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Intrepid’s Indonesian Misadventure – Things Not Looking Good

Ousted Mining Co Getting Little Mileage From Its In-house Mogul

by Xavier Basil


Light Shed On Disturbing Scene

Late last year, we ran a feature on investing in Indonesia which headlined the admonition ‘let’s be careful out there’ (Investment in Indonesia – Let’s Be Careful Out There). That was referable in some measure to the experience of listed mining co Intrepid Mines Ltd (ASX: IAU, TSE: IAU) which in July had been summarily evicted from the massive gold, silver and copper prospect, known as Tujuh Bukit and located on the island of Java, in which the Brisbane-based Intrepid asserted an 80 percent ‘economic interest’.

We noted in that prior piece that information as to who exactly had executed the eviction, and how Intrepid could have let it happen, was fairly thin on the ground. Since then though, some light’s been shed from a variety of sources, albeit only continuing the case for extreme caution when entering Indonesia’s investment waters. For behind what at first sight presented as a fairly commonplace joint venturers’ spat is a picture of claim-jumping on a grand scale, involving some seriously heavy hitters in Indonesian business and politics.

One Helicopter and Two Truckloads of Police

An interesting little fact not reported in the initial media coverage of the eviction or indeed over the ensuing months was the apparently simultaneous arrival at the Tujuh Bukit site of one helicopter and two trucks. The helicopter carried one of Intrepid’s supposed co-venturers and representatives of the latter’s ‘new friends’, to deliver the eviction notice. The trucks contained a contingent of armed Indonesian police, presumably to keep the peace, or to back up the eviction notice, or both.

The new chum on the Indonesian side of this saga has turned out to be – or at least is routinely being reported to be – one Edwin Soeryadjaya, age 64 and according to Forbes magazine worth $1.4 billion, making him the world’s 1,107th-ranked billionaire and Indonesia’s 22nd richest citizen. His Saratoga Capital investment fund, co-founded in 1998 with rising young entrepreneur and billionaire-in-waiting Sandiaga Uno, known to all as ‘Sandy’, is a key player in Indonesia’s minerals and transport industries. Seemingly, the shareholding in Intrepid’s Indonesian co-venturer had, prior to Intrepid getting its marching orders, been transferred to interests representing Soeryadjaya – or Saratoga Capital.

My Mogul’s Bigger Than Your Mogul

Intrepid’s management back in Brisbane moved quickly to fight fire with fire. In short order, it found its own mogul, in the person of media tycoon Surya Paloh. The 62-year-old owner of a major daily newspaper and 24-hour news network – who also happens to lead Indonesia’s major political party and be a prospective candidate in next year’s presidential elections – entered the fray in exchange for nearly 25 million paid-up shares in Intrepid, some five percent of its issued capital, and a call option on a further 10 percent referable to share price performance.

Enemy Mogul Opens Another Front

If Intrepid’s plan was that its tycoon could eyeball the other side’s tycoon and – mogul-to-mogul as it were – thrash out an acceptable solution to the Tujuh Bukit debacle, so far it hasn’t worked. On the contrary, it seems that the Soeryadjaya camp have embarked on a further move aimed at nothing less than Intrepid’s utter emasculation. On 19 February, Intrepid chairman Ian McMaster, aged 64, released to the media his ‘letter to the shareholders’ concerning moves by a Hong Kong-based investment fund called Quantum Pacific. McMaster wrote:

Your directors believe that Quantum Pacific is working with others, including Indonesian businessman Edwin Soeryadjaya, as part of a concerted plan to take control of your Company. If successful, the plan could strip further value from Intrepid shareholders, by neutralising our efforts to enforce our rights to Tujuh Bukit.

Quantum Pacific had at that stage, according to the letter, amassed 1.2 percent of Intrepid’s stock in on-market trades and was then approaching individual shareholders with offers to buy them out, or to seek their support for the ouster of the company’s incumbent board and senior management.

There is indeed a Quantum Pacific, though its website – – has zilch to say about Intrepid or anything related. But we noted that its ‘News & Resources’ section has just three entries for 2012, so perhaps management are focused more on making money than news. And the basis for a connection with Edwin Soeryadjaya can be discerned in the ‘Portfolios’ page, again with just three entries, two for speculative R&D projects in Canada but the third in Indonesian coal – the core of Soeryadjaya’s fortune.

Stick With Us – We’ll See You Right

Intrepid’s McMaster is appealing to shareholder loyalty in the face of a prospective and decidedly hostile raid by a proxy for the opposing camp in the Tujuh Bukit stoush, whose dastardly plan is to gain control of Intrepid and cause it to exit stage left from the claim. One wonders though how much loyalty could be expected, given the spectacular slide in the company’s market capitalisation since the Canadian Intrepid merged with the Australian Emperor Mines in 2008, after the latter had teed up its Tujuh Bukit ‘economic’ interest. An interest it couldn’t own directly because of Indonesian law prohibiting foreign ownership of mineral resources. At that time, according to the Financial Post’s 6 March story on the saga, the merged entity was valued at around $1.4 billion. Today you can buy Intrepid shares on the ASX for 26.5 Australian cents, giving it a market cap of $150 million.

Signs of Shellshock?

And perhaps, in-house mogul notwithstanding, the writing is on the wall for Intrepid. There is an air of desperation about its chairman’s open letter to shareholders, with the message seemingly being stick with us – your board – because actually you don’t have any choice. Indeed, an impression of bewilderment at what has befallen the company in Indonesia permeates all of Intrepid’s reported responses since the crisis erupted. This not least in December when confronted by the Australian media with the news that the crucial licence to the Tujuh Bukit prospect had effectively been transferred out of Intrepid’s joint venture ‘partner’ – they now of course estranged but nevertheless affording Intrepid the basis for its legal and contractual claim – and into a third-party Indonesian company. The Age in Melbourne put it like this: ‘Contacted for comment, Intrepid chief executive Brad Gordon said he was not aware of a change of ownership and questioned the authenticity of the document.’

It seems though that the ‘document’ was authentic and that Intrepid may well have been left clutching at straws in an increasingly hostile Indonesian business environment which has bested the company at every turn so far. For who, according to media reports, is behind the newly-approved Tujuh Bukit licensee? None other than Edwin Soeryadjaya, who by now surely has nemesis status within the Aussie/Canuck miner’s boardroom in suburban Brisbane.

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