Intrepid’s Tujuh Bukit unaffected by recent fire

Intrepid Mines (iau-t, iau-a) says a group of illegal miners recently set a small fly camp and drill rig on fire at a target on its prized Tujuh Bukit sulphide gold-copper project in East Java, Indonesia.

“As unfortunate and unexpected as this incident was, it will have no impact on our main operations at Tujuh Bukit,” said Intrepid’s CEO Brad Gordon in a press release.

No one was hurt during the incident, but “it’s a situation we are still working on sorting out,” says Intrepid’s investor relations representative Greg Taylor.

He says the company has been dealing with some illegal miners on the project’s Gunung Manis target for several years.

Gunung Manis, near the eastern border of Tujuh Bukit, is one of many mineralized targets on the 110-sq.-km property. Intrepid started drilling Gunung Manis in June after reaching an agreement with a group of illegal miners.

However, Taylor says the “real trouble” leading to the fire likely came from outside the local area. He elaborates that different groups of illegal miners were seen in the area and some individual miners were paid by wealthy people to dig gold with their hand tools. He adds that besides destroying the company’s property and threatening the safety of its workers, illegal miners contaminate the environment by using cyanide and mercury to separate the gold.

Intrepid notes illegal mining has not been seen on its other targets at Tujuh Bukit. Taylor explains what makes Gunung Manis susceptible to such mining is that it’s an epithermal gold target, unlike the other targets which are porphyry systems or a copper/gold oxide.

The company is working mostly at its porphyry targets and has six drill rigs turning at the Tumpangpitu and Candrian areas at Tujuh Bukit.

However, Tumpangpitu lies in an area the Indonesian government has labelled as a protected forest area, which inhibits open-pit mining. However, other parts of the project sit within a production forest area, where open-pit and underground mining is generally allowed.

Taylor says the company, along with its Indonesian partner, PT Indo Multi Niaga, will see if it can get the protected forest area rezoned. He points out Newmont Mining (nmc-t, nem-n), Pan Asia Corp., Straits Resources were the three companies that were able to do this in the past year.

He notes that the protected forest areas are one of many misconceptions people have about mining in Indonesia. “For example, this whole protected forest thing, people assume you got sequoia redwoods or great fir forests that someone wants to rip out. And we are not talking about that. We are talking about a very small area… that looks like ravished prairie land.”

The company says it has a four-year exploration license on part of the project and a 20-year renewable production operation license.

Based on a cutoff grade of 0.2% copper or 0.2 grams gold per tonne, Tujuh Bukit has an inferred resource of 990 million tonnes at 0.4% copper and 0.45 grams gold for 8.8 billion lbs. copper and 14 million oz. gold. The deposit remains open at depth and laterally.

On June 29, the company shares gained 8¢ to close at $1.53.