Local mining company PT Pukuafu Indah (PT PI) has pledged its 20 percent shares in PT Newmont Nusa Tenggara (PT NNT) as collateral for a US$280 million loan secured recently from US mining giant Newmont Mining Corporation.
Newmont’s website announced on Wednesday that its subsidiaries that directly hold shares in PT NNT, Newmont Indonesia Limited (NIL) and NVL USA Limited (NVL), have entered into a loan transaction with Pukuafu.
“Pursuant to the terms of the loan, PT PI utilized $287 million of the loan proceeds to repay and extinguish outstanding debt, agreeing to pledge its 20 percent interest in PT NNT to NVL [the “Pledged Shares”] as collateral for the loan, in addition to pledging as collateral all the shares of PTPI itself.
NVL also may fund certain additional advances as required to extinguish other debt held by PTPI,” Newmont said.
The loan has a maturity date of Dec. 31, 2019 . Repayment of the loan prior to maturity will be made from dividends attributable to the pledged shares and other payments until such time as the loan balance is repaid.
PT NNT operates the Batu Hijau copper and gold mine in West Nusa Tenggara Province. PT NNT’s shareholders are Newmont (35.44 percent) Sumitomo (20.56 percent), Pukuafu (20 percent), and PT Multi Daerah Bersaing (24 percent).
PT Multi Daerah Bersaing (PT MDB) secured the 24 percent shares of NNT in November in a divestment process governed by a 1986 mining contract. PT MDB is a joint venture between PT Daerah Maju Bersaing — a business consortium representing the Nusa Tenggara Barat province, Sumbawa Regency and West Sumbawa Regency — and PT Multicapital, an investment subsidiary of PT Bumi Resources, one of Indonesia’s biggest energy producers.
Amid the lack of new discoveries as regards big mineral reserves, the Batu Hijau mine has been a problematic investment. Pukuafu said it had filed a legal suit against Newmont and Sumitomo at Central Jakarta District Court.
According to Pukuafu’s owner and president commissioner Jusuf Merukh the divestment process was illegal, because a shareholder meeting in 2005 had agreed to divest the stake to Pukuafu. Newmont has denied this claim.
On Wednesday, Jusuf Merukh said legal action was still going on.
With regard to the $280 loan, he explained that the loan was part of Newmont’s obligations. He said Pukuafu had spent a lot of money on the exploration of the Batu Hijau mine, whereas Newmont and Sumitomo were entering the mining stage when the exploration activities were already completed.
