Owners mull over selling more stakes in Batu Hijau mine: Report

U.S. gold miner Newmont Mining Corp. and other foreign owners of the Batu Hijau copper and gold mine in West Nusa Tenggara are considering the possibility of selling down their stakes in the mine, which could fetch about $1.2 billion, sources familiar with the matter said.

The investment bankers are lobbying for a sale of a 31 percent stake in PT Newmont Nusa Tenggara (NNT) held by foreign investors to be in one go rather than a gradual sell off, they said.

"What they are now deciding to do is whether they just wait for a couple of years or if they should just do one transaction where they can get paid a premium for delivering a significant block," the source told Reuters.

"They have not decided yet but they are thinking about it. Newmont is definitely considering options," he said.

However, Newmont might choose to sell down its stake gradually given the sheer size of the mine, he added.

Under the CoW, foreign shareholders of NNT is obliged to gradually divest at least 51 percent of NNT?s shares to Indonesian government or Indonesian owned entities, starting with 15 percent in 5 years after commercial operations (2005) and 8 percent the following year (2006). NNT is only obliged to divest 3 percent this year as local company PT Pukuafu Indah (PI) has already controlled 20 percent of NNT?s shares. The 51 percent divestment is expected to be completed in 2010.

Current foreign shareholders are Newmont Mining Corp (45 percent) and a consortium led by Japan?s Sumitomo (35 percent).

NNT?s Batu Hijau mine, which has ore reserves of 1 billion tons containing 0.525% copper and 0.37 gram per ton gold is producing around 600 million pounds of copper and 700,000 ounces of gold annually.(*)