UPDATE: Indonesia Government: Newmont Unit Worth Less Than $4 Billion

The Indonesian government estimates the value of the local unit of Newmont Mining Corp. (NEM) in which it plans to buy a stake at less than $4 billion, a senior mining official said Tuesday.

Bambang Setiawan, director general for mineral resources at the Department of Mines and Energy, told reporters he can't yet reveal the exact price at which the government has valued PT Newmont Nusa Tenggara, or PTNNT.

Under its contract of work with the Indonesian government to develop the Batu Hijau copper mine run by PTNNT, Newmont is scheduled to divest in stages 51% of PTNNT to Indonesian buyers by 2010.

Newmont failed to meet deadlines to divest 3% of PTNNT in 2006, and 7% of the company due to be sold in both 2007 and last year.

An international arbitration panel on March 31 gave Newmont a 180-day deadline to sell the stakes.

Newmont has said PTNNT's assets are worth $4.9 billion as of this year.

The Indonesian central government has said that it will purchase the 21% stake in Newmont that was due to be sold between 2008 and next year.

The combined 10% of PTNNT scheduled for divestment in 2006 and 2007 will be sold to the regional government of West Sumbawa, where Batu Hijau is located.

Newmont has already sold 20% of PTNNT to local mining company PT Pukuafu Indah.

The company offered the 7% stake of PTNNT due for divestment last year to the government at $426 million, and the 7% to be sold this year at $384 million. It hasn't yet offered a price for the remaining 7% due for divestment in 2010. The central government has requested that Newmont sell all these stakes this year.

Newmont and the government will meet later this month to continue price negotiations.

-By Deden Sudrajat, Dow Jones Newswires; 62 21 3983 1277; [e-mail]