Newcrest divests Gosowong for $60 million

According to Mining News Pro - The move comes after the Joko Widodo government issued a mandate in 2018 stating that major mines such as Gosowong or Freeport-McMoRan’s (NYSE:FCX) Grasberg have to be at least 51% owned by Indonesian companies.

The Gosowong gold operation is located on Halmahera Island, about 2,450 kilometres northeast of the national capital, Jakarta. It is a gold (epithermal and epithermal – low sulfidation) deposit, with additional occurrences of silver.

Gosowong has produced 190,000 ounces of gold, and its all in sustaining costs (AISC) were $1,099/oz for the 2019 financial year.

In its 2018/19 Full Year Financial Results, released last August 16, Newcrest Mining said it had started the process aimed at divesting a least a 26% interest from its current 75% ownership of Gosowong.

The divestiture comprises a A$5m cash deposit paid on execution of the sale and purchase agreement, A$55m cash payable on transaction completion,  A$30m deferred cash payable 18 months after completion for a total of A$90 million (US60.2 million).  

The sale of NSH follows a strategic review of the asset and to comply with the amended Gosowong Contract of Work, which required Newcrest to sell down to at least 49% of PT NHM by 30 June 2020, the Australian miner said in a press release.  

“Following an extensive review and sale process we are pleased to be able to announce the sale of Gosowong to Indotan. This outcome delivers value for Newcrest shareholders and provides a clear future path for Gosowong for the benefit of its employees and the community,” Sandeep Biswas, Newcrest’s Managing Director and CEO said.

“Gosowong has been a valued part of our operating portfolio since we discovered it in 1993, with first production commencing in 1999.  Over the last 30 years we have built valued relationships with our Indonesian joint venture partners, suppliers, employees, government and community stakeholders, and together achieved the strong culture we see today which is based on safety, trust and teamwork,” Biswas added.

Newcrest expects to recognize a A$44m loss on divestment of its 75% interest after taking into account the sales proceeds less written down value of the assets sold and transaction costs.

Friday morning, Newcrest’s shares were down over 3% on the ASX.