Intrepid to Receive Approximately $A90 Million in Settlement of Indonesian Disputes
February 19 2014 - 7:00AM
Marketwired Canada
Intrepid Mines Limited (TSX:IAU)(ASX:IAU) ("Intrepid", or the "Company"),
announces that it has signed binding agreements to settle all disputes
surrounding the ownership of the Tujuh Bukit copper/gold project in Indonesia
("Project") which will result in the Company receiving US$80 million (approx.
A$90 million) in cash.
In entering into the agreements, the Company seeks to bring to an end the
various streams of disputes relating to the Project in which it has been
involved.
The agreements, which Provident Capital and Saratoga Capital brokered on behalf
of the parties with whom Intrepid has been in dispute, are binding and subject
only to Intrepid shareholder approval being obtained at a general meeting
expected to be held in early April 2014.
To effect the proposed settlement, two binding agreements and a range of
ancillary documents have been signed. Key amongst these are:
1. Master Settlement Deed
A deed of settlement has been signed by all of the parties involved in
the ownership dispute, including Intrepid's former Indonesian partners,
PT Indo Multi Niaga ("IMN"), Maya Ambarsari ("Maya"), Reza Nazaruddin
("Reza") and Paul Willis ("Master Settlement Deed"). Under this deed,
all parties have agreed to settle the disputes between them, including
those that are the subject of arbitration proceedings brought by
Intrepid in Singapore and the dispute between the Company and IndoAust
Limited, IndoAust Pty Ltd and Paul Willis which is before the Indonesian
courts.
Under the Master Settlement Deed, Emperor Mines Pty Ltd, a wholly-owned
subsidiary of the Company, ("Emperor") will exchange a US$70 million
promissory note issued by IMN in settlement of Emperor's claims against
IMN, Maya and Reza for a bond which is convertible into a 15% pre-IPO
shareholding in PT Merdeka Serasi Jaya ("MSJ"), the current holding
company for the companies holding the Tujuh Bukit mining tenements
("Convertible Bond").
The Convertible Bond is exercisable upon the IPO of MSJ. However, the
controlling shareholders of MSJ have advised Intrepid that neither the
timing nor the jurisdiction of that listing have yet been finalised.
Emperor has also been granted the right to pay US$37.5 million to
acquire 7.5% of the shares in MSJ at the time of the proposed IPO
("Option").
Settlement under the Master Settlement Deed will occur automatically
following the passing by Intrepid shareholders of the ordinary
resolution approving the transaction, referred to below.
2. MSJ Securities Assignment Deed
A deed of assignment has also been signed under which Intrepid and
Emperor have sold and assigned all of their rights under the Master
Settlement Deed, including the Convertible Bond and the Option, to
Kendall Court Resource Investments Ltd ("KCR"), a company associated
with the Singapore-based funds manager Kendall Court ("Sale Agreement").
The purchase price payable by KCR is US$80 million (approx. A$90 million).
KCR's obligations under the Sale Agreement have been secured by:
-- payment of a US$40 million cash deposit into an independently controlled
escrow account; and
-- the provision by DBS Bank in Singapore of a Standby Letter of Credit for
US$40 million in favour of Emperor.
These funding arrangements provided the Company's board with the comfort it
required regarding KCR's ability to complete the sale transaction.
Shareholder Approval
One resolution will be put to shareholders seeking approval to enter into both
the Master Settlement Deed and the Sale Agreement, together with all related
documentation needed to complete the transactions.
Unanimous Board Recommendation
The board of directors of Intrepid has unanimously resolved to recommend that
the Company's shareholders vote in favour of the proposed settlement at the
forthcoming general meeting.
The reasons supporting this recommendation will be set out more fully in the
Notice of Meeting, which is currently being prepared. In summary, those reasons
include:
-- the benefits of putting an end to lengthy litigation, arbitration and
appeals which have an uncertain outcome and significant associated
costs;
-- the fact that the proposed settlement recovers a substantial proportion
of the funds previously invested, which will provide greater certainty
about the outcome and optionality for shareholders in terms of the
future deployment of those funds together with the Company's current
cash reserves of approx. A$90 million;
-- the impact of new regulations enacted in Indonesia in September 2013
which mean that the Company is now limited to a maximum 49% interest in
the Indonesian company holding the Project licences;
-- the introduction of regulations that limit the export of raw and semi-
processed minerals, and impose new taxes on such exports, has adversely
affected the economics of the Project; and
-- the Intrepid board's unanimous view that the US$80 million sale price
for the Convertible Bond and the Option is fair (further information on
the board's views on value will be set out in the Notice of Meeting).
The Company's Chairman, Mr Ian McMaster AM, said today:
"We are pleased to have reached this settlement which marks the end of a
difficult period for Intrepid and our shareholders. In addition to the
protracted dispute over ownership rights in the project which we have now
resolved, the value of our interest in the project has declined as a consequence
of lower metal prices and regulatory changes which have decreased both our
ultimate potential ownership and the overall returns available to the project.
Legal challenges are time consuming, costly and rarely result in harmonious
relationships going forward.
The board therefore unanimously resolved that it was in the best interests of
our shareholders to settle the disputes now and recover a substantial portion of
the funds previously invested.
While this is a disappointing conclusion to our efforts on the project, I am
confident that our shareholders will see the benefit of eliminating the current
risks we face in Indonesia and recovering the US$80m for redeployment
elsewhere."
Further information about the overall transaction and the reasons for the board
recommending the settlement will be set out in the Notice of Meeting, which will
be despatched to shareholders as soon as possible.
Intrepid is being advised by Macquarie Capital, Ashurst in Australia and
Singapore and SSEK Legal Consultants in Indonesia.
Directors
Ian McMaster (Executive Chairman)
Colin G. Jackson (Deputy Chairman)
Scott F. Lowe (Managing Director Chief Executive Officer)
Laurence W. Curtis (Non-executive Director)
Robert J. McDonald (Non-executive Director)
Alan Roberts (Non-executive Director)
Adrianto Machribie (Non-executive Director)
Garry Gill (Company Secretary)
Stock Exchange Listing
ASX and TSX symbol: IAU
Substantial Shareholders
Taurus Funds Management 8.5%
Van Eck Associates 7.6%
Acorn Capital 6.8%
Surya Paloh 5.0%
Issued Capital
556,612,782 shares
5,218,259 unlisted options
2,472,000 unlisted share rights
FOR FURTHER INFORMATION PLEASE CONTACT:
Intrepid Mines Limited - Brisbane, Australia
Scott Lowe
Chief Executive Officer
+61 7 3007 8000
slowe@intrepidmines.com
Intrepid Mines Limited - Toronto, Canada
Greg Taylor
+905 337 7673 or Mobile: +416 605 5120
gtaylor@intrepidmines.com
www.intrepidmines.com