It was reported that Bumi Resources subsidiary, Multicapital, has been appointed by local governments of West Nusa Tenggara, both provincial and regency, as the partner to finance acquisition of 10% stakes in Newmont Nusa Tenggara (NNT), the gold and copper mine controlled by Newmont of the US. Multicapital might need to spend around US$390m to finance the deal. JV with local government company, Daerah Maju Bersaing (DMB), would soon be finalized. We have yet to receive confirmation from Bumi Resources on this news.
Based on NNT contract of work, Newmont is required to divest up to 51% of its stakes in NNT to Indonesian entities. As the central government has stated that it had no interest to acquire the stakes offered, local government and several state-owned companies have been pushing hard for the stakes.
Note that NNT is more of a copper company rather than gold. Around 60% of NNT revenue and profit comes from copper while the rest comes from gold. NNT contributes to around 5% of Newmont total gold production while produces almost all of Newmont copper outputs.
How the whole transaction would affect Bumi Resources would depend on 1) the price paid for the whole transaction and 2) whether Bumi could eventually control NNT.
At this juncture, details of the potential deal are still very sketchy. Note that as the financier, we are not sure what role could Bumi Resources have on NNT. Reportedly, Bumi would get 25% of revenue of the planned JV, mostly from dividend stream of NNT, but unlikely, at lest for now, to have management installed. We understand that there is another 21% of NNT stakes to be available but government would be the one to decide the preferred bidders for these stakes, likely to be announced in early August, with other parties, reportedly, also interested. Note that negotiation for pricing of these stakes is still on going. There is another 20% of NNT stakes owned by an Indonesian company called Pukuafu Indah, controlled by Merukh family.
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