Intrepid Mines Limited: Explanation Regarding Company

Intrepid Mines Limited: Explanation Regarding Company Announcement
Dated 18 December 2012 
BRISBANE, AUSTRALIA -- (Marketwire) -- 12/19/12 -- Intrepid Mines
Limited (TSX:IAU)(ASX:IAU) (the "Company") comments that on Monday 17
December 2012 the Australian Securities Exchange ("ASX") asked the
Company to respond to a media article in the Sydney Morning Herald
("SMH") regarding the reported transfer of the Tujuh Bukit IUPs, held
by joint venture partner PT IMN, to a third party. 
The Company responded to ASX on 17 December noting that it was making
enquiries and would lodge an announcement later in the day. The
Company lodged on the ASX platform for pre-market open on 18 December
the announcement set out below. 
However, pre-market open on 18 December, ASX requested that the
Company amend the proposed announcement, before it would be released
on the ASX platform. In particular the ASX required a response only
to the matters raised in the SMH publication and, further, the
deletion of all historical background. 
The Company responded that the information in the proposed
announcement was to place the SMH article in context and to provide
an update on all related matters including other market rumours about
the Company and the Tujuh Bukit project recently brought to the
attention of the Company by its shareholders.   
In compliance with ASX direction, a substantially limited
announcement was eventually released to the market late on 18
December 2012.  
The Company believes shareholders should have the benefit of the full
text of the original announcement and has made this available to
shareholders on the Company's website 
Full text of the announcement follows: 
Campaign Against Intrepid Continues Unabated 
BRISBANE, 18 DECEMBER 2012: Intrepid Mines Limited (TSX:IAU)(ASX:IAU)
(the "Company") comments on the reported transfer of Tujuh Bukit IUPs
held by joint venture partner PT IMN to a third party, and progress
on two complaints lodged against the original shareholders of PT IMN
and other parties associated with PT IMN with the police in Jakarta
regarding fraud and embezzlement of funds and unlawful denial of
Reported transfer of Tujuh Bukit IUPs  
Information purportedly provided to the Australian media by Mr Paul
Willis, who has recently served a statement of claim on the Company,
implies a transfer of IUPs to a company called PT Bumi Sukses Indo
(BSI), and a subsequent transfer of shareholding in BSI. This company
now has several corporate shareholders, whose ultimate holding have
informally been traced back to Mr Edwin Soeryadjaya, Provident
Capital and Mr Garibaldi Thohir, another influential Indonesian
businessman and associate of Mr Soeryadjaya.  
As far as Intrepid is able to tell, the document signed by the
Banyuwangi regent appears to be genuine and suggests that IUPs in
Banyuwangi were issued to BSI in July 2012, but it is noted that the
most recent formal lists of certified "clean and clear" IUPs issued
by the Indonesian Energy and Minerals Department, does not reflect
this holding.  
Refer: Appendix for detailed background.  
Complaints against original shareholders and other parties associated
with PT IMN  
The first relates to fraud and embezzlement of funds solicited from
Emperor and Intrepid by PT IMN with the promise of the grant of
shares in PT IMN, and the continued calling of funds after it became
apparent that PT IMN and its shareholders had no intention of
honouring the agreements in place with the Company.  
The second complaint relates to the unlawful denial of access to site
and unlawful retention of equipment and intellectual property. Under
the terms of the Alliance Agreement, intellectual property situated
at the Project site belongs to Emperor, and the Company sourced,
bought and paid for several items of technical equipment which are
now being withheld from it.  
The complaints were made in October 2012and the Indonesian police are
progressing their investigation, including interviews of the original
and current shareholders of PT IMN. 
Unusual share trading activity  
The Company regularly interrogates shareholder movements and is aware
that there has been a noticeable and unusual shareholding build-up by
two brokers in Singapore, both of whom cite local privacy laws as a
reason for declining to cooperate with section 672 notices requiring
disclosure of beneficial holders. A fund from Singapore, Quantum
Pacific Capital, has also been very actively lobbying the Company's
major shareholders to sell significant stakes to Quantum at
discounted prices and have nominated potential new directors and
management for the Company.  
