Newmont sheds 10% stake in Batu Hijau

Newmont Mining (NEM-N) and Sumitomo have completed the transfer of 10% of PT Newmont Nusa Tenggara (PTNNT) to a consortium of regional and local governments near the Batu Hijau mine, and to a private Indonesian company.

Newmont has received its pro-rata 56.25% of the US$391 million proceeds and last week reached an agreement with the government of Indonesia to extend the deadline for the sale transfer of the 2008 (7%) and 2009 (7%) divestiture shares until Nov. 23. The extension was made to give the government more time to find buyers.

Following the 10% divestiture announced today (3% for the 2006 divestiture and 7% for the 2007 divestiture), Newmont’s ownership in Batu Hijau’s proven and probable equity reserves of 4.1 million ounces of gold and 3.95 billion pounds of copper (as of Dec. 31, 2008) has been cut to 39.37% from 45%.

Equity gold and copper sales during the third quarter at Batu Hijau tallied 93,000 oz. gold and 64 million lb. copper at costs applicable to sales of US$178 per oz. gold and US50¢ per lb. copper.

Equity gold and copper sales were slightly higher than expected due to higher grades. Total costs applicable to sales were lower than expected, largely due to lower diesel costs and a higher build in ore stockpile inventory. Costs applicable to sales allocated to gold were lower than expected due to co-product accounting.

Total third-quarter revenue for the company reached US$2 billion and net cash from operations US$1.1 billion, resulting in net income of US$388 million or US79¢ per share, up from US$191 million or US42¢ per share in the year-ago quarter.

Newmont reported that costs applicable to sales for gold reached US$404 per oz., down about 13% from US$467 per oz. in the third quarter of 2008.

At presstime Newmont was trading at US$52.70 per share. The gold major has traded between a low of US$21.17 per share and a high of US$53 per share over the last 52 weeks.