Summary
Newmont Mining Corporation (NEM) has announced a change in its economic interest in the Batu Hijau mine located in Sumbawa, Indonesia. Previously, due to a loan structure where an Indonesian partner, PT Pukuafa Indah (PTPI), held a carried interest and had a loan from the Nusa Tenggara Partnership (NTP), Newmont reported a 52.875% economic interest. This included their 45% ownership in NTP, which in turn owns 80% of the operating subsidiary PT Newmont Nusa Tenggara (PTNNT). On May 25, 2007, PTPI fully repaid the loan to NTP, resulting in Newmont's economic interest in Batu Hijau reverting to its direct ownership stake of 45%. This adjustment is expected to result in a one-time after-tax charge of approximately $20 million to $30 million in the second quarter of 2007. Consequently, Newmont will also reduce its reported proven and probable equity reserves for Batu Hijau to reflect this 45% interest. The company will reassess the accounting treatment for Batu Hijau, which has previously been fully consolidated in its financial statements.
Key Highlights
- 1Newmont's economic interest in the Batu Hijau mine has been reduced from 52.875% to 45%.
- 2The reduction in economic interest is due to the full repayment of a loan by PT Pukuafa Indah (PTPI) to the Nusa Tenggara Partnership (NTP).
- 3Newmont expects to record a one-time after-tax charge of approximately $20 million to $30 million in Q2 2007.
- 4Reported proven and probable equity reserves for Batu Hijau will be reduced to reflect the 45% economic interest.
- 5At December 31, 2006, the previous 52.875% interest included 5.0 million ounces of gold and 4.7 billion pounds of copper.
- 6Newmont will reassess the accounting treatment for Batu Hijau, which has been fully consolidated.
- 7This event is primarily an accounting and economic interest adjustment, not an operational change.