Newmont Mining Corp. (NEM) sold its 7% stake in PT Newmont Nusa Tenggara (NNT), partly owned by Newmont and Japan’s Sumitomo Corporation to the government.

NNT plans to raise about $500 million in a public offering by selling a 10% stake within 12 months.

The divesture was in compliance with the Contract of Work with the government of Indonesia. The financial details of the divesture were not disclosed but it is assumed that the deal was $246.8 million. The stake went to the state investment agency Pusat Investasi Pemerintah (PIP).

As per the agreement, foreign shareholders of NNT were supposed to sell a total stake of 51% gradually to local investors in four years after they started production.

Jointly, Newmont and Sumitomo sold a 24% stake to PT Multi Daerah Bersaing, a consortium of the governments of West Nusa Tenggara province, West Sumbawa regency and Sumbawa regency, where the mine is located and PT Multicapital, a unit of Bumi Resources Minerals.

PT Pukuafu Indah, a local NNT shareholder owns 17.8%, while local firm PT Indonesia Masbaga Investama holds another 2.2%.

Recently, Newmont reported adjusted net income of $513 million or $1.04 per share in the first quarter versus last year’s $408 million or 83 cents per share. The result eclipsed the Zacks Consensus Estimate of 96 cents per share.

Total revenue was $2.5 billion, up 10% year over year, below the Zacks Consensus Estimate of $2.6 billion.

Newmont reported attributable gold and copper production of 1.3 million ounces and 57 million pounds, respectively, in the quarter at costs applicable to sales of $557 per ounce, and $1.11 per pound on a co-product basis.

The company faces stiff competition from Barrick Gold Corporation (ABX) and AngloGold Ashanti Ltd. (AU).

Newmont has a short-term (1 to 3 months) Zacks #3 Rank (‘Hold’) and a long-term Outperform recommendation.

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