AIC Mines Ltd IAUFF

Newmont Mining

[Kutubu]

TORONTO (miningweekly.com) – US senior gold producer Newmont Mining expects that an arbitration committee will announce a decision during the first half of the year on the firm's obligation to sell stakes in its Batu Hijau mine, in Indonesia, to local investors.

Newmont took the matter to arbitration, after the Indonesian government accused the firm of failing to meet its commitment to sell a percentage of the local holding company of the mine by an agreed deadline.

The arbitration ruling will clarify “how and to whom” the interest in Batu Hijau should be divested, CEO Richard O'Brien said at an investor day in New York on Wednesday.

He commented that the uncertainty around the issue continued to weigh on Newmont's stock, but said he was optimistic that the divestiture question would soon be resolved, including whether Newmont may or should sell interests in Batu Hijau to private Indonesian companies, if local governments are not interested.

Newmont owns 45% of PT Newmont Nusa Tenggara (PTNNT), which owns the Batu Hijau mine, and its partner, Nusa Tenggara Mining Corporation (NTMC) – owned by Japan's Sumitomo Corporation, owns 35%.
The balance is owned by a
n Indonesian company.

PTNNT entered into a Contract of Work with the government of the Republic of Indonesia on December 2, 1986, which covers the Batu Hijau mine, in which the partners agreed to sell a combined 31% stake in PTNNT to local entities over time.

Newmont and NTMC had offered to sell a 3% interest in Batu Hijau to the Indonesian government in 2006 and a further 7% in 2007 and, after the government chose not to buy the stakes, the Ministry of Energy and Mineral Resources said that the shares should be offered to local government entities, which the mine's owners have attempted to do.

The companies say they have sold 2% in PTNNT to a local-government controlled company and are working to sell the rest of the stake required by the contract.

Edited by: Liezel Hill