MELBOURNE/JAKARTA May 7 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
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
"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
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
"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
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)