Medco takes over Batu Hijau mine from Newmont
Thursday, June 30 2016 - 02:58 PM WIB
Newmont announced it has entered into a binding share sale and purchase agreement with PT Amman Mineral Internasional (PT AMI) to sell its interests in PT Newmont Nusa Tenggara (PTNNT), which operates the Batu Hijau copper and gold mine. Nusa Tenggara Mining Corporation, majority owned by Sumitomo Corporation, has also agreed to sell its ownership stake to PT AMI, according to the firm.
Separately, Medco announced that it had agreed to acquire PT AMI.
Newmont said the total consideration is $1.3 billion for its 48.5 percent economic interest in PTNNT. This amount is comprised of cash proceeds of $920 million expected to be paid at closing and contingent payments of $403 million tied to metal price upside and development of Elang.
?Selling our stake in PTNNT for fair value is aligned with our strategic priorities to lower debt, fund our highest margin projects and create value for shareholders,? said Gary Goldberg, President and Chief Executive Officer. ?We believe PT AMI, supported by Batu Hijau?s experienced team, will be well positioned to continue operating the asset successfully. We acknowledge and thank Batu Hijau?s employees, the government of Indonesia and our valued partner Sumitomo for their support as we work to execute a successful sale and transition.?
The transaction is expected to close in the third quarter following receipt of regulatory approvals and satisfaction of other conditions precedent. These conditions include government approval of the PTNNT share transfer; a valid export license at closing; concurrent closing of PT Multi Daerah Bersaing?s (PTMDB) sale of its 24 percent stake to the buyers; resolution of certain tax matters; and no material adverse events that would substantially impact the future value of Batu Hijau.
Meanwhile, Medco said it has agreed to acquire PT AMI which controls 82.2 percent of PT NNT for $3.6 billion. It is the largest structured finance transaction in Southeast Asia this year, according to the firm.
?The transaction will directly provide a strategic added value to MedcoEnergi in view of the world-scale operation of PTNNT. We are committed to maintaining high standards of safety, environmental protection, social responsibility, qualified workforce which is the foundation of MedcoEnergi to achieve successful operation until now. The acquisition will strengthen MedcoEnergi?s position as an energy and natural resources top-tier enterprise in Indonesia and emphasizes our commitment to contribute to the national development,? Medco?s President Director Hilmi Panigoro said in a statement.
Medco cooperates with AP Investment in carrying out the acquisition with supports from three state owned banks Bank Mandiri, BRI and BNI. AP Investment is led by Agus Projosasmito, former President Director of Danareksa Securities.
PTNNT?s Board of Management welcome the acquisition, saying the operation of the mine will continue as normal following the acquisition by PT AMI.
?All employees and business partners of Batu Hijau mine appreciate PT AMI?s commitment to maintaining high standards of safe mining operation, responsible environmental performance and community development. Through good and sustainable performance, we shall continue contributing to the development of West Sumbawa regency and West Nuasa Tenggara province on the long term and the income of the government through tax payment on the local, regional and national levels,? PTNNT?s President Director Rachmat Makkasau said.
Editing by Johannes Simbolon