Summary
Newmont Mining Corporation (NEM) announced the completion of a 10% share transfer in PT Newmont Nusa Tenggara (PTNNT), operator of the Batu Hijau mine, to a consortium of Indonesian regional governments and a private company for $391 million. This transaction fulfills divestiture obligations under the Batu Hijau Contract of Work, with an additional $38 million committed to community development projects. As a result, Newmont's ownership in the mine's proven and probable equity reserves has decreased from 45% to 39.375%. Future transfers could further reduce this stake to as low as 27.5625%. The company has also secured an extension from the Indonesian government for the divestiture of 2008 and 2009 shares until November 23, 2009. Importantly, this share transfer does not require the deconsolidation of PTNNT, and the resulting gain will be recorded as an increase in stockholders' equity. However, the filing notes that further divestitures could potentially lead to deconsolidation, which would impact Newmont's reported financial statements.
Key Highlights
- 1Completed 10% share transfer of PTNNT (Batu Hijau mine operator) for $391 million.
- 2Additional $38 million committed to community development projects.
- 3Newmont's ownership in Batu Hijau's equity reserves reduced from 45% to 39.375%.
- 4Potential for further ownership reduction to as low as 27.5625% due to future transfers.
- 5Current share transfer does not require deconsolidation of PTNNT.
- 6Gain from the current transfer will increase stockholders' equity, not immediate earnings.
- 7Indonesian government extended the deadline for further divestitures to November 23, 2009.