Summary
Newmont Mining Corporation (Newmont) announced the completion of a 7% divestiture of its Indonesian subsidiary, PT Newmont Nusa Tenggara (PTNNT), for its Batu Hijau copper and gold mine. This sale, part of divestiture obligations under the Batu Hijau Contract of Work, was made to PT Multi Daerah Bersaing (PTMDB), a consortium of local governments, and PT Multicapital, a private company. The transaction resulted in Newmont receiving approximately $129 million in cash and is expected to generate a pre-tax gain of approximately $50 million, which will increase equity on the balance sheet. While Newmont's direct ownership stake in the Batu Hijau mine has decreased from 52.44% to 48.50%, the company, along with its affiliate Sumitomo Corporation, retains operational control through a new mine operating agreement, as their combined interest remains greater than PTMDB's. This ownership change is anticipated to reduce Newmont's 2010 production guidance by approximately 25,000 equity ounces of gold and 20 million equity pounds of copper. The company is obligated to offer an additional 7% of PTNNT shares for sale by March 31, 2010, to fully satisfy its divestiture requirements.
Key Highlights
- 1Newmont completed the sale of 7% of PT Newmont Nusa Tenggara (PTNNT) as part of divestiture obligations for the Batu Hijau mine.
- 2The sale generated approximately $129 million in cash for Newmont.
- 3A pre-tax gain of approximately $50 million is expected from the transaction, increasing the company's equity.
- 4Newmont and Sumitomo maintain operational and management control of the Batu Hijau mine via a new operating agreement.
- 5Newmont's ownership in the Batu Hijau mine's reserves has decreased from 52.44% to 48.50%.
- 62010 operating guidance is reduced by approximately 25,000 equity ounces of gold and 20 million equity pounds of copper due to the divestiture.
- 7An additional 7% stake in PTNNT will be offered for sale by March 31, 2010, to complete divestiture obligations.