MAC: Mines and Communities

Newcrest finally offloads Indonesia mine

Published by MAC on 2020-02-05

The world's largest gold miner, Newcrest, has finally acceded to Indonesian demands  that it sell owership of a major gold mine to a national company.

Newcrest divests Gosowong for $60 million

Amanda Stutt

31 January  2020

Newcrest (ASX: NCM) announced Friday it has signed an agreement to sell
its wholly owned subsidiary Newcrest Singapore Holdings Pte Ltd (NSH),
which owns a 75% interest in PT Nusa Halmahera Minerals (PT NHM), the
operator of the Gosowong mine in Indonesia, to PT Indotan Halmahera
Bangkit (Indotan).

The move comes after Joko Widodo’s government issued a mandate in 2018
stating that major mines such as Gosowong or Freeport-McMoRan’s (NYSE:FCX)
Grasberg have to be at least 51% owned by Indonesian companies.

Newcrest expects to recognize a A$44m loss on divestment of its 75%

The Gosowong gold operation is located on Halmahera Island, about 2,450
kilometres northeast of the national capital, Jakarta. It is a gold
(epithermal) deposit with additional occurrences of silver.

The Gosowong mine produced 190,000 ounces of gold at an all-in sustaining
cost (AISC) of $1,099/oz for the 2019 financial year.

In its 2018/19 full year financial results released last August, Newcrest
said it had started the process aimed at divesting at least a 26% interest
from its current 75% ownership of Gosowong.

The divestiture comprises a A$5m cash deposit paid on execution of the
sale and purchase agreement, A$55m cash payable on transaction completion,
and A$30m deferred cash payable 18 months after completion for a total of
A$90 million (US$60.2 million).

The sale of NSH follows a strategic review of the asset and to comply with
the amended Gosowong contract of work, which required Newcrest to sell
down to at least 49% of PT NHM by June 30 of this year, the Australian
miner said in a press release.

“Following an extensive review and sale process we are pleased to be able
to announce the sale of Gosowong to Indotan. This outcome delivers value
for Newcrest shareholders and provides a clear future path for Gosowong
for the benefit of its employees and the community,” Sandeep Biswas,
Newcrest’s Managing Director and CEO said.

“Gosowong has been a valued part of our operating portfolio since we
discovered it in 1993, with first production commencing in 1999. Over the
last 30 years we have built valued relationships with our Indonesian joint
venture partners, suppliers, employees, government and community
stakeholders, and together achieved the strong culture we see today which
is based on safety, trust and teamwork,” Biswas added.

Newcrest expects to recognize a A$44m loss on divestment of its 75%
interest after taking into account the sales proceeds less written down
value of the assets sold and transaction costs.

On Friday morning, Newcrest’s shares were down over 3% on the ASX.


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