Newmont Mining Corporation (NEM) has announced today that its Indonesian unit, PT Newmont Nusa Tenggara (PTNNT) has obtained an essential land-use permit, which will allow it to continue its mining operation as planned. Newmont Nusa Tenggara had previously warned that it might have to slow down its mining activity this year and halt it completely by 2010 if it did not obtain the permit.

The land-use permit, which has a validity of 20 years, provides certainty for Newmont’s operation to continue its performance as previously planned in the Contract of Work with the Government of Indonesia . Under the contract, 51% of PTNNT’s share in the Batu Hijau mine must be offered for sale – first to the Indonesian Government and next to Indonesian nationals – by March 31, 2010. Thus, pursuant to the divesture, Newmont’s share in the mine would taper down to 49%.

Newmont also stated that it has not changed its production targets for this year. The company expects to produce 455 million pounds of copper concentrate this year, up from 284 million pounds in 2008. The company also hopes to produce 486,000 oz of gold this year, up 80.6% from 269,000 oz in 2008.
In addition, Newmont expects to start operations at the Boddington Project in the second half of 2009. Development of the project was 98% complete at the end of the second quarter of 2009. Newmont anticipates Boddington to add between 375,000 equity gold oz and 450,000 equity gold oz in 2009.

For 2009, Newmont expects equity gold sales in the range of 6.35 million oz to 6.70 million oz, up from 5.2 million oz in 2008 at lower costs applicable to sales of $400 per oz to $440 per oz. The rise in equity gold sales will ride on the Boddington project following its complete acquisition and higher gold sales at lower-cost operations such as the Yanacocha and Batu Hijau mines.

The company expects copper sales of 460 to 510 million pounds in 2009 at costs of about $0.50 to $0.65 per pound. We maintain our Neutral recommendation on the stock.
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