South Jakarta court annuls mining agreement

South Jakarta court annuls mining agreement

JAKARTA (JP): The South Jakarta District Court has annulled an
agreement between Canadian mining firm Ag Armeno Mines and
Minerals Inc. and Indonesian mining entrepreneur Yusuf Merukh
over the acquisition of shares in the Batu Hijau gold project in
West Nusa Tenggara, a court official said.

A secretary of the court, Dimyati Masduki, said on Tuesday the
panel of judges announced the verdict during a hearing on Monday.
The lawyers of both disputing parties failed to attend the
hearing as they were late.

He said the verdict was in line with the wishes of both
parties.

Documents made available to the local media said Armeno, which
is listed on the Vancouver Stock Exchange, entered into an
agreement with Merukh in May 1998 granting the former the sole
and exclusive option to acquire the 18 percent stake owned by
Merukh in the Batu Hijau gold project.

Merukh would have received 50 million worth of shares in
Armeno and US$2 million in cash payment in return.

The Batu Hijau gold project is owned by PT Newmont Nusa
Tenggara, in which Merukh's company PT Pukuafu Indah had 20
percent shares. The other owners are American mining firm Newmont
Corp. (45 percent) and a Japanese consortium comprising of, among
others, Sumitomo and Mitsui (35 percent).

Under the agreement, Armeno would have been allowed to conduct
a due diligence on the project's value prior to the share
acquisition.

However, Armeno failed to access the project and accused
Merukh of breaching the agreement.

The company thus sued Merukh in Vancouver and after some legal
processes, the Supreme Court of British Columbia decided in
January last year in favor of Armeno, ordering Merukh pay the
company compensation.

However, the Supreme Court's decision could not be executed
here because Canada and Indonesia do not have a bilateral
agreement obliging Indonesian courts to execute Canadian court
verdicts and vice versa.

Armeno filed another suit against Merukh in the South Jakarta
Court last year, demanding US$5.4 million in compensation from
him.

Dimyati said in its verdict the panel of judges ordered Merukh
to pay Armeno a certain amount of compensation for "the incurred
expenses", but he refused to reveal the amount.

"It's unethical to reveal the amount of compensation to the
press as the lawyers of both disputing parties do not know of the
amount due to their absence from the last hearing," Dimyati said.
(jsk)