In summary  
Intrepid asserts that it has complied fully with the terms of its
agreements, and has acted at all times in full compliance with
relevant laws. Intrepid asserts that it remains legally entitled to
an 80% economic interest in the Tujuh Bukit project, and disputes
that the current uncertainty over ownership rights is merely a
contractual dispute between commercial partners. Intrepid further
asserts that it is the victim of an attempt at criminal fraud that is
now under investigation by Indonesian Police. 
Intrepid Chief Executive, Brad Gordon, stated that the Company
intends to use every means at its disposal to frustrate these
attempts to usurp its rights to the Project. "Nothing is as critical
to our future and our shareholders' interests as resolving this
matter, and we intend to focus all our people on it, and devote all
our resources to supporting their actions", he said. "While we remain
confident that our complaints of criminal fraud will be upheld,
nobody should question our preparedness for a long-term battle to
retain our rights, if that should be what is required." 
"In the meantime, Intrepid advises shareholders to treat with caution
any offers or representations from parties that may be associated
with the actions against your Company. We remain available to discuss
the background to and progress of matters with our shareholders."  

Ian McMaster AM     Brad Gordon                                             
Chairman            Managing Director and CEO                               

Background: Intrepid's predecessor, Emperor Mines Pty Limited
("Emperor") began its working relationship with PT Indo Multi Niaga
("PT IMN"), then owned by Indonesians Andreas Reza Nazaruddin
("Reza") and Maya Miranda Ambarsari ("Maya"), in 2007.  
In 2007, Emperor management was approached by Paul Willis, an
Australian associate of Maya and Reza, with an offer to participate
in a mining project at Banyuwangi, East Java, which later came to be
known as Tujuh Bukit. The Emperor technical team reviewed the project
and subsequently, on 19 August 2007, an agreement was signed amongst
Emperor, PT IMN, Maya, Reza, Mr Willis and associates of Mr Willis
(together, the "Counterparties"). Under the terms of this agreement
(the "Initial Alliance Agreement"), Emperor could earn a 70% economic
interest in the Tujuh Bukit project (the "Project") by incurring
expenditure of A$8 million in milestone payments and project funding.
Emperor was then required to sole fund a further A$42 million in
project expenditure. 
This initial agreement had a term of six months, to allow for Emperor
to undertake initial due diligence on the project and to afford the
parties time to negotiate and execute definitive joint venture
documentation. From September 2007, Emperor management attempted to
convene meetings with the Counterparties, through Mr Willis, but
Emperor was repeatedly informed of the cancellation of these meetings
at short notice. In early 2008, the Counterparties, once again
through Mr Willis, requested a rescheduling of payments to be made
under the Alliance Agreement and Emperor agreed to the rescheduling.
In February 2008, complete joint venture documentation, reflecting
the discussions with Mr Willis on behalf of the Counterparties, was
presented to Mr Willis for review by the Counterparties. Several
dates were set for meetings in Jakarta for a joint review of the
documentation, but these meetings were once again cancelled on short
notice by the Counterparties through Mr Willis. In March 2008, Mr
Willis indicated to Emperor that the Indonesian Counterparties no
longer wished to proceed in cooperating with Emperor, as they were
seeking more money and wanted an Indonesian joint venture partner,
and he also indicated that they would not sign the joint venture
documentation, or an extension of the Initial Alliance Agreement,
which would lapse on 31 March 2008. 
Thereafter, in April 2008, Maya and Reza contacted Emperor management
and indicated that they wished to continue a relationship with
Emperor and indicated that they had not made a request for more money
or recorded a preference for an Indonesian partner. Rather, they
indicated that Mr Willis had been trying to persuade them that they
should discontinue the cooperation with Emperor (despite the
expenditure of funds in excess of A$1 million by Emperor), in favour
of a transaction with a large Indonesian conglomerate. They also
indicated that they had been requested to sign a new alliance
agreement with an investor sourced by Mr Willis. 
