Intrepid seeks clarity on Indon mine law

AUSTRALIA’S largest gold producer and a number of juniors have been quick to dispel any talk of potential fallout from the Indonesian government’s plans to impose mine foreign ownership limits but the path ahead remains somewhat unclear for Intrepid Mines.
Intrepid seeks clarity on Indon mine law Intrepid seeks clarity on Indon mine law Intrepid seeks clarity on Indon mine law Intrepid seeks clarity on Indon mine law Intrepid seeks clarity on Indon mine law

While Newcrest Mining, Robust Resources and Finders Resources say they have already complied with the requirements and do not expect any further divestments, Intrepid, which reportedly has one of the largest exploration programs this year in the country totalling $A50 million, is studying the regulations and considering its best course of action, particularly in light of a number of related issues which it says have yet to be addressed.

Intrepid chief executive Brad Gordon told these relate to the interpretation of the regulations as they were published and do not specifically relate to its direct equity process.

The company's Tujuh Bukit mining concessions, in which it holds an 80% interest, are currently held by a wholly Indonesian-owned company, PT IMN, but Intrepid is in the process of negotiating the conversion of PT IMN into a foreign investment vehicle in which it will hold an 80% direct equity stake.

"We have several questions around how this will be implemented, who it affects and when does it come into play," Gordon told MNN.

"On the face of it they are saying in one regulation that 10 years after your first production you need to be at 49 per cent ownership, but then another regulation says it is 10 years after your mining licence is issued, and it is questions like these that we need to clarify."

To this end the company has sent formal questions to the Minister for Energy and Mineral Resources Jero Wacik and has requested responses from the country's director general for minerals and coals Thamrin Sihite.

"I'm aware also that the Indonesian Mining Association is preparing a submission," he said.

"The shock for the industry is that this has been decreed without any consultation and no one really saw it coming.

"To get announcements like this and our stock price dropping by 20% doesn't help at all.

"Just last week I was sitting with the Australian ambassador in Indonesia [Greg Moriarty] talking about the scuttlebutt of regulations pertaining to increased local ownership in foreign-owned resource assets and it was both our contention that we had lots of time, if in need it was at all true given the history of how long these things take to become law.

"Look at the 2009 Mining Law. It was 10 years of negotiation and dialogue, discussion and consultation."

While Indonesia's president signed off on the controversial mining law on February 21, it was only made publicly available this week.

According to the Jakarta Globe, the law forces foreign-owned companies which hold mining permits to begin divesting stakes to Indonesian entities in the sixth year after production.

These Indonesian entities - whether they are national or provincial government-owned - must reportedly have a 20% stake in the sixth year, a 30% stake in the seventh year, a 37% stake in the eighth year and a 51% stake in the ninth year.

As for Finders Resources, it says the current corporate structure of its Wetar copper project complies with the new divestment requirements, while Robust Resources recently converted its Indonesian incorporated operating entities to PMA (foreign investor company) and took on a strategic local investor in Salim Group company PT Kilau Sumber Perkasa for its Romang Island project.

However, Robust says it will continue to take advice and monitor the situation with its local partner, which currently owns 22.5% of the Indonesian incorporated subsidiary in addition to 9.35% of Robust.

Shares in Newcrest were up 4.28% or $1.31 in afternoon trade to $31.95, while shares in Robust were down 4% or 5c to $1.20, shares in Finders were unchanged on 40c and shares in Intrepid were down 4.8% or 5c to 98.5c after starting the week at $1.22.


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