scenarios/pt imn

It's early days in this (new) story. The stock is trading at cash value now. We don't have enough information to know the intentions of PT IMN. One scenario is that they are playing a hardball game to renegotiate better terms of the direct equity deal or the pre-existing partnership. And this shutdown and resulting pressure on the stock (and therefore the board and management) could be an effective tactic to accomplish better terms. I understand that these people are sophisticated, mining savvy, connected and with deep pockets. Therefore, they would, I presume, understand their legal options and limits and are executing a strategy to take maximum advantage of Intrepid in a negotiation. Inflicting a thorough pummelling on Intrepid would not be an unusual tactic to soften up the opposite side of the table.

Expropriation (one scenario that has been mentioned elsewhere) would mean that contractual rights underlying the JV are meaningless and can be abrogated at will. That would effectively blacklist Indonesia as a mining friendly jurisdiction, which is not the intention of the government. (Has anyone noted the ads touting Indonesia as a place to do business on BBC and CNN?) It would also result in a very aggressive legal action by Intrepid, which has the funds to finance a legal assault on the partners. The Churchill mining saga is already an embarrassment for the government and the treatment of Intrepid by the Indonesian partners threatens to significantly amplify investor concerns about the country in general. If the government is not involved, it is highly likely that it will be involved shortly, through lobbying by Intrepid (via the Australian government and through internal contacts) and by the press, which will see this story as a greater story pertaining to the risks of investment in Indonesia. Major mining companies will also be scrutinizing this story closely, given the resource status of Tujuh Bukit and the legal issues which could also affect their decision making in Indonesia.

Another possible scenario, given the reputed sophistication of PT IMN shareholders, would be to acquire Intrepid shares at blood in the streets prices in the open market. Then start a process which would be considered market friendly and rapidly capitalize on the appreciation of the shares together with an increased ownership in the property through Intrepid. Classically Machiavellian, but there's no reason why sophisticated players with leverage wouldn't attempt to gerrymander the stock price for their benefit.

PT IMN needs to show its hand before I would abandon this company. This is a blood in the streets price for the stock, so downside is probably limited from here.