Newmont Mining Company (NEM) has agreed to sell its 14% stake of PT Newmont Nusa Tenggara, the Indonesian gold mine, to PT Multi Daerah Bersaing for about $494 million, ending the dispute with the Indonesian government over selling its shares as required under the contract to operate in the country.
Newmont shares ownership of the Batu Hijau mine with Japan’s Sumitomo Corp. and Indonesia’s PT Pukuafu Indah. The Denver-based company will transfer the stake to private company PT Multicapital and PT Multi Daerah Bersaing, a consortium of regional and local Indonesian governments.
Last week, Newmont had sold a 10% stake to the consortium, for proceeds of about $391 million. In the last quarter, gold and copper sales at Batu Hijau in Indonesia were 93,000 ounces and 64 million pounds, respectively, at costs applicable to sales of $178 per ounce and 50 cents per pound. Gold and copper sales from this mine are expected at 225,000 ounce to 250,000 ounce and 210 million pounds to 230 million pounds, respectively, in 2009.
Due to an assumed higher gold price than copper, Newmont has lowered its expected costs applicable to sales for gold to be $200 to $220 per ounces from $280 to $320. Gold sales at the Ahafo mine in Ghana amounted to 136,000 ounce at costs applicable to sales of $446 per ounce. At Ahafo, Newmont maintained its gold sales guidance of 500,000 ounces to 525,000 ounces and costs applicable to sales between $425 and $450 per ounce in 2009.
For the full year 2009, Newmont expects gold sales to be about 5.2 million ounces, at the lower end of the previously estimated range due to the extended start-up of the Boddington mine. For 2009, Newmont expects gold sales of 1.9 to 2.0 million ounces at Nevada, up from the initial guidance of 1.8 to 2.0 million ounces. The company has narrowed its outlook for 2009 costs applicable to sales to between $400 and $425 per ounce for gold from $535 to $575 per ounce.
For 2010, Newmont expects gold production to improve 5% to 10%, primarily as a result of higher production from Boddington in Australia and Batu Hijau in Indonesia, partially offset by lower production in Nevada and Yanacocha in Peru. The company also expects 2010 costs applicable to sales to be modestly higher, by about 5%, partially as a function of higher expected energy costs and adverse changes in exchange rates.
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