Due to the misinformation being provided to it by Mr Willis and as
Maya and Reza were the shareholders in PT IMN, Emperor entered into
discussions directly with Maya and Reza to formalise an ongoing joint
venture arrangement in respect of the Project. Once the terms of this
agreement were finalised, the Indonesian Counterparties indicated to
Mr Willis that they no longer wished to continue their collaboration
with him, due to the breaches of trust which had occurred. Mr Willis
had been acting as a technical advisor and financier to PT IMN, and
Emperor agreed to reimburse Mr Willis for his expenditure on the
Project to date. After a negotiation regarding the amount of the
reimbursement, binding settlement documentation was executed between
Emperor and Mr Willis and his associated companies, under the terms
of which Mr Willis accepted an amount of $2 million and acknowledged
that he had no further claims or entitlements in respect of the
Project or PT IMN. PT IMN and Mr Willis additionally executed a
document terminating all arrangements in place between those parties. 
In April 2008, Emperor entered into an agreement with PT IMN, Maya
and Reza (the "Alliance Agreement"), to regulate the ongoing working
relationship at the Project. The Alliance Agreement provided that
Emperor could earn an 80% economic interest in the Project by
spending A$8 million in milestone payments and project expenditure
and would thereafter sole fund A$42 million in project expenditure.
The earn-in percentage had been increased from 70% under the Initial
Alliance Agreement by reason of Emperor's A$2 million payment to Mr
Willis and his associates, who were no longer involved in the
Project, as the agreed reimbursement of expenditure by him and in
settlement of any entitlements to the Project. As Indonesia was in
the process of drafting a new mining law at the time the Alliance
Agreement was entered into, the agreement proposed an indicative
mining services structure for the joint venture going forward, but
noted that the parties would amend this structure to bring it into
line with the new mining law, once implemented. It should be noted
that cooperation agreements with terms similar to the one proposed
under the Alliance Agreement were commonly used by foreign companies
cooperating with Indonesian mining companies, and the type of
arrangements put in place had been viewed as bankable at another
project of which Emperor was aware. Subsequent to the promulgation of
the new Indonesian Mining Law in 2009, and implementing regulations
in 2010, several foreign companies who had operated under similar
cooperation agreements with local Indonesian mining companies went on
to convert their contractual rights in respect of mining projects
into direct shareholding in the Indonesian companies without event. 
In September 2008, PT IMN, Maya, Reza and Emperor also entered into a
shareholders' agreement in respect of a Singaporean company which had
been established for the purposes of conducting the joint venture
(the "Shareholders' Agreement"). The agreement provided that the
parties would execute documentation to allow Emperor to hold direct
equity in the vehicle holding the Tujuh Bukit licences, should the
Indonesian mining law change to allow for foreign ownership in in
companies holding mining licences. 
Due to the commencement of discussions and negotiation of
documentation between Intrepid and PT IMN and Vale Exploration and
the subsequent enactment in January 2009 of the new Mining Law, the
structure envisioned by the Alliance Agreement was deferred and
subsequently not implemented, but the Company continued to fund the
Project and seconded personnel to 
PT IMN to provide technical
expertise to the Project, in accordance with the intent of the
Alliance Agreement and Shareholders' Agreement. 
In March 2008, Emperor completed a merger with Intrepid Mines Limited
("Intrepid" or the "Company") and the merged entity proceeded under
the Intrepid name. 
At the time of the signing of the original Alliance Agreement,
Intrepid, as a non-Indonesian company, was unable to hold any direct
rights - through shares or otherwise - to the Tujuh Bukit Project
tenements (kuasa pertambangan, or "KPs"). Rather, these rights to the
Tujuh Bukit Project tenements were held by PT IMN. In January 2009,
Indonesia enacted a new mining law (the "Mining Law"), which
provided, inter alia, that foreign entities could hold shares in
companies holding mining licences (now known as izin usaha
pertambangan or "IUPs"). In accordance with the Alliance Agreement
and Shareholders' Agreement, the Company commenced negotiations with
PT IMN to restructure the joint venture arrangements so that PT IMN
would be converted into a foreign capital investment company in which
the Company, through a subsidiary, would ultimately hold 80% of the
shares and therefore a direct interest in the Tujuh Bukit Project.
This restructuring process would require certain governmental
approvals, including a recommendation from the Bupati of Banyuwangi. 
