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Intrepid heading for arbitration on mining dispute

Australian Intrepid Mines Ltd, which is in dispute with an Indonesian company over a gold mining concession in East Java, is planning to take the battle to an arbitration panel in Singapore, an executive said on Tuesday

Raras Cahyafitri (The Jakarta Post)
Jakarta
Wed, August 21, 2013

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Intrepid heading for arbitration on mining dispute

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ustralian Intrepid Mines Ltd, which is in dispute with an Indonesian company over a gold mining concession in East Java, is planning to take the battle to an arbitration panel in Singapore, an executive said on Tuesday.

'€œWe will take it immediately, as soon as within this month,'€ Intrepid Indonesia executive general manager Tony Wenas said.

Intrepid was under the spot light recently following a dispute with local company PT Indo Multi Niaga (IMN), which holds a license to mine an area in Tujuh Bukit, Banyuwangi, East Java.

Intrepid and IMN were partners in developing the Tujuh Bukit mining site, which was dubbed one of the best undeveloped gold and copper projects in the world. Under the cooperation, established in 2008, Intrepid agreed to provide funds to IMN to develop the Tujuh Bukit concession.

The relationship turned sour after changes to IMN'€™s shareholder structure, coupled with the alleged transfer of the Tujuh Bukit mining license to another company,
PT Bumi Suksesindo, which was approved by the Banyuwangi regent in September 2012.

According to Tony, Bumi Suksesindo is now 5 percent owned by PT Alfa Suksesindo and PT Merdeka Serasi Jaya.

The latter is owned by private equity firm Provident Capital Partner and a number of Indonesian tycoons '€” Edwin Soeryadjaya, the founder of private equity firm Saratoga Capital; Garibaldi Thohir, the president director of major coal miners PT Adaro Energy; and Sakti Wahyu Trenggono, who is a major player in the telecommunications industry.

Intrepid said it was not informed about the mining license transfer and was in discussions with IMN to follow up on an agreement to change IMN'€™s status as a foreign investment company (PMA), in which Intrepid would hold 80 percent in ownership.

Despite the dispute, Intrepid continued to funds the development of Tujuh Bukit, it has delivered a total of US$95 million to IMN.

The dispute seeped into the boardroom battle when an Intrepid shareholder '€” Quantum Pacific Capital, said to be controlled by Edwin Soeryadjaya'€” proposed changes to the company'€™s board of directors.

Tony said that Intrepid would prefer peaceful negotiations rather than a legal process. He said that dialog between Intrepid'€™s Indonesian shareholder '€” media tycoon and politician Surya Paloh '€” and Edwin Soeryadjaya have been attempted but bore no result.

Intrepid is also embroiled in legal proceedings at the State Administrative Court in Surabaya against the Banyuwangi regent over the transfer of the Tujuh Bukit mining license. Under the country'€™s 2009 Mining Law, this is not allowed.

The court is expecting to issue its order this Thursday.

It is estimated that Tujuh Bukit has 80 billion tons of copper reserves and 25 million ounces of gold reserves. Production was slated for the middle of 2014 with initial volume of around 150,000 to 200,000 ounces. However, production is unlikely to commence production in the current climate.

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