Release: Antam evaluating potential investment in PT Freeport Indonesia
Acquisition will only occur if results in value for Antam
Monday, June 6 2005 - 05:29 AM WIB
Antam?s management wishes to clarify it is at the preliminary stages of evaluating the possible purchase of a stake in PT Freeport Indonesia consisting of the 9.36% owned by the Government of Indonesia and the 9.36% owned by PT Indocopper Investama. Antam will only make such an investment if it will result in value for Antam and its shareholders. The evaluation shall be conducted prudently and according to business principles.
Antam?s stated strategy includes the evaluation of acquisition opportunities that could possibly create value. As part of the ordinary course of running its business, Antam evaluates potential investment prospects that arise and could match with its existing diversified mining assets. Antam?s management would be remiss not to consider the possible acquisition of a stake in PT Freeport Indonesia, which owns an acknowledged prime world-class copper and gold asset.
Antam?s management sent a letter (No. 26/0732/DAT/2005) to the Ministry of State- Owned Enterprises on January 7th, 2005, which seeks approval for the potential acquisition of the government?s interest in PT Freeport Indonesia. The letter was sent as a required first step before implementing a full evaluation and signals Antam?s interest in the acquisition. Upon receipt of a favourable answer, Antam will appoint an independent financial advisor and begin a thorough financial, legal and commercial evaluation of the possible transaction.
By exploring this potential opportunity Antam has not departed from its current strategy of maximizing shareholder value by focusing on its core business and improving and growing its core gold, nickel and bauxite reserves and operations. More exactly, the evaluation is being made as part of Antam?s efforts to maintain a value generating strategy in a dynamic business environment. The investment will not be made if an analysis shows the investment will not generate economic value for Antam.
The evaluation of the possible opportunity to purchase a stake in PT Freeport Indonesia will not affect Antam?s work on its existing project pipeline. As such, efforts with international partners to complete the Joint Venture Agreement for the US$220 million, 300,000 tonnes per year, Tayan Chemical Grade Alumina project in West Kalimantan continues, with a target of the end of this year. Tayan will be project financed and Antam plans to fund its equity in the project from operating cash and the sale by auction of certain non-productive assets. Initially, Antam will take the largest minority share in the project and upon some milestone exercise an option to acquire a majority interest.
On March 16th, 2005, Antam signed a Memorandum of Understanding with POSCO of Korea to, by the end of 2006, complete a bankable feasibility study of a proposed US$650 million, 30,000 tonnes per year ferronickel project. FeNi IV, which Antam also plans to project finance, will develop Antam?s large saprolite, or high grade nickel ore, reserves at Buli, North Maluku. Last week Antam sent a team to Japan for FeNi IV, which Antam expects to begin commercial operations in 2010. For FeNi IV as well, Antam plans to initially own the largest minority stake in the project, with an option to acquire a majority interest of perhaps 60%. To develop the vast limonite, or low grade nickel ore, reserves of Buli, Antam has a plan to take an interest in a High Pressure Acid Leach project and is in discussions with international mining companies.
Antam?s investment activities in 2005 will again focus on the nickel division. Of the total amount of Rp1,164 billion, the nickel division will receive Rp981 billion, followed by Rp58 billion for the gold division and Rp125 billion for the other divisions and head office. Antam will spend Rp881 billion for FeNi III, Rp87 billion for routine expenditures, Rp47 billion on nickel and bauxite exploration, and Rp32 billion for opening new mines. (end of release)