Throw in the previously released message from Newmont Mining CEO that it's ready to re-engage into merger discussions with ABX...is a buyout offer from ABX forthcoming?
NEM will need to release a new forecast on production at Batu Hijau...that is revise the number upwards.
It appears that the MOU settlement undertaken by Freeport-McMoRan is the template whereby Newmont and Indonesia have agreed in principle to a MOU between parties.
Royalty payments and ore export tax is identical to the Freeport MOU.
There is nothing specific about divestiture; but the Freeport agreement used a divestiture of up to 30% at fair market value.
Additionally, for Newmont, they will submit a $25M surety bond as 'good faith' in joining the Freeport smelter build, as a junior partner in the project.
Moreover, there is some talk about a contract extension. Using Freeport as the guideline, the Newport MOU may use the same dateline timeframe as the target--2041.
Time is here to export the stored ore capacity and return to mine production.
NEM should shortly revise the Batu Hijau forecast for CY 2014 and CY2015.
The number of shares short actually shrank during the first half of August to a total of 14,725,764 shares.
Perhaps the short holders are understanding the futility of betting against an upward movement in NEM share price.
Newmont Mining website has confirmed that the arbitration filing has been pulled and there is apparently negotiations going on between NEM and Indonesia to get a settled MOU completed.
Not much specifics in the Newmont press release other than like most of us anticipated, NEM will pay some part of the price that FCX has committed towards and that NEM will indeed guarantee certain tonnage to be processed locally within Indonesia...obviously tied to the build roadmap related to the new FCX smelter.
The MOU should go beyond those understandings and deal with ore export tax amount; royalty increase; divestiture levels to the Indonesian government, etc...
Good news indeed.
The ICSID website still indicates that the case is pending and that a Tribunal not yet constituted. There is no evidence that NEM has withdrawn the arbitration filing. It's possible that an update is forthcoming to the ICSID website in the next couple of days.
The ICSID Case Number is "Pending" #191 and is ARB 14/15.
It will be interesting to review the outcome of the line item elements to any MOU between NEM and Indonesia and then compare the agreement to what was settled between Freeport-McMoran and the Indonesian government. I'm still of the opinion that NEM held a stronger negotiation position than what FCX had; so the terms of settlement might be ever so slightly better than what FCX negotiated.
Here are my thoughts on the potential MOU.
There will be an export tax imposed on unprocessed ore; most likely the same rate that applies to FCX under their MOU.
NEM will contribute to the smelter build undertaken by FCX but will not have to build a separate smelter.
NEM will guarantee a certain amount of tonnage each year to be processed by the smelter once operational.
Further divestiture of operations to the Indonesian government but not to the extent of what FCX settlement concluded.
There will be no extension of the CoW expiration date.
Royalty payments will be increased but not to the levels of what FCX agreed to do.
Whatever the case, it sure would be great for the P&L to get operations started again. The next CC should shed light on what the settlement means to the production forecast in the foreseeable future.
Good news this morning.
Newmont Mining Corp has withdrawn its international arbitration filing against the Indonesian government, the industry minister said on Tuesday, in a possible sign of a breakthrough over its seven-month dispute that halted exports.
Well, guess that I regret placing Political info into my message. Albeit, politics do play a part in the perceived price of gold.
I prefer to only post messages that relate directly to Newmont Mining and the Gold market in general.
Tomorrow is the dissemination date for the short interest for mid-month August.
It's highly likely that the number of shares shorted has escalated during the period. Some factors for the increased level would be the propaganda that interest rates are headed higher imminently; and the hope that political settlement can be reached in the Ukraine-Russia and Israel-Gaza conflicts. For me, the Fed meetings are over, and Putin isn't ready for a truce and Israel continues to bomb Hamas...those issues that helped drive the short interest upward are now evaporating.
The short interest had already increased for the period of 15-31 July. It went from 13,753,454 shares to 15,580,557 shares. Meanwhile average trading volume for NEM shares has declined which leads to days to cover extending to 2.69 days; that number is the largest days-to-cover in quite some time. The release tomorrow should extend the days-to-cover considerably.
The take on all this is that despite the relatively large increase in short position the resilient share price and low trading volume are working against those engaging in speculation that NEM will head aggressively lower than the current price.
Newmont Mining Corp said on Thursday it is applying for an injunction to get workers back to its Batu Hijau mine as it fights a controversial tax on copper exports that led the company to halt shipments from Indonesia this year.
Newmont CEO Gary Goldberg told an industry function in Melbourne that the company would seek interim injunctive relief from the arbitration panel to reopen the mine and resume exports, ahead of the outcome of the arbitration.
"We estimate it could take several months to obtain a ruling on interim relief and at least several weeks to ramp back up to full production if that relief is granted," Goldberg said in a speech.
Newmont Mining Corp Chief Executive Gary Goldberg said on Thursday he was open to resuming discussions about a potential merger with Barrick Gold Corp but had not heard from the company since April.
ABX it's now your turn to make the phone call.
This was the attention grabber in the news release.
"invest in developing the Merian gold mine in Suriname with strong local support for the project"
Contrast the welcome to the acrimony that is exhibited by Indonesia.
The Indonesia Government got quite the eye-opener with today's arbitration ruling against Russia in the YUKOS oil expropriation. What Indonesia is attempting by the ore export tax change to the existing COW with Newmont is eerily similar to the Russian tactics used to expropriate Yukos oil. Today a verdict against Russia to the tune of $50B was rendered by the arbitration court. Get the message Indonesia? You cannot win any arbitration hearing...stop the nonsense...give Newmont an export license.
An international court on Monday ordered Russia to pay over $50 billion in compensation to the former majority shareholder of now-defunct oil producer Yukos over the expropriation of the company more than 10 years ago.
