TORONTO (miningweekly.com) – Denver-based gold-miner Newmont Mining has been told by lenders that pledges will be lifted on shares that Newmont is required to sell in the company that owns the Batu Hijau mine, in Indonesia, CEO Richard O'Brien said on Thursday.

On March 30, an international arbitration panel ruled that Newmont and its partner in the giant copper/gold mine, a subsidiary of Japan's Sumitomo Corp, must sell 17% of the mine to the government within 180 days.

Newmont owns 45% of PT Newmont Nusa Tenggara (PTNNT), which owns the Batu Hijau mine, and Sumitomo owns 35%. The balance is now owned by an Indonesian company.

PTNNT entered into a contract of work with the government of Indonesia on December 2, 1986, in which the international partners agreed to sell a total of 51% in PTNNT to local entities, in stages, over an agreed timeframe.

However, the stakes which should have been divested in 2006, 2007 and 2008 have yet to be sold.

Although Newmont has offered the shares to various levels of government for sale, it was not able to find buyers for the 2006 and 2007 tranches in time to meet the deadlines set out in the contract.

The process was put on hold last year while the parties headed to arbitration, after the government threatened to cancel the contract of work for the operation, because it said the mine's owners were not holding up their end of the bargain.

As part of its ruling last month, the panel also directed that pledges to senior lenders must be removed before qualifying offers can be made.

The company received confirmation this week from lenders that the pledges will be removed, O'Brien said on a conference call.

“Pending approval of the necessary changes to our PTNNT project financing facility by our partners Sumitomo, this confirmation will allow us to transfer the required shares free of any obligation within the 180 days period provided by the arbitration panel.”

Once the pledges are removed, the shares will be re-offered to the government.

The firms were supposed to sell 3% in 2006, and then another 7% a year in 2007, 2008 and 2009.

The company believes that the prices negotiated for the stakes that were supposed to have been divested in 2006 and 2007 remain valid, said Newmont CFO Russell Ball.

“The tribunal panel never ruled on that specific issue, and we are working through discussions with the Indonesian government to clarify that. But we believe the '06 and '07 prices would stand.”

The 2008 and 2009 values are still up for negotiation, after the company filed for arbitration in March last year.

Newmont's most recent valuation of the whole PTNNT unit was $4,9-billion, from $6,1-billion last year, reflecting lower commodity prices, Ball said.