When Intrepid Mines faces off in court in Indonesia with its former partner Paul Willis in May, at the core of the showdown will be the events of April 21, 2008.

That day, in a hotel café in Jakarta, Willis signed a release in which he relinquished his rights to the massive Tujuh Bukit gold deposit.

Paul Willis says that at the time of signing he was outnumbered nine-to-one. Those numbers included Intrepid chief executive Brad Gordon, legal counsel Vanessa Chidrawi, and Intepid’s Indonesian partner Reza Nazaruddin.

He says there were six local ‘heavies’ present, armed with revolvers in holsters. It was due to this duress, says Willis, that he signed the releases.

He says Brad Gordon was there for the second half of the meeting and Vanessa Chidrawi came in at the end of the meeting for the signing.

A spokesman for Brad Gordon says Gordon is emphatic that there was one bodyguard and not six. He said there were ‘three or four police’.

“The only other people apart from Reza’s offsider at a nearby table were the police who arrived at the end of the meeting to escort Paul Willis to the office to clear out his things,” the spokesman said.

“Reza organized for the police to turn up. There were NOT six heavies there at any time of the meeting and the length of time – 3 hours – reflected discussions around his payment and why did he try to bring Bumi into the project without telling anyone.”

An email from Chidrawi to Gordon and the Indonesian partners, obtained by BusinessDay, shows how Intrepid conspired with the local partners to squeeze Willis out of the venture.

Apart from the matter of duress, that is, whether Willis was intimidated into signing the release, the other critical issue for Intrepid will be whether Intrepid should have pushed Willis out of the venture anyway. Gordon maintains that Willis was in breach of his fiduciary duties. Willis denies this. Below, are a series of questions put to Intrepid and then Willis for response.

The Willis case may be critical to the future of Intrepid. This is a company with $100 million in cash which has had its one major projects taken by stealth by its Indonesian partners. With that kind of kitty, and the astounding circumstances in which they lost control of a jumbo gold deposit, the prospect of a class action lawsuit is real.

Intrepid now accuses Paul Willis, the man who introduced it to Tujuh Bukit in the first place, of working with the people who have taken their project.

Willis says he was dudded by Intrepid and, yes, has done some work with the new owners (whose ownership is disputed by Intrepid) as a consultant. He wants to get back into the Tujuh Bukit project.

Here are the questions which were put to intrepid. Paul Willis reponses also follow.

1. Did Willis and Garrett introduce Emperor (represented by Malcolm Norris, who was previously at Indophil) to the Project in late 2006?

  • Intrepid: Yes.

2. Did Willis, Garrett, Emperor and the Indonesian partners sign an “Alliance Agreement” in August 2007?

  • Intrepid: Yes. Willis was a party to the Alliance Agreement, and that agreement expired on 31 March 2008. In February 2008, draft JV documentation was sent to Paul Willis (prior to this a renegotiation of some commercial terms had been taking place between Malcolm Norris and Paul Willis. The JV documentation reflected these amended commercial terms). Please note that the formal agreement provided by Emperor in February 2008 was used as the base document, amended for the Bumi deal.
  • Paul Willis: In any jurisdiction, getting draft docs in February with a 31 March deadline is a tough ask, in Indonesia with Indo partners to explain and satisy, is an impossibility. They simply stuffed up and left their run too late. The original Alliance Agreement was basis for the proposed Bumi deal albeit with significantly enhanced terms due to the excellent drilling results and geological progress.

3. Were the drilling results achieved at the Project positive, neutral or negative in the period until the end of March 2008? Emperor made release to ASX in Jan 2008, claiming the Project was potential company-maker.

  • Intrepid: Emperor has an independent valuation of the project undertaken at the end of 2007. The valuation returned a value of $2.5 – $3 million. In March 2008, Emperor’s corporate advisors, Gryphon, undertook some further valuation work and returned a value range of $5 to $15 million dollars (the upper value was, however, largely influenced by one broker valuing the project at $30 million).
  • Paul Willis: Avoiding the question, the ASX release in Jan 2008 is self explanatory, the drilling results were not included in the end of 2007 work.

4. Did the Alliance Agreement expire on 31st March 2008?

  • Intrepid: Yes.

