PE investor fails to oust Intrepid board over Indonesia mining dispute

Quantum, which owns 5.4% of Intrepid, mounted its campaign over the Tujuh Bukit deposit, a copper and gold project in Java in which the company took an 80% stake in 2008.

The problems emerged when the seller, Indonesian firm Indo Multi Niaga, was sold to a new owner who transferred the mining license to a separate entity. This effectively dishonored the investment agreement with Intrepid, which has spent $100 million developing the project.

Greg Mazur, a founding partner at Quantum, said the debacle meant the shareholder group he represented had lost confidence in the board. Quantum had hoped to remove five of the seven board members and appoint four new directors to pursue a plan to win back a stake in Tujuh Bukit within nine months.

However, a majority of shareholders came out in support of the board in a vote held yesterday. The board wants to win back rights to the deposit by pressing for fraud and embezzlement charges against its former Indonesian partners.

"In our opinion, the board's legal strategy reflects an inexperienced and highly naive view of conducting business in Indonesia and puts any chance of project recovery at significant and unnecessary risk," said Quantum in a statement. "All precedent cases have favored the Indonesian party."

Intrepid's shares fell 8.7% to a three-month low of A$0.21 after the vote, valuing the company at A$117 million, down from more than A$1 billion in 2011.

According to an address to shareholders made by Intrepid Chairman Ian McMaster, more than 20% percent of the company's shares were bought by people from Indonesia, Singapore and Hong Kong - areas where Intrepid has previously had few investors - in the weeks leading up to the poll.

He said the company has been unable to find out if the new investors have ties to the new owners of Tujuh Bukit.

"Many of the shares are held through nominees, a number of whom have been very releuctant to reveal the beneficial holders as they are required to do so," McMaster added. "The company has been in discussion with the regulator over the lack of transparency, and will continue to seek clarification on the entities driving this activity."

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• Topics
• Southeast Asia
• Regulation
• Industrials
• Indonesia
• Commodities
• regulation