PERTH (miningweekly.com) – Gold miner Newcrest Mining will need to divest of at least another 26% interest in its Gosowong gold mine, in Indonesia, in order to meet the criteria of a new Contract of Work (CoW).
The miner said on Tuesday that it had entered into an amended agreement with the government of Indonesia to amend the Gosowong CoW. The amended CoW was required in order for the government to approve the yearly Work and Budget plan for the mine.
“Following extended negotiations we have reached a mutually acceptable framework for our Gosowong operation, which provides certainty of the regulatory and fiscal arrangements going forward,” said Newcrest CEO and MD Sandeep Biswas.
Newcrest told shareholders that while the amended agreement would see a number of changes to the CoW, the most significant was that Newcrest, through its 75% held Indonesian subsidiary PT Nusa Halmahera Minerals (PT NHM) will be required to pay the prevailing tax rates contained in the Indonesian Income Tax Laws from July 1 this year.
The miner said that while the net impact of these tax changes in aggregate would negatively impact the value of the Gosowong operation, the impact on cash flows was not expected to be material to Newcrest.
In addition, the amended agreement would also require Indonesian parties to own at least 51% of PT NHM within two years of singing the amendment agreement.
This would require Newcrest to divest of at least another 26% of its current 75% shareholding in Gosowong.