UOB Kay Hian - Bumi is bidding to team up with regional government for 10% of Newmont?

Bumi is bidding to team up with regional government for 10% of Newmont? BUMI Resources via its subsidiary Multicapital is one of the 4 bidders proposing to be the partner of regional government to buy 10% of Newmont Indonesian gold mine. The regional government has set up an investment arm known as Daerah Maju Bersaing DMB to buy a 10% stake of Newmont with the valuation of US$391m for 10% stake. The ownership of DMB is 40% provincial government Nusa Tenggara Barat, 40% regency government Sumbawa Barat and 20% regency government Sumbawa. According to the commissioner of DMB, BUMI's proposal is BUMI will provide the financing and entitled to profit sharing scheme of BUMI 25% and DMB 75%. The other bidders are Batavia Inc (a subsidiary of British company Amstelco Plc), Valco Corporation and Northstar Pacific Indonesia. Comment: While Newmont should be an attractive asset to own, we are unsure if BUMI's balance sheet willl allow it to gear up to pay for the investment.

Separately, the local press also quoted BUMI's President Director saying that there were potential strategic investors from China, Africa and Australia currently interested to become strategic partner in Bumi's copper and gold mine. Comment: Recent newsflow seemed to suggest that Bumi is seeking strategic partner for its non-coal venture. Obviously, BUMI's balance sheet does not allow it to gear up for further investment in these non-coal ventures. So the only way to do it is by inviting strategic partner who has the capital to invest.