Newmont offers Martabe gold mine for US$114 million

The U.S.-based Newmont Corporation has offered its entire stake in the Martabe gold and copper mine site in Tapanuli, North Sumatera for US$114 million, but a senior official at the ministry of energy and mineral resources says that Newmont's offering price is still too high, Investor Daily reported on Monday.

Mangantar S. Marpaung, the director for development of coal and geothermal at the ministry of energy and mineral resources, said in Jakarta last week that at least five companies including PT Aneka Tambang had expressed their interest to buy Newmont's interest in the Martabe mine.

Aneka Tambang will likely cooperate with South African and Malaysian companies in acquiring Newmont stake in the mine.

According to Marpaung, Newmont, the local government and the ministry of energy were still discussing the criteria in determining the right buyer for the Martabe mine. "There will be 11 criterias in determining the right buyer. Seven will come from Newmont, and the other four from the government," he said.

For the government side, he said, that the priority to buy Newmont shares in Martabe mine should be given to local investors. "We also feel the offering price from Newmont is still too high given the fact that the company has yet to begin its production," he said.

The Martabe gold and copper mine is operated by Newmont Horas Nauli, which is 90 percent owned by Newmont Corp. The remaining balance is held by the Tahija family through PT Austindo Nusantara Jaya.

Pre-feasibility study on the gold project conducted by previous owner Normandy Mining in 2002 revealed that high returns from the project could be achieved from a heap or dump leach operation for a low entry capital of approximately US$30 million and operating cost of approximately US$105/oz, with an indicative average annual production of 150,000ozs. (*)