In November 2010, the Company and PT IMN signed an addendum agreement
which documented the agreed restructuring arrangements and, in June
2011, the parties executed a further agreement stipulating the
milestone payments which would be made in respect of the
restructuring steps. Subsequently, Intrepid advanced negotiations
with PT IMN in order to finalise the terms of the shareholders'
agreement which would govern the relationship between the parties
once the agreed restructuring was completed. In the following year,
despite the Company's efforts, little progress was made and, in June
2012, the Company learned that the PT IMN's shareholding had ch
to include new partners holding 80% of the expanded equity in that
To date, the Company has fully complied with all of its obligations
under the Alliance Agreement and addenda, and has expended in excess
of A$105 million on capital payments to PT IMN and Project funding
(including funding PT IMN's Jakarta offices and salaries for Maya and
Following the discovery in June 2012 that the original owners of PT
IMN had transferred 80% of the company to new parties, Intrepid
gathered information from public sources indicating possible links
between the new shareholders and Edwin Soeryadjaya, a prominent
Indonesian businessman. (Since Intrepid's removal from the Tujuh
Bukit site, media in Indonesia and Australia have reported
extensively on the new owners of PT IMN, and have noted similar
links). Shortly thereafter, members of the Company's board requested
a meeting with Mr Soeryadjaya to determine his involvement in the
matter and ascertain what outcomes he and his associates were
seeking. Mr Soeryadjaya agreed to meet and an initial meeting was
held In a subsequent meeting, Mr Soeryadjaya made an offer to settle
the matter on the basis that the Company be compensated for waiving
its contractual rights to PT IMN and the Project. 
Despite the changes to the shareholding and management of PT IMN
having been registered in May 2012, PT IMN representatives continued
meeting with the Company's representatives, purportedly to negotiate
the terms of the joint venture going forward. Once the Company became
aware through its own enquiries, prompted by the slow pace of
negotiations with the founding shareholders of PT IMN, of the change
in shareholding and management and attempted to confront the issue by
meeting with PT IMN's management, Maya and Reza ceased all
communication with the Company and failed to respond to e-mails or
telephone calls. Although the corporate changes within PT IMN were
officially recorded in May 2012, and were almost certainly under
negotiation even before that date, PT IMN's management continued
making cash calls of the Company and Intrepid funded approximately
A$10 million in site and Jakarta office costs between May and July
Without forewarning, on 19 July 2012, PT IMN suspended exploration
activities at Tujuh Bukit without reference to Intrepid and requested
several members of local management, including all expatriate
employees seconded to PT IMN from Intrepid, to leave site. These
actions were in contravention of the agreements in place between
Emperor, PT IMN and Maya and Reza. 
Also on 19 July, Brad Gordon received a phone call from Mr Willis,
substantial shareholder in and then Chief Executive of Sihayo Gold,
who admitted knowledge of the plan to remove Intrepid's seconded
employees from site and intimated that he would broker a "deal"
between the Company and the new shareholders in PT IMN, in return for
a share of the Project. Mr Willis resigned as CEO of Sihayo Gold in
December 2012, but according to press reports, remains a consultant
to that company. Mr Soeryadjaya is a principal founder of Saratoga
Capital, whose associated company, Summit Investments, is a 17%
shareholder in Sihayo Gold. In recent months, following Intrepid's
exclusion from the Project site, personnel associated with Sihayo
Gold and its consultants, as well as personnel of Provident Capital
Partners, have visited Tujuh Bukit and been undertaking supervisory
work at the site. Provident Capital has partnered with Saratoga
Capital in a number of investments in Indonesia, including
telecommunications infrastructure and palm oil. The founder of
Provident Capital is also a director of both Sihayo Gold and Saratoga
On 31 July 2012, the Company issued 27,680,017 ordinary shares,
representing approximately 5% of the Company's expanded issued
capital, to prominent Indonesian businessman, Surya Paloh.
Additionally, the Company issued to Mr Paloh 51,208,032 unlisted
restricted performance rights to ordinary shares, subject to vesting
Since this time, the Company has been actively working with Mr Paloh,
to resolve the dispute over the Tujuh Bukit project. A key focus has
been on ensuring that both community and government officials in
Banyuwangi and in Jakarta are properly informed of Intrepid's rights
under its agreements with PT IMN and the Company's contribution to
date to social and economic development in the Banyuwangi area. 
