Intrepid Mines’ exploration activities at the Tujuh Bukit Project in East Java, Indonesia, have been unilaterally 'suspended' by its Indonesian owner. According to Intrepid, its Indonesian “joint venture partner,” PT Indo Multi Niaga, has “without prior reference” to Intrepid, suspended operations at the project “beginning immediately.”
PT IMN reportedly “requested” several members of senior management, including all expatriate employees seconded to PT IMN from Intrepid, “to leave site and this has occurred.”
Intrepid, a dual Australian/Canadian-listed company (TSX:IAU)(ASX:IAU) claims to be “in compliance with, and has always been in compliance with, all of its obligations under the joint venture agreements in place and applicable law.”
This interruption, the company says, will impact its timetable for delivery of an updated porphyry resource estimate “and, further, may impact work on the updated oxide resource.”
Project expenditure, “solely funded by Intrepid to date, in compliance with the joint venture agreement, is US$95 million. This includes financing to the original shareholders of PT IMN to allow them to meet their 20% contribution commitments in excess of the initial full carry of A$50 million.”
On 28 June 2012, Intrepid advised that it had discovered that new shareholders had joined the register of PT IMN, collectively hold 80% of the expanded issued capital in PT IMN, which holds the Tujuh Bukit mining licences.
Intrepid reiterated that “under the terms of the Alliance Agreement between the parties, Intrepid holds an 80% economic interest in the Tujuh Bukit project, with PT IMN holding the remaining 20%.”
The company said, then, it was “in the process of engaging the representatives of the new shareholders in discussion and will provide updates on negotiations, including details of the new shareholders, as appropriate.”
Ian McMaster, Intrepid's lead director, was to immediately assume the role of Deputy Chairman, to facilitate negotiations.
However, today, Intrepid says it is still attempting to establish discussions with both the new and original PT IMN shareholders “regarding arrangements which would allow the resumption of drilling activity at the earliest opportunity.”
Intrepid's immediate objective is completion of technical studies "which will demonstrate the financial viability to develop a world class mine for the benefit of shareholders and stakeholders - community, and local, provincial and central government, alike."
The Tujuh Bukit project covers 11,621 ha under two permits (IUPs) issued to PT IMN. It comprises several mineral prospects, of which the Tumpangpitu Prospect, in the south-east portion of the Project area, continues to be the major focus for exploration activity. There are five zones of known near surface gold-silver oxide mineralisation and deeper sulphide copper-gold mineralisation within Tumpangpitu.
The main porphyry mineralisation at depth currently measures an extent of approximately 3.4 km by 2.8 km and contains an Inferred Mineral Resource, estimate of 1.7 Bt at 0.41% copper and 0.46g/t gold at a cut-off grade of 0.2% Cu for a total 15 Blb of contained copper and 25 Moz contained gold.
On 16 July 2012, Intrepid's CEO, Brad Gordon, said, "As we have promised our loyal shareholders all along, we remain extremely active in advancing this world class project and we have been rewarded by very positive results on several fronts. These latest drill results on the main Tumpangpitu porphyry have enabled us to define a new high grade zone on the eastern edges of the target area. However, the depth potential of this resource is still to be thoroughly tested. Meanwhile, we are advancing the smaller, but not insignificant, oxide project as quickly as we can, with a view based on peer company valuations, that this project alone justifies our current share market capitalisation."
However, he did not comment on the extensive delay in PT IMN converting to a PMA company - an incorporated entity under Indonesian law permitted to include foreign shareholders – which has been anticipated since the 2009 mining law once again provided for direct foreign investment in Indonesian mining projects.