Australia’s Intrepid Mines Surges on Indonesian Share Deal
Narayanan Somasundaram & Miranda Maxwell
Sydney. Shares in Australia’s Intrepid Mines jumped more than a quarter on Wednesday after the company brought in a high-profile Indonesian businessman as a shareholder, days after being evicted from its Indonesian gold mining project.
Intrepid said it had placed 5 percent of its shares with Surya Paloh, the prominent founder and owner of Indonesian news television network Metro TV and publisher the Media Group.
The placement comes as Intrepid Mines prepares for a legal battle after being forced by its local partner to quit its $5 billion mine in Java, in a case that some in the resources sector view as another example of growing hostility in Indonesia to foreign investors.
“That’s the kind of game they need to play now,” said Peter Gray, an analyst at Hartley’s in Perth.
“Get someone with some sort of influence supporting the company who can then take that to the negotiating table with the other parties and have some sort of equal footing in terms of potential influences they can have.”
Shares in Intrepid Mines hit a high of A$0.29 and last traded up 27 percent at A$0.28. The share price had more than halved last month after revealing the problems at the Tujuh Bukit Project gold, silver and copper project with its Indonesian joint venture partner, Indo Multi Niaga.
“We are delighted to be associated with Mr. Paloh, whose extensive networks and vast experience in navigating the waters of Indonesian business will greatly benefit the company both in safeguarding its existing interests in Indonesia and in expanding within the local resources sector,” Intrepid chief executive Brad Gordon said in a statement.
Indonesia has announced a raft of new mining regulations this year, including export taxes, a ban on unprocessed metals exports and limits on foreign ownership, in an effort to boost state revenues from the sector.
Indonesia is one of the world’s top metals miners and the sector accounts for about 12 percent of gross domestic product in the G20 economy.
The Intrepid Mines’ situation follows a case involving London-listed Churchill Mining, which has gone to an international court of arbitration in its fight over a share of a $3 billion Indonesian coal mine.
“The impression it gives to the wider investment community is that Indonesia is still a place you don’t want to do business and you don’t want to be investing capital there because you are never quite sure if your capital is being well invested or if you end up with nothing,” Gray said of Intrepid’s position.