MELBOURNE/JAKARTA Feb 25 A $4 billion copper
and gold project in Indonesia, snatched from an Australian
company two years ago, is set to come back to the market this
year in a public offering by its new owners, led by two local
The owners of Tujuh Bukit plan an initial public offering in
the third quarter of 2014, looking to raise up to $75 million
and aiming for a market capitalisation of at least $800 million
on listing, a controlling stakeholder said.
Work will initially focus on a zone that according to a 2012
report may hold at least 1.6 million ounces of gold and 60
million ounces of silver, generating cash before attention turns
to what has long been recognised as one of the world's largest
undeveloped copper lodes.
"Basically it's a very profitable project in its own right
and allows us to generate cash flows and start to entrench
ourselves in the area," said Gavin Caudle, a partner in
Southeast Asia-focused Provident Capital Partners, a major
shareholder in the Tujuh Bukit holding company.
The plan is to start building the mine later this year, with
first gold production expected in 2016, ahead of the copper
project, where construction would begin only in 2019, he said.
"The copper project's still got a fair way to go ... It's a
massive project. The capex is in the billions," Caudle told
Reuters by telephone from Singapore.
At one time eyed by Brazil's Vale, the mine in
East Java was once seen as a company maker for Australian firm
Intrepid Mines, which spent $100 million proving up a
world-scale project that may hold 19 billion pounds of copper,
nearly 29 million ounces of gold and 13 million ounces of
But Intrepid was kicked off the site in 2012 by its partner,
who transferred the mining leases into a new company and brought
billionaire Edwin Soeryadjaya and other investors into the
Intrepid went to court and arbitration to reclaim its rights
to 80 percent of the project, but finally gave up and reached a
settlement last week with Soeryadjaya and his partners.
Under the deal, Intrepid received 22 percent in a new
holding company, PT Merdeka Serasi Jaya, which it onsold to
Singapore-based fund Kendall Court for $80 million, a "good
outcome" compared with protracted litigation, new managing
director Scott Lowe told Reuters.
For Intrepid, it offered a clean exit from a two-year
nightmare, which saw its market value crumble from A$1 billion
to A$140 million.
For the new owners it offered a clear path towards
developing Tujuh Bukit, with plans to seek a strategic partner
with mining expertise to help develop the huge copper mine.
In light of Intrepid's experience, Indonesia's recent export
tax on partly processed ore and a ban on ore exports, it may be
tough to attract a big miner with the kind of expertise needed
to develop the huge copper project, said UBS analyst Tom Price.
"Given they're required to invest large sums of money just
to get the project up and running, if you're a global miner ...
you'd probably be thinking the risk is higher here now, perhaps
I should be considering options elsewhere where the risk is
lower," Price said.
PATIENT ON COPPER
The Tujuh Bukit partners, however, are undaunted by
Indonesia's export ban, aimed at driving miners to process metal
with Indonesia to generate more value at home.
"Copper exports are very important, and (we) believe that
solutions will be found to enable copper mining to thrive in the
future," said Chris Chia, managing partner of Kendall Court.
Kendall Court, which has around $300 million in assets under
management, was attracted to Tujuh Bukit because of the resource
and the parties backing it.
"This is one of the best undeveloped copper assets in the
world and its sponsors, Provident, Saratoga and Boy Thohir, are
very reputable and established," Chia said.
PT Saratoga Investama Sedaya Tbk is Soeryadjaya's
private equity firm. Garibaldi "Boy" Thohir, who Forbes ranks as
one of Indonesia's 50 richest people, is chief executive of coal
miner Adaro Energy Tbk.
Saratoga said Soeryadjaya was unavailable to comment.
Intrepid, meanwhile, is looking to invest in gold, copper or
other base metals projects in countries outside of Indonesia.
"I would say the same thing to any other foreign company
looking to invest in Indonesia ... There have been some policy
decisions made in Indonesia that really change the sovereign
risk profile," Lowe said.
(Reporting by Sonali Paul; Editing by Richard Pullin)