5. What was Emperor/Intrepid’s position as at 1st April 2008?

  • Intrepid: A new agreement was reached on 21 April. It expired because Willis was misrepresenting the state play to both sides. Maya and Reza wanted to resign. It would not have expired but for delays by Willis.
  • Paul Willis: It was not Willis who caused the delays, and then Norris went on leave in March.

6. What was the basis for Chidrawi preparing and sending the email to the Indonesians? Did the Indonesians want to “kick-out” Willis?

  • Intrepid: The email relates to a decision by INM and Intrepid to terminate Willis because he had been negotiating with Bumi without INM’s knowledge and during a period when the Alliance agreement was still intact. During those negotiations he indicated to Raza and Maya that Intrepid did not want to continue funding the alliance. This was incorrect. At the same time he was telling Intrepid that he could not contact Raza and Maya to discuss an extension of the Alliance. This was also incorrect.
  • Paul Willis: IMN had full knowledge I was talking with Bumi.

7. Willis makes claim to have spent $4.7million up until April 2008 on the Project, is this correct?

  • Intrepid: No evidence was ever presented to Intrepid of this. According to IMN’s books, which reflected a “loan from Paul Willis” of the amounts contributed by him of around $1 million. That is why the termination agreement initially stipulated that the amount to be paid out to him would be $1 million. After negotiations between Brad and Paul, the amount was increased to $2 million and the termination agreement changed before signature.
  • Paul Willis: See speadsheet kept by IMN accountant Pak Kris, it shows $4.7 million.

8. Was Norris the key Emperor contact person dealing with Willis? See emails between Willis and Norris.

  • Intrepid: Yes, Malcolm was the key contact.

9. If the Project was going well and Willis had spent money and he had worked on a new deal with PT Bumi (one of Indonesia’s most powerful companies in 2008), how is it that he “left the Project on commercial terms” – particularly given the email sent by Chidrawi?

  • Intrepid: He left because he had been negotiating with Bumi outside of the Alliance. He did not have the mandate to have those discussions. He termination agreement was on agreed commercial terms.
  • Paul Willis: Utter bullsh-t.

10. Is it true that if Willis can prove duress and intimidation took place that the Jakarta Court can declare agreements between Intrepid and the Indonesian partners null and void?

  • Intrepid: It is a matter for the court to determine. Intrepid will defend the claims by Willis. Intrepid did nit intimidate Willis during his discussions on his termination agreement. Please also note that Emperor was not placing all bets on Willis signing the termination agreement, as there was no certainty that he would. The plan was to point out to him his that the other parties had become aware of his duplicitous dealings, that there was considerable weakness in his legal position, and to offer him an exit on commercial terms. Had he refused to sign the termination agreements, Emperor had already put in place an action plan to have his arrangements with IMN and Maya and Reza set aside by the Indonesian court.
  • Paul Willis: Willis held Powers of Attorney to Sell and Vote the shares of Maya and Reza in Pt IMN and as such he could not be simply forced out.

The sole reason that the Agreement expired was that Emperor was too busy with the merger with Intrepid and they left it until the last 6 weeks to try and complete documents that at best would have taken 3 months to complete.

I first spoke to Bumi about the possibility of entering the deal before the Alliance Agreement expired.  Bumi suggested they would “at least match the deal terms with Emperor / Intrepid” and that position was used in my discussions with Maya and Reza.  The deal with Bumi was finalised on 12th April 2008.

If the whole basis of getting rid of me was that I breached a confidentiality agreement, then their actions were completely wrong, there is a proper legal basis to follow through if someone has breached.

The amount I had spent on the project and IMN was kept on record by the IMN accountant – Pak Kris (copy of his spreadsheet attached), it is just more bullshit to suggest I had spent $1m.

Willis says he was dudded by Intrepid and, yes, has done some work with the new owners (whose ownership is disputed by Intrepid) as a consultant. He wants to get back into the Tujuh Bukit project.

There were three reasons why I approached Bumi:

  1. They could hold a direct legal equity in the project. Intrepid could not
  2. The ability to rezone forestry classification needed to allow any development, something Intrepid and IMN could not achieve
  3. Strong Indonesian business and political connections, something which Intrepid and IMN did not have