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UPDATE: Newmont To Sell 10% Stake In Indonesia Unit For $391 Million

(Adds details on additional stake sale, background.)

By Deden Sudrajat and Linda Silaen

Of DOW JONES NEWSWIRES

JAKARTA -(Dow Jones)- Newmont Mining Corp. (NEM) has agreed to sell 10% of its Indonesian unit to local governments for $391 million, part of a plan to divest a majority stake in the unit to domestic buyers.

The 10% of PT Newmont Nusa Tenggara, or PTNNT, comprises stakes that were scheduled to be divested in 2006 and 2007, Newmont spokesman Rubi Purnomo said in a text message late Friday.

Newmont's contract of work with the Indonesian government requires that 51% of the unit should be sold in stages to local buyers by 2010, but most of the scheduled divestment hasn't occurred yet due to problems with the negotiations.

The consortium that is buying the PTNNT stake includes the governments of West Nusa Tenggara province and West Sumbawa and Sumbawa regencies, the three areas in which PTNNT's Batu Hijau copper and gold mine is located, as well as financial firm PT Multicapital.

Purnomo said PTNNT will also make a $38 million goodwill payment to "aid community development," including building infrastructure in West Nusa Tenggara, in the 12 months following the stake sale.

Separately, a government minister also said Friday that the three local governments, along with state nickel and gold miner PT Aneka Tambang (ANTM.JK), will make an offer for a further 14% of PTNNT by Thursday.

Industry Minister Mustafa Abubakar told reporters that Antam, as the state mining company is known, will represent the central government in the transaction.

However, he didn't provide details on the price that will be offered or the breakdown of ownership among the consortium's members.

Media reports last month cited Finance Minister Sri Mulyani Indrawati as saying the 14% stake would be bought for about $493.6 million.

An arbitration court in March ruled that stakes in PTNNT due to be divested between 2006 and this year must be sold by late September, although the government and Newmont have agreed to extend the deadline until Thursday.

Newmont has a 45% stake in PTNNT and Sumitomo Corp. has 35%. The two companies will sell a total 24% of PTNNT this year and the remaining 7% is scheduled for divestment by 2010. A local mining company has already bought a 20% stake.

-By Deden Sudrajat and Linda Silaen, Dow Jones Newswires; 62 21 3983 1277; Reuben.Carder@dowjones.com

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  11-08-092342ET
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