Saratoga plans $100m Indonesia mining unit IPO

According to the Nikkei Asian Review, the PE firm plans to release as much as 20% of the company, which will use the proceeds to develop its mining assets and build a smelter to process copper and gold concentrates.

MSJ is the holding company for the Tujuh Bukit Gold and Copper Project in East Java that until year ago had been at the center of a dispute between Australian firm Intrepid Mines and its former Indonesian partner Indo Multi Niaga (IMN).

IMN held the license for the project from 2007 - due to local restrictions covering direct foreign ownership - with the understanding that Intrepid would hold an 80% stake in the project.

But when the law changed two years later, the nominee structure was unwound, and Intrepid stopped paying IMN salaries in 2011 following disagreement with the management over the shareholder agreement, but continues to pay $105 million to fund work at the site.

Eventually, the license was transferred to a new majority shareholder - Bumi Sukses Indo (BSI), an entity controlled by Saratoga co-founder Edwin Soeryadjaya - and Intrepid was kicked off the site in 2012. The dispute only ended when Kendall Court Capital Partners acquired Intrepid Mines' interest in the project for $80 million, in a deal brokered by Provident Capital and Saratoga.

Kendall Court acquired a convertible bond and option into MSJ that would give it a 22.5% stake in the business if fully converted. IMN also issued a $70 million promissory note to Intrepid subsidiary Emperor Mines for a bond that can convert into a 15% stake in MSJ once it goes public. Emperor also has the right to acquire a further 7.5% stake in MSJ for $37.5 million at the time of the IPO.

MSJ has assets of $4 billion and plans to start developing the gold mine this year, with production slated for 2016. The copper project is due to start in 2019, with the smelter being built shortly after. The mines is estimated to have as much as 29 million ounces of gold, 19 billion pounds of copper and 13 million ounces of silver.

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• Topics
• Southeast Asia
• Industrials
• Exits
• Saratoga Capital Group
• IPO
• Exit
• Kendall Court Capital Partners
• Commodities