The government of Indonesia has granted Newmont Gold (NGC-N) a construction permit for the Batu Hijau copper-gold project on the island of Sumbawa.
The last week has been a tense one for the Denver-based major. Reports from Indonesia suggested that the government wanted a larger percentage of the project after learning that the Busang property in Kalimantan contained no minable gold.
Douglas Hock, spokesman for Newmont, confirmed that the government had asked Newmont to renegotiate the deal so as to give Indonesian companies a greater share in the project. However, Newmont responded by saying a renegotiation was not feasible.
But with the permit now in hand, Newmont can begin constructing the US$1.9-billion project immediately. Initial work will focus on building port facilities, a power plant, roads and housing. Construction is expected to last three years.
The mine is projected to produce 550,000 oz. gold and 270,000 tons of copper annually over 20 years. Reserves stand at 1 billion tons grading 0.53% copper and 0.012 oz. gold per ton, equivalent to 12.1 million contained ounces of gold and 10.6 billion contained pounds of copper.
Newmont holds a 45% interest in Batu Hijau, Sumitomo holds 35%, and Indonesia-based Pukuafu Indah owns the remainder.
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