MENU

Is this the end for this Intrepid miner?

Intrepid Mines Limited (ASX: IAU) shares have crashed by 50% this morning, after its Indonesian partner on the Tijuj Bukit gold and copper project, PT Indo Multi Niaga, suspended operations without consulting the company first.

PT Indo Multi Niaga also requested several members of senior management, including all expatriate employees seconded from Intrepid, to leave the site immediately.

Intrepid is attempting to establish discussions with both new and original shareholders of PT Indo Multi Niaga, regarding arrangements to allow the resumption of drilling activity at the earliest opportunity. No reason has been given for the moves by PT Indo Multi Niaga, but the Australian Financial Review reports that souring relations were to blame.

Intrepid stated that it is in compliance with and always has been in compliance with all of its obligations under the joint venture agreements in place and applicable law. Intrepid has also financed all of the project expenditure to date, being US$95m, including financing the original shareholders of PT Indo Multi Niaga to allow them to meet their 20% obligation commitments in excess of the initial amount of A$50 million.

This situation illustrates one of the risks faced by companies operating joint ventures and projects in foreign countries. Due to foreign ownership laws, 20% of the Tujuh Bukit project and the title on the tenement, is held by a young Indonesian couple, which means Intrepid’s name is not on the title of its main asset. Newcrest Mining Limited (ASX: NCM) has a similar arrangement for its Gosowong project in Indonesia.

Indonesia changed its project ownership rules in April 2012, requiring at least 51% of any project to be locally owned by the 10th year of production, which has implications for both Intrepid and Newcrest.

Investors will be hoping Intrepid doesn’t share its fate with the likes of Kagara Ltd (ASX: KZL) and Mirabela Nickel Limited (ASX: MBN). Kagara was forced to call in administrators and Mirabela Nickel was forced to raise $120m in equity.

If you’re in the market for some high yielding ASX shares, look no further than our ”Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.  The Motley Fool ‘s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!