Newmont Guarantees Pledged Shares Not a Problem
Monday, 25 February, 2008 | 15:51 WIB

TEMPO Interactive, Jakarta: Newmont Mining Corporation, the holding company of PT Newmont Nusa Tenggara (NNT), has confirmed that NNT's shares being pledged would not affect the share divestment to the regional government.

According to Blake M. Rhodes, Newmont's Vice President, the pledging of the shares was not against the law as this had been approved by the government in 1997.

Despite the shares having been sold, the loan guarantor is still NNT, rather than the shareholders, Newmont Mining Corporation (45 percent), Sumitomo (35 percent) and Pukuafu (20 percent).

“The shares being pledged isn't a problem in terms of the share divestment,” said Rhodes in Jakarta yesterday (24/2).

Newmont pledged all its shares in 1996 in order to acquire financing for the Batu Hijau mine in West Nusa Tenggara.

The shares were pledged as a guarantee for an around US$1 billion loan to the bank that financed the Batu Hijau project.

Now NNT's remaining loan not yet repaid is only between US$300 million and US$400 million.

The pledging of the shares was questioned during the negotiations regarding Newmont's share divestment in NNT to the Sumbawa Regency Government, between the government and Newmont on Friday last week (22/2).

After fruitless negotiations, Mohamad Lutfi, Head of Investment Coordinating Agency (BKPM), said a fundamental problem had just been revealed, that the shares to be divested had already been pledged to a bank.

According to Simon Sembiring, Director General for Minerals, Coal and Geothermal at the Energy and Mineral Resources Department, the pledging of the NNT shares was a disruption in the process of divestment to the regional government.

The problem regarding the sale of these shares began when the central government obtained agreement for the sale of two percent of Newmont's NNT shares with Sumbawa.

This was despite the fact that based on the work contract NNT had divested 10 percent of the shares.

Therefore NNT received a default letter as it was regarded as not having fulfilling the work contract.

Nieke Indrietta | Gabriel Wahyu Titiyoga | Jobpie S