Intrepid Mining plunges 55% on shadowy Indonesian ouster

Australia's Intrepid Mining (ASX:IAU) has seen its share price plunge after being summarily booted from a key copper project in Indonesia by shadowy local business interests.

The Australian reports that local business groups orchestrated the ouster of Intrepid mining from the Tujuh Bukit copper and gold deposit on the south coast of east Java late last week.

Matters reached a dramatic climax on Thursday, when 667 workers, including seven expatriates, received an out-of-the-blue visit at the Tujuh Bukit deposit by representatives of private Indonesian company PT IMN traveling on helicopter, who ordered the workers to leave the site immediately.

Shares in Intrepid plunged 55% to AUD0.25 upon resumption of trading on Monday after being halted last week, destroying AUD160 million in market value.

Intrepid has warned that Indonesia risks damaging its reputation as an appealing mining investment destination. The company has since provided the Australian embassy in Jakarta with a briefing on the issue.

Indonesia is one of the world's largest exporters of thermal copper and tin, and the Tujuh Bukit deposit is believed to hold 15 billion pounds of copper and 25 million ounces of gold.

According to the Sydney Morning Herald, expenditure on the project of USD95 million has been funded solely by Intrepid, of which AUD50 million was provided to IMN shareholders to help it meet its financing commitments.

IMN underwent a mysterious change in ownership several weeks ago following the purchase of an 80% equity stake in the company by shadowy new shareholders.

Even Intrepid chairman Colin Jackson is unsure of the precise identity of his new business partners, saying that the new PT IMN owners "seem to be elusive."

Intrepid's sudden ouster will further sour foreign investor sentiment on the Indonesian mining sector, which was heavily dampened earlier this year following the introduction of a law by the Indonesian government in April capping foreign investment in mining projects at 49%, and requiring all foreign investors to divest at least 20% of their shares by the fifth year of operation.