Freeport-McMoRan has agreed to and signed the new MOU. Freeport can begin export of unprocessed copper in August. Below are the considerations contained in the MOU.
Newmont, on the other hand, still has no export license. Are there truly negotiations with the Indo Government to work out a MOU for a license? Obviously, the negotiations have different parameters than what the Freemont case involved--extension of the FCX contract date was predominate. For Newmont, what is the one consideration that must be included into the MOU? Newmont has some leverage since the existing COW remains valid for an extended timeframe. Perhaps, it's relief of the smelter build--or a much more limited ownership percent divestiture w/ the Indonesian Government. Freemont was in a weaker negotiation position.
On July 25, 2014, the Government revised its January 2014 regulations regarding export duties to incorporate reduced rates for copper concentrate exports for companies engaged in smelter development. The revised regulations provide for duties on copper concentrate exports during smelter development initially at 7.5%, declining to 5% when development progress exceeds 7.5% and 0% when development progress exceeds 30%.
Among other items, MOU provisions to be addressed in the negotiation of the Amended COW include provisions for the development of new copper smelting and refining capacity in Indonesia which will take into consideration an equitable sharing of costs between PT-FI (and any partners in the project) and the Government through fiscal incentives, provisions for FCX to divest to the Government and/or Indonesian Nationals up to a 30% interest (an additional 20.64% interest) in PT-FI at fair value, and continuation of operations from 2022-2041. Negotiations will take into consideration PT-FI’s need for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large scale investment program for the development of its reserv
Based on today's news update from Indonesia, a breakthrough with the current regime is an uphill battle. This guy, Sukhyar is one strange dude.
Here is the comments:
Newmont also said it was negotiating a memorandum of understanding that could restart stalled shipments. But the government denied such talks had taken place.
“There have been no MOU discussion with Newmont. None at all,” Sukhyar said. “The government’s position is we will face them in court.
Does sanity finally prevail?
July 23 (Reuters) - Newmont Mining Corp is negotiating an agreement with Indonesia that would enable the U.S. company to resume exports of copper concentrates, a spokesman said on Wednesday.
"We hope to reach an agreement with the government of Indonesia on an MoU or memorandum of understanding, which we would expect would lead to issuance of an export permit," Newmont spokesman Omar Jabara said.
Newly declared President Jokowi Widodo wants to sit down with mining companies in a bid to resolve the ore export tax issue. Definitely, a positive tone to get negotiations rekindled between Indo and Newmont.
“First, I want to sit down with stakeholders, investors, regulators and with the people to know the problem and find a good solution for them. I want to know the details,” Jokowi said in an interview at his residence in Jakarta on Saturday, before he was declared winner of the presidential election on Tuesday.
However, there is no harmony within the new leader's circle of power on the topic. The Vice President elect, Jusuf Kalla, was instrumental in developing the latest mining law strategy while he held the VP position in 2007.
Kalla also said there should be no tampering with the ban on unprocessed ore exports signed into law five years ago.
Still, in a more conciliatory view, some of the new economic advisors seems more willing to negotiate.
Darmawan Prasodjo, an economic adviser to Jokowi, has said that the new president would not “kill the industry” and that the government and industry were partners who should face the issue together. Prasodjo criticized the current administration for not creating the conditions for the industry to thrive.
Syahrir Abubakar, the executive director of the Indonesia Mining Association, said any move to review mining regulations would be welcomed. “There are contradictions from one article to the next, and many renegotiations have been held up because of this law.”
Anyhow, it is refreshing that the newly elected Government may be more receptive to engage in a fair and reasonable negotiation outcome involving Newmont Mining.
Here is the latest from the Indonesian Government.
“We are considering taking Newmont Nusa Tenggara to a different arbitration court,” Chairul Tanjung, the coordinating minister for the economy, said in Jakarta on Monday.
Though Chairul offered few details on the government’s plans to challenge NNT, he cited as a possible arbitration court the United Nations Commission on International Trade Law, a UN appellate body.
Amazing, these crooks from Indonesia want a change in venue? Guess, the International Center for Settlement of Investment Disputes (ICSID) is not credible to Indonesia?
Not sure how this would ultimately get handled, but think that first filed has the upper hand. It should be ICSID that handles proceeding; should it actually go through the arbitration path.
On another note, the Indonesia Government won't proceed with negotiations unless NEM withdraws their arbitration filing first. Duh, like NEM would even consider that action. Try that scenario, NEM agrees to withdraw arbitration request then forgoes it's place in the legal timeline (negate arbitration filing date) then Indonesia immediately files for arbitration with the UN venue. Yea, NEM is that dumb?
Stand firm Newmont...
The FOOLS are back at it today...they continue to signal that Freeport handled the negotiation with the Indonesian Government in a better manner than did Newmont...in principle because the arbitration path that Newmont pursued is now under attack by the Indonesian Government.
Oh yea, Newmont should follow the cave-in by Freeport. I'd like to know how the FOOLS can make their judgment without knowing the entire details of the MOU agreement. The MOU might be fair and reasonable, I don't know if it is; but I'm curious if the Indonesian Government has shared MOU details with Newmont. If they already did, then surely Newmont would jump at the opportunity to settle...but so far the arbitration process continues.
Stand firm Newmont, don't be a FOOL.
Indonesia has threatened NEM with breach of contract and claims that could terminate the contract within 90 after the filing of default. Extortion to the extreme?
How stupid is this claim? It continues to be the Indonesia Government that won't abide by the COW; and now they're suggesting that the very same contract that they are not adhering to is in breach by Newmont...at least it's good for laugh.
Until the negotiation team of Indo comes to their senses, then I say that NEM needs to stand firm. Let International arbitration settle this issue.
Bought more shares today.