In September 2008, PT IMN, Maya, Reza and Emperor also entered into a shareholders' agreement in respect of a Singaporean company which had been established for the purposes of conducting the joint venture (the "Shareholders' Agreement"). The agreement provided that the parties would execute documentation to allow Emperor to hold direct equity in the vehicle holding the Tujuh Bukit licences, should the Indonesian mining law change to allow for foreign ownership in in companies holding mining licences.
Due to the commencement of discussions and negotiation of documentation between Intrepid and PT IMN and Vale Exploration and the subsequent enactment in January 2009 of the new Mining Law, the structure envisioned by the Alliance Agreement was deferred and subsequently not implemented, but the Company continued to fund the Project and seconded personnel to PT IMN to provide technical expertise to the Project, in accordance with the intent of the Alliance Agreement and Shareholders' Agreement.
In March 2008, Emperor completed a merger with Intrepid Mines Limited ("Intrepid" or the "Company") and the merged entity proceeded under the Intrepid name.
At the time of the signing of the original Alliance Agreement, Intrepid, as a non-Indonesian company, was unable to hold any direct rights - through shares or otherwise - to the Tujuh Bukit Project tenements (kuasa pertambangan, or "KPs"). Rather, these rights to the Tujuh Bukit Project tenements were held by PT IMN. In January 2009, Indonesia enacted a new mining law (the "Mining Law"), which provided, inter alia, that foreign entities could hold shares in companies holding mining licences (now known as izin usaha pertambangan or "IUPs"). In accordance with the Alliance Agreement and Shareholders' Agreement, the Company commenced negotiations with PT IMN to restructure the joint venture arrangements so that PT IMN would be converted into a foreign capital investment company in which the Company, through a subsidiary, would ultimately hold 80% of the shares and therefore a direct interest in the Tujuh Bukit Project. This restructuring process would require certain governmental approvals, including a recommendation from the Bupati of Banyuwangi.
In November 2010, the Company and PT IMN signed an addendum agreement which documented the agreed restructuring arrangements and, in June 2011, the parties executed a further agreement stipulating the milestone payments which would be made in respect of the restructuring steps. Subsequently, Intrepid advanced negotiations with PT IMN in order to finalise the terms of the shareholders' agreement which would govern the relationship between the parties once the agreed restructuring was completed. In the following year, despite the Company's efforts, little progress was made and, in June 2012, the Company learned that the PT IMN's shareholding had changed to include new partners holding 80% of the expanded equity in that company.
To date, the Company has fully complied with all of its obligations under the Alliance Agreement and addenda, and has expended in excess of A$105 million on capital payments to PT IMN and Project funding (including funding PT IMN's Jakarta offices and salaries for Maya and Reza).
Following the discovery in June 2012 that the original owners of PT IMN had transferred 80% of the company to new parties, Intrepid gathered information from public sources indicating possible links between the new shareholders and Edwin Soeryadjaya, a prominent Indonesian businessman. (Since Intrepid's removal from the Tujuh Bukit site, media in Indonesia and Australia have reported extensively on the new owners of PT IMN, and have noted similar links). Shortly thereafter, members of the Company's board requested a meeting with Mr Soeryadjaya to determine his involvement in the matter and ascertain what outcomes he and his associates were seeking. Mr Soeryadjaya agreed to meet and an initial meeting was held In a subsequent meeting, Mr Soeryadjaya made an offer to settle the matter on the basis that the Company be compensated for waiving its contractual rights to PT IMN and the Project.
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