Update: Newmont offers another 7 percent stake to government

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U.S mining giant Newmont Corp. and its foreign partner have offered another seven percent stake in PT Newmont Nusa Tenggara (NNT) to the government as part of their mandatory divestment program, Kontan reported Tuesday.

NNT's spokesman Rubi W. Purnomo said in Jakarta Monday that the company had sent a letter to the Ministry of Energy and Mineral Resources to offer the seven percent stake to the government.

"According to the contract, the government has 30 days to decide whether or not to accept or to turn down the offer," he said. "It means that on April 28, the government should make its final decision on the offer," he added.

He, however, refused to disclose the price of the seven percent stake, but acknowledged that it would be much higher than the price of the shares which were offered to the government last year.

According to Investor daily, the seven percent share is priced at US$420 million, but Director General of Mineral, Coal and Geothermal Resources at the Ministry of Energy and Mineral Resources Simon F. Semibiring told Petromindo.Com on Tuesday the price was $426 million.

NNT, which obtained its contract of works to operate a copper and gold mine in Batu Hijau, West Nusa Tenggara in 1986, is required to divest up to 51 percent of its shares to the government or Indonesian companies by 2010. By the end of 2007, the company should divest 10 percent of its shares as part of the mandatory divestment program.

Under the contract, three percent of the stake should be divested in 2006, seven percent in 2007 and another seven percent respectively in 2008, 2009 and 2010. The tag price for three percent stake is US$106 million and $282 million for the seven percent.

The latest offer of the seven percent stake is made despite the fact that the sales of the 10 percent stake to the local governments have not been concluded.

The central government has accused NNT of delaying the sales of the 10 percent stake. NNT denied the charge saying that the divestment of the 10 percent shares could not be concluded because the local governments, which have been named to buy the shares, have difficulties to finance the share purchase.

Both the government and NNT later agreed to settle their difference through an international arbitration. But, no decision has so far been made.

Currently, NNT?s shareholders are Newmont Mining Corp (45 percent), local company PT Pukuafu Indah (PI) which controls 20 percent and a consortium led by?s Sumitomo (35 percent). (*)