Newcrest Mining is progressing a requirement to offload a significant share in the Gosowong gold mine in Indonesia by next year’s deadline.
The company reiterated that it has started a sale process for the stake after releasing its 2019 financial results last Friday.
Newcrest must divest at least 26 per cent of its Indonesian company that operates the mine by the end of the current financial year following an amendment to the contract of work for the operation.
Agreed in June 2018, Indonesian parties must own at least 51 per cent of Newcrest’s local subsidiary, PT Nusa Halmahera Minerals (PT NHM), by June 30 next year.
As a result, Newcrest must divest the stake from its current 75 per cent shareholding in PT NHM.
“Gosowong produced 190,000 ounces of gold in financial year 2019 and generated $29 million of free cash,” Newcrest chief executive officer Sandeep Biswas said during a conference call.
“As previously announced and as required by the revised Gosowong contract of work, Newcrest has commenced a sales process to divest at least 26 per cent of our interest by the end of June 2020.
“The recent appreciation of the gold price is welcome, but we are well aware that the gold price fluctuates and altering long-term plans based on short-term movements can lead to poor decisions being made.”
Newcrest’s output at Gosowong during the 2019 financial year fell from the 251,390 ounces produced during the previous fiscal period.
Biswas believes the site’s future will be as a smaller operation as the orebody changes.
“Gosowong has had a two-year mine life for all the time that I’ve been in Newcrest because it is just one of those ore bodies, but there is no question that this mine life is coming to an end,” Biswas said.
“My view is Gosowong will be there for much longer as a lower ounce mine, not the rates that we mined it in the past. So, we continue to operate it.
“As you know, we are under an agreement to sell at least 26 per cent and we’re in the process of doing that. And we will see what comes out of that whole process.”