Shareholders of Intrepid Mines (>> Intrepid Mines Limited (Australia)) backed their board and its attempt to reclaim rights to a $5 billion copper and gold project in Indonesia, defeating a plan by a private equity investor to oust the board on Thursday.
At stake is the Tujuh Bukit mine, where Intrepid was kicked off site last July after its Indonesian partners transferred the leases for the project to a new company, now controlled by Indonesian tycoon Edwin Soeryadjaya.
A new shareholder, Hong Kong-based private equity investor Quantum Pacific, led a push to take over the Intrepid board and pursue a plan to negotiate with Soeryadjaya to win back a stake in Tujuh Bukit within nine months.
A majority of shareholders rejected that plan in Thursday's vote, supporting the board and the battle to win back rights to Tujuh Bukit, which may hold 19 billion pounds of copper and 30 million ounces of gold.
That strategy involves pressing for fraud and embezzlement charges against its former Indonesian partners. Intrepid has also launched a case against the local government of Banyuwangi for allowing the transfer of Tujuh Bukit leases to another company.
"In our opinion, the Board's legal strategy reflects an inexperienced and highly naive view of conducting business in Indonesia and puts any chance of project recovery at significant and unnecessary risk," Quantum Pacific said in a statement.
"All precedent cases have favored the Indonesian party," it said after the vote.
Intrepid Managing Director Brad Gordon said on Thursday the company has been talking to Soeryadjaya, chairman of Indonesian coal miner PT Adaro Energy (>> PT Adaro Energy Tbk). Gordon declined to put any timeframe on reaching a commercial resolution with him.
Intrepid's shares fell 8.7 percent to a three-month low of A$0.21 after the vote, valuing the company at A$117 million, down from more than A$1 billion in 2011.
In the weeks leading up to the shareholders' poll, more than 20 percent of the company's shares were bought by people from Indonesia, Singapore and Hong Kong, where Intrepid has previously had few investors, Intrepid Chairman Ian McMaster said on Thursday.
The company has been unable to find out if the new investors have ties to the new owners of Tujuh Bukit. Gordon said the issue may be raised in talks with Soeryadjaya.
"All we're doing is highlighting that a large percentage of our register is now sitting with some Southeast Asian shareholders who won't disclose who they are, and we'll continue to try to get to the bottom of it," Gordon told Reuters.
Following the vote, Quantum Pacific said it would review its position as a shareholder in Intrepid.
(Reporting by Sonali Paul; Editing by Muralikumar Anantharaman and Tom Hogue)