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)