The Company is aware of rumours that the Project IUPs have been
transferred to a company called PT Bumi Sukses Indo ("BSI") which has
several corporate shareholders, whose ultimate holding can be traced
back to Mr Soeryadjaya and Provident Capital. The Company was in the
process of verifying this information, and on 16 December 2012,
Intrepid's Chief Executive, Brad Gordon, received a call from a
reporter from the Sydney Morning Herald, advising that the reporter
had been contacted by Paul Willis and was in possession of a document
indicating the transfer of the Tujuh Bukit IUPs. The document was
provided to Mr Gordon - it is written in the Indonesian language and
is currently being reviewed but appears to refer to the issue of two
IUPs to BSI in July 2012 and to a subsequent change in shareholding
in BSI. The Company has informally learnt that, through various
layers of corporate structuring, the majority underlying beneficial
shareholders in BSI include Provident Capital, Mr Soeryadjaya and Mr
Garibaldi Thohir, another influential Indonesian businessman and
associate of Mr Soeryadjaya It should be noted that the "Clean and
Clear" list issued by the Indonesian Ministry of Energy and Mining
still reflects PT IMN as the holder of the Tujuh Bukit IUPs. 
Forward-looking statements 
This announcement contains certain forward-looking statements,
relating to, but not limited to Intrepid's expectations, intentions,
plans and beliefs. Forward-looking information can often be
identified by forward-looking words such as 'anticipate', 'believe',
'expect', 'goal', 'plan', 'inte
nd', 'estimate', 'may' and 'will' or
similar words suggesting future outcomes, or other expectations,
beliefs, plans, objectives, assumptions, intentions or statements
about future outcomes, or statements about future events or
performance. Forward-looking information may include reserve and
resource estimates, estimates of future production, unit costs, costs
of capital projects, and timing of commencement of operations and is
based on current expectations that involve a number of business risks
and uncertainties. Factors that could cause actual results to differ
materially from any forward-looking statement include, but are not
limited to, failure to establish estimated resources and reserves,
the grade and recovery of ore which is mined varying from estimates,
capital and operating costs varying significantly from estimates,
delays in obtaining or failures to obtain required governmental,
environmental or other project approvals, inflation, changes in
exchange rates, fluctuations in commodity prices, delays in the
development of projects and other factors. Forward-looking statements
are subject to a variety of known and unknown risks, uncertainties
and other factors that could cause actual events or results to differ
materially from those expressed or implied.  
Shareholders and potential investors are cautioned not to place undue
reliance on forward-looking information. By its nature,
forward-looking information involves numerous assumptions, inherent
risks and uncertainties, both general and specific, that contribute
to the possibility that the predictions, forecasts, projections and
various future events will not occur. Intrepid undertakes no
obligation to update publicly or otherwise revise any forward-looking
information whether as a result of new information, future events or
other such factors which affect this information, except as required
by law. 

Ian McMaster (Chairman)               
Colin G. Jackson (Deputy Chairman)                                          
Brad A. Gordon (Managing Director)                                          
Laurence W. Curtis (Non-executive Director)                                 
Robert J. McDonald (Non-executive Director)                                 
Alan Roberts (Non-executive Director)                                       
Adrianto Machribie (Non-executive Director)                                 
Nyla Bacon (Company Secretary)                                              
Stock Exchange Listing                                                      
ASX and TSX symbol: IAU                                                     
Substantial Shareholders                                                    
Taurus Funds Management 8.5%                                                
Van Eck Associates 7.9%                                                     
Acorn Capital 7.4%                                                          
Surya Paloh 5.0%                                                            
Issued Capital                                                              
8,941,961 unlisted options                                                  
4,645,104 unlisted share rights                                             
51,208,032 unlisted restricted performance rights                           
Shareholder Enquiries                                                       
Matters related to shares held,                                             
change of address and tax file                                              
numbers should be directed to:                                              
Computershare Investor Services                                             
GPO Box 2975, Melbourne, Victoria 3001, Australia                           
Telephone: 1300 850 505                                                     
           +61 3 9415 4000                                                  

Intrepid Mines Limited
Brad Gordon, Managing Director
Chief Executive Officer
Brisbane, Australia
(Office) +61 7 3007 8000 or (Mobile) +61 400 036 636 
Intrepid Mines Limited
Greg Taylor
Investor Relations
Toronto, Canada
(Office) +1 905 337 7673 or (Mobile) +1 416 605 5120
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