Thursday, March 18, 2010

Newmont and Sumitomo Complete 2009 7% Share Sale of PTNNT for $247 Million

Newmont Mining Corporation announced that its subsidiary, Newmont Indonesia Limited, together with Nusa Tenggara Mining Corporation BV (NTMC), an affiliate of Sumitomo Corporation, completed the sale of 7% of PT Newmont Nusa Tenggara (PTNNT) corresponding to the PTNNT 2009 divestiture obligations. The 7% interest was sold to PT Multi Daerah Bersaing (PTMDB), a consortium comprised of regional and local governments near the Batu Hijau copper and gold mine in Indonesia, and PT Multicapital, a private company.
Upon completion of this sale, Newmont received approximately $129 million in cash, reflecting its 56.25% portion of the $247 million sale price reduced by a $17 million dividend adjustment payable to PTMDB under the sale agreement. The 2009 Share Transfer will result in a pre-tax gain of approximately $50 million that will be reflected as an increase in equity on the Company's consolidated balance sheet.
In conjunction with the closing of the 2009 Share Transfer, the mine operating agreement among Newmont, NTMC, and PTMDB came into effect. Under this agreement, Newmont and Sumitomo continue to retain -- so long as their combined shareholding is greater than PTMDB's interest in PTNNT -- the right to apply Newmont's operational, technical, financial, and related standards and practices to the operation and management of Batu Hijau. This includes standards for safety, environmental stewardship, and social responsibility.
Pursuant to the PTNNT Contract of Work, an additional 7% of PTNNT's shares will be offered for sale by Newmont and NTMC by March 31, 2010, after which the divestiture obligations contained in the Contract of Work will be complete.
With the close of the 2009 Share Transfer, Newmont's economic ownership in Batu Hijau has been reduced from 52.44% to 48.50%, which includes the 17% effective economic interest obtained as collateral for the previously reported loan transaction with PT Pukuafu Indah as well as Newmont's direct holding of 31.5%. The resulting net effect on Newmont's 2010 operating outlook is a decrease in production of approximately 25,000 equity ounces of gold and 20 million equity pounds of copper.




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