IAU - Intrepid Mines

[kennas]

I'm Surprised your amazed Kennas...you have worked in Central Africa and travelled extensively, you have seen crazy up close and you should know that crazy doesn't stop at street level it just continues on up the money chain, corruption greed and power perverts these people, in these wild west (anything goes) country's.

Indonesia is what less than 1 decade out of one of the greatest (worst) dictatorships in world history.

Well, I'm more amazed at what Intrepid have actually done in the background with this one all along now.

Along with the forestry laws that don't allow them to mine most of this deposit anyway, there's still questions on whether they actually have any right to this resource anyway.

Michael West has been investigating:

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

[kennas]

They've tried to provide some 'clarity' over the above news article that they seem to be claiming is 'unsubstantiated'.

What they have actually done is confirm his 'unsubstantiated' claims by my reading of it.

They key seems to be the Alliance Agreement and the proposal to apply for the required approvals for Intrepid to actually own their 80% of the project.

The Alliance Agreement was signed by all parties in 2009 and 2010 and was amended on 24 November 2010 and 3 June 2011. The document affirmed that IMN would be converted into a foreign investment company and that 80% of the expanded equity in IMN would be issued to Intrepid.

The amended agreements envisage that IMN will apply for all necessary approvals to implement the new structure. This includes approvals from Indonesia’s Investment Coordinating Board and Ministry of Law and Human Rights (including necessary recommendations from the Banyuwangi Bupati and the Ministry for Energy and Mineral Resources).

To date, IMN has not advised the Company that it has applied for the required approvals / recommendations to implement the agreed shareholding structure.

Intrepid 'envisaged' that IMN would apply for approvals for a new structure, but they just didn't!

How binding the agreements are I suppose is the issue. If there's some contract that they would do it then fine.

Having said that, it's just an application. It still seems to have to pass Indon red tape to be approved before they have their 80%.

So, effectively, Intrepid seem to have been claiming that they own 80% of the deposit, when they actually DO NOT. They just might, one day.

Does anyone read that differently?

[sammy84]

I work in Jakarta and have seen a lot of this. There are many companies who would be in a similar position.

During 2009 the mining law didn't allow foreign ownership the way it does now. Many strange agreements were entered into. Also many large payments were made by foreign companies without receipt or certainty of contract because they believed 'that was the way of doing business in Indonesia'.

After working here I would not invest in a company with substantial interests in Indonesia.

[kennas]

I'm more concerned with IAUs communication here. They have claimed all along they owned 80% of the deposit yet after the Indon mining laws they seem to now own nothing. Of their own admittance. Perhaps they will get the relevant agreements signed etc, but only a few days ago they were claiming they held an 80% interest when they DID NOT.

Unless someone can explain those company statements better to me.

[indoaust]

I'm more concerned with IAUs communication here. They have claimed all along they owned 80% of the deposit yet after the Indon mining laws they seem to now own nothing. Of their own admittance. Perhaps they will get the relevant agreements signed etc, but only a few days ago they were claiming they held an 80% interest when they DID NOT.

Unless someone can explain those company statements better to me.

IAU entered Indonesia in 2007 and did a deal with IndoAust Mining (a private Australian company) to gain access to the Tujuh Bukit Project.

In 2008, IndoAust Mining departed from the TB Project in strange circumstances.

The contract agreements between IAU and the Indonesian company, PT Indo Multi Niaga, are most likely unenforceable and illegal under Indonesian law at the time of signing.

Prior to 2009, the only legal way for foreign companies to access mining projects in Indonesia was via the Contract of Work System (COW).

IAU chose to circumvent Indonesian laws and do a deal based on contracts and this will bring them unstuck most likely.

How can a Board authorise all the spending on a project in which their true legal entitlement is very weak to say the least.

The whole story is about lack of disclosure, deals that were against the spirit of the Indonesian laws, and now trying to blame the Indonesians for their actions.

Shame on the IAU Board and management, maybe if they had followed the prevailing laws and processes this mess would not be happening.

[Anmar]

IAU entered Indonesia in 2007 and did a deal with IndoAust Mining (a private Australian company) to gain access to the Tujuh Bukit Project.

In 2008, IndoAust Mining departed from the TB Project in strange circumstances.

The contract agreements between IAU and the Indonesian company, PT Indo Multi Niaga, are most likely unenforceable and illegal under Indonesian law at the time of signing.

Prior to 2009, the only legal way for foreign companies to access mining projects in Indonesia was via the Contract of Work System (COW).

IAU chose to circumvent Indonesian laws and do a deal based on contracts and this will bring them unstuck most likely.

How can a Board authorise all the spending on a project in which their true legal entitlement is very weak to say the least.

The whole story is about lack of disclosure, deals that were against the spirit of the Indonesian laws, and now trying to blame the Indonesians for their actions.

Shame on the IAU Board and management, maybe if they had followed the prevailing laws and processes this mess would not be happening.

21st September, close of ASX

Shares closed at $0.515, a gain of 71% for the day, so what does this prove!

[kennas]

21st September, close of ASX

Shares closed at $0.515, a gain of 71% for the day, so what does this prove!

71%

Even so, stock price movements prove nothing in relation to this particular deal. It was at 2.25 not too long ago as well. I would be more interested in getting to the bottom of their rights over the deposit and the ability to actually get a mining lease in the end over the forestry land.

[kennas]

Intrepid don't seem to really know what's going on with ownership of their key asset.

Ann 2 days ago:

Campaign Against Intrepid Continues Unabated

BrisBane, 18 DeCeMBer 2012: intrepid Mines Limited (asX, TsX: iaU) (the “Company”) comments on the reported transfer of Tujuh Bukit iUPs held by joint venture partner PT iMn to a third party.

Documentation provided to the Australian media, of which Intrepid has obtained a copy, implies a transfer of IUPs in Banyuwangi regency to a company called PT Bumi Sukses Indo (BSI), and a subsequent transfer of shareholding in BSI. The Company is aware of rumours that the Tujuh Bukit IUPs had been transferred to BSI, and was in the process of verifying this information prior to the provision of the documentation to the media by third parties.

As far as Intrepid is able to tell, the document signed by the Banyuwangi regent appears to be genuine and suggests that IUPs in Banyuwangi were issued to BSI in July 2012, but it is noted that the most recent formal lists of certified “clean and clear” IUPs issued by the Indonesian Energy and Minerals Department, does not reflect this holding.

"as far as Intrepid can tell".

[skc]

Intrepid don't seem to really know what's going on with ownership of their key asset.

Ann 2 days ago:

"as far as Intrepid can tell".

Market cap of IAU is ~$140m which is basically cash + a small lottery ticket in case things come around to their benefit.

Coincidentally, IAU sold Paulsens to NST for something like $20m in 2010.

There's been a few development in between now and then, but NST is worth ~$550m.

Looks like they kept the wrong asset!

[AllAussie]

Statement by Intrepid on 31 Jan 12. The first point is interesting

http://www.google.com.au/url?sa=t&rc...O2cLdRJZKZeEMw

Title and Ownership Status
 The Indonesian Ministry of Energy and Mineral Resources has confirmed that the
two IUPs held by PT IMN in respect of the Tujuh Bukit project have been reviewed
and are considered “clean and clear”.
 Intrepid has an 80% economic interest in the Tujuh Bukit IUPs, derived through
contractual arrangements with PT IMN.
 The Company is working with PT IMN to finalise a shareholders’ agreement to
allow Intrepid to acquire an 80% direct equity interest in PT IMN.
 The Commercial terms upon which Intrepid will acquire its Direct Equity stake
have been agreed.