Sovereign risk is rampant in Indonesia, it would appear. It would also appear that Intrepid has left itself susceptible to severe shareholder angst and even legal action.
Its desperate deal this week to buy influence through an Indonesian businessmen, to get its hands back on what it has always purported to be its own resource, is a signal that all was not well from the beginning.
The intricacies of Indonesian laws are too much to delve into here. Suffice to say that Intrepid's predecessors were advised by Jakarta law firms, including a Baker & Mackenzie affiliate, that they never had a legal entitlement to the resource.
There is no reason to think that the subsequent 2010 reforms to Indonesia's investment laws had improved their legal position either.
Was the fact that there was no enforceable title to Tujuh Bukit properly disclosed by Intrepid to its shareholders?
There is mention of the legal risks in the prospectus for instance to the company's $112 million Canadian share issue 18 months ago, an issue followed by director share sales at far higher prices than now.
Whether this disclosure is enough is a moot point, especially for a company which sold its main asset, the Paulsen's mine in Western Australia, and relied on this one "company-maker" to which it never enjoyed formal title.
Read more: http://www.smh.com.au/nsw/company-ma...#ixzz22cMMQfEU