November 24, 2010 and June 3, 2011 following the issuance of the 2009 Mining Law, which allows foreign companies to hold direct equity interests in Indonesian foreign investment companies holding mining licenses.

"It was in this document that IMN would then be converted into a foreign investment company, in which 80 percent of the expanded equity in IMN would be issued to Intrepid," said Intrepid CEO Brad Gordon, adding that IMN stated it will apply for all necessary approvals, including from Indonesia?s Investment Coordinating Board and Ministry of Law and Human Rights as well as necessary recommendations from the Regent of Banyuwangi and the Ministry for Energy and Mineral Resources.

"In compliance with its agreement to IMN, Intrepid has expended a total of US$95 million in payments to shareholders of IMN, as well as to fund exploration activities at Tujuh Bukit. This is well in excess of the company's original US$50 million funding commitment," he said.

However, IMN shut down the site in just ten days after requesting and receiving the most recent payment from Intrepid, dated July 9, 2012.

Gordon than added that to date, IMN has not advised Intrepid that it has applied for the required approvals and recommendations to implement the agreed shareholding structure, stating that despite protracted discussions, IMN and its shareholders have accepted the money paid under the agreements, but have consistently failed to implement the agreed shareholding structure.

Intrepid stated it has taken legal advice that foreign shareholding in Indonesian companies holding mining licenses is permitted under Indonesian law, subject to the requisite government approvals being obtained, and that the company intends to vigorously exercise its right to acquire shares in IMN.

"I want to assure all stakeholders that Intrepid has, at all times, conducted itself in a straight-forward and honest manner in these matters, with absolute adherence to the law. Simply put, the rumours and misleading statements being circulated about our negotiations, agreements and related actions with our partners and otherwise in relation to Tujuh Bukit are nefarious and unfounded at best," Gordon pointed out.

Editing by Er Audy Zandri