Newmont, Sumitomo ink Batu Hijau deal

Newmont Gold (NGC-N) and Japan-based Sumitomo have reached an agreement to develop jointly the Batu Hijau copper-gold deposit on the Indonesian island of Sumbawa.

Newmont will hold a 45% interest, having already spent more than US$80 million developing the property. Sumitomo will earn 35% by paying about US$100 million and arranging for 60% (up to US$800 million) of the project’s financing. The remaining 20% will be held by an Indonesian company, P.T.

Pukuafu Indah.

The Batu Hijau deposit contains 11.2 billion lb. of copper and 14.7 million oz. gold, with a projected minelife of more than 20 years. Development costs for an open-pit mine, mill, port facilities, power plant and employee housing are estimated at US$1.5 billion.

The partners have submitted the final feasibility and environmental impact studies to the Indonesian authorities.