Australia-listed Newcrest Mining Limited is seeking a buyer for a 26 per cent stake in Indonesia-based gold mining company Nusa Halmahera Mineral (NHM) to meet regulatory requirements, a company executive told DealStreetAsia.
Newcrest is required to reduce its ownership in NHM from the current 75 per cent before 26 June 2020 in accordance with Indonesia’s mining law, the company’s investor relations and media head Christopher Maitland said.
JPMorgan is advising Newcrest on the deal.
According to Indonesia’s Energy and Mineral Resources Ministry (Permen ESDM) regulation no. 9/2017, foreign shareholders are required to gradually dispose of their stake in local firms to the central government, local government, state-owned companies, and then, local private companies. In case no potential buyers come forward, foreign investors can divest their holding through an initial public offering (IPO) on the Indonesia Stock Exchange (IDX).
According to the country’s mining law, a foreign investor is required to hold a maximum of a 49 per cent stake in a local mining company. Newcrest currently owns 75 per cent of NHM.
Indonesia’s state-owned mining company Aneka Tambang (Antam) holds a 25 per cent stake in NHM. As an existing partner, Antam has the right of first refusal, which makes it the first contender to acquire the stake from Newcrest, said Antam SVP corporate secretary Kunto Hendrapawoko.
However, Antam is yet to make a decision on the stake acquisition, he added.
A source familiar with the situation said Newcrest may sell its entire stake in NHM to Antam or another local buyer. According to Maitland, it is certainly an option for the Australian mining firm to divest its entire holding and the company remains open to all offers. But Newcrest has not committed to selling more than 26 per cent of NHM so far.
Both Newcrest and Antam hold the stake in NHM since 1994 under the Kontrak Karya or Contract of Work (CoW) status for Gosowong mine, located in Halmahera Island, North Maluku Province, per Newcrest’s website.
NHM’s Gosowong mine produces gold and silver dore, and the company has a processing plant with up to 800,000 tonnes of annual capacity. By the end of June 2018, the Gosowong mine had produced 251.390 ounces of gold. Since its operations in 1999, the mine has been producing more than four million ounces of gold, according to Newcrest’s website.