Intrepid ex-partner flags compensation offer in gold mine dispute
MELBOURNE/JAKARTA May 7 (Reuters) - An Indonesian company is willing to reimburse Australian explorer Intrepid Mines for work it carried out on a huge gold prospect in Indonesia, looking to resolve a bitter dispute over rights to the mine, a lawyer said.
At stake is ownership of the Tujuh Bukit project, considered one of the world's 10 best undeveloped gold and copper projects, with a potential 30 million ounces of gold, 19 billion pounds of copper and 73 million ounces of silver.
The battle is one of several mine ownership and partnership disputes that have spooked foreign investors in Indonesia. These include a fight involving Churchill Mining Plc, which is suing the Indonesian government for $2 billion in compensation over lost rights to a coal project.
Investors were once so bullish on Tujuh Bukit, despite it being in a protected forest where open pit mining is not allowed, that Intrepid's market value peaked two years ago at more than $1 billion.
The Brisbane-based firm, which will brief unhappy shareholders at its annual meeting on Wednesday, is now worth just A$147 million ($150 million) after its workers were forced off the site last July and its partner, PT Indo Multi Niaga (IMN), transferred the mining licence to a new company.
Shares were also sold to new investors, including powerful Indonesian businessmen Edwin Soeryadjaya and Garibaldi Thohir.
"They are breaching their agreement with us," Tony Wenas, Intrepid's chief executive in Indonesia, told Reuters.
A lawyer for IMN said the company would be willing to reimburse Intrepid $78 million, which IMN says the Australian firm spent on work at Tujuh Bukit.
"We are ready to reimburse," Hendry Muliana Hendrawan from the law firm Adnan Kelana Haryanto & Hermanto told Reuters late on Monday. He also represents PT Bumi Sukses Indo (BSI), the company to which IMN transferred the Tujuh Bukit mining licence.
Intrepid had not received any formal approach about being reimbursed, a spokesman said, adding that the firm had spent more than $100 million on the project. However, its main aim was to win back its 80 percent interest in the project, he said.
Hendry said the dispute over the alliance agreement with IMN should be resolved by an arbitration tribunal in Singapore. Intrepid's spokesman said that would only be the company's last resort.
Intrepid has vowed to fight a legal battle to reclaim its 80 percent interest in the project, but so has far made no headway negotiating with BSI.
"Having the right connections is essential," said Owen Hegarty, vice-chairman of G-Resources Group, which started producing gold in Indonesia last year.
Adding to Intrepid's woes, a new shareholder, Quantum Pacific, has called on shareholders to boot Chief Exective Brad Gordon and four other board members and replace them with its own appointees, including Quantum Pacific's lead partner Greg Mazur as CEO.
Intrepid has yet to set a date for the shareholder vote, which must be held before the end of June. But before that, it will face heat from Mazur at the company's annual meeting on Wednesday.
"This company's in crisis," Mazur, a former head of Asia M&A at Merrill Lynch, told Reuters. "The board is taking a hostile litgation approach, which we believe is completely the wrong way to go."
Intrepid's top shareholder, 8.5 percent stakeholder Taurus Funds Management, is backing the board at present, taking the view that it should stay at least until a deal is reached in Indonesia.
"People on the board have far more knowledge about the history of this project than anyone that comes in from the outside," said Gordon Galt, a principal at Taurus Funds Management.
Intrepid has said its other major shareholders also support the current board.
Quantum Pacific's Mazur has yet to spell out how he expects to win back rights to the Tujuh Bukit project, but has said he has experience in negotiating with Soeryadjaya.
($1 = 0.9770 Australian dollars) (Reporting by Sonali Paul; Editing by Richard Pullin)
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