 TORONTO (miningweekly.com) – Colorado-based Newmont Mining and partner Sumitomo Corp have sold another 7% of the company that owns their Batu Hijau copper/gold mine in Indonesia to local entities.
The stake was sold for $247-million to PT Multi Daerah Bersaing, a consortium owned by regional and local governments near the mine, and private Indonesian company PT Multicapital, Newmont said on Wednesday.
Newmont and Sumitomo agreed in a 1986 contract of work to sell a total of 51% of the project to local Indonesian entities in stages, over an agreed timeframe.
However, by early 2009, the stakes which should have been divested in 2006, 2007 and 2008 had yet to be transferred.
Although Newmont had offered the shares to various levels of government for sale, it was not able to find buyers for the 2006 and 2007 tranches in time to meet the deadlines set out in the contract, and the sale process was eventually put on hold in 2008 while the parties headed to arbitration, after the government threatened to cancel the contract of work for the operation, because it said the mine's owners were not holding up their end of the bargain.
After an arbitration panel ruled, setting a deadline for the overdue divestments to be completed, the foreign partners last year completed the 3% sale that should have taken place in 2006, as well as 7% for 2007, and later another 7% for the 2008 sale.
The latest transaction relates to their 2009 divestiture obligations, Newmont said. A final 7% will be sold this year.
The sale brings Newmont's direct interest in the huge Batu Hijau mine to just 31,5%, but the company owns an effective 48,5%, because PT Pukuafu Indah, which owns 20% of the mine, pledged its holding and all of its own shares as collateral for a loan provided last year by Newmont.
The US-based miner received about $129-million from the latest transaction, which will result in a pretax gain of about $50-million that will be reflected as an increase in equity on the company's balance sheet.
The sale will lower Newmont's attributable production in 2010 by about 25 000 oz of gold and 20-million pounds of copper, the company said.
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