NNT eyes $300m profit in 2005 on high prices

Leony Aurora, The Jakarta Post, West Sumbawa

Copper and gold miner PT Newmont Nusa Tenggara (NNT) aims to book a profit of US$300 million this year after its net income more than doubled in 2004 boosted by high commodity prices.

The company posted a net profit of $224 million in 2004, significantly higher than the $100 million it recorded the year earlier, finance director Dan Desjardins told The Jakarta Post on Thursday.

"Copper prices rose substantially last year," he said at the company's compound in Batu Hijau on Sumbawa Island, West Nusa Tenggara, adding that the company expected the trend to continue this year.

The average price of copper in 2004 was $1.33 a pound, more than 50 percent higher than the average price in the previous year at 86 U.S. cents a pound.

The price of copper on the international market was hovering around $1.50 a pound at the present, Dan said.

Gross revenues are expected to total $1.05 billion in 2005, comprising $850 million from copper and $200 million from gold.

Last year, NNT recorded a gross revenue of $900 million from 718 million pounds of copper produced and $235 million from 719,000 ounces of gold.

In 2003, NNT -- the only other major copper producer in the country aside from Papua's PT Freeport -- produced 632 million pounds of copper and 599,000 ounces of gold.

The company contributes about 8 percent to 9 percent of the nation's total yearly copper output.

For this year, NNT targets a little less copper production of between 650 million and 700 million pounds and gold output of between 750,000 and 800,000 ounces.

"It depends on the copper and gold content in the ore that we get in this phase of mining," said Ian McGaffin, NNT's processing plant manager.

To increase production, NNT would budget about $75 million for capital expenditure this year, Dan said.

"About half of it will go to expand our mobile fleet of haul trucks," he said.

NNT is a joint venture between Indonesia's PT Pukuafu Indah, which owns a 20 percent of the company's shares, and Nusa Tenggara Partnership with the remaining 80 percent.

Nusa Tenggara Partnership is owned in majority by Newmont Indonesia Ltd. -- a subsidiary of Denver-based Newmont Mining Corp. -- while over 43 percent of its shares are controlled by Japan's Sumitomo.

At present, NNT has a total of $1.05 billion outstanding debts, of which $650 million is in loans to a consortium of banks, including the U.S. Exim and Japan Export Import banks, and $400 million to its parent companies Newmont and Sumitomo.

"We're expecting to pay off our long-term debts in 2012," Dan said.

NNT borrowed $1 billion from the bank consortium and another $600 million from Sumitomo and Newmont to start constructing the mining complex. The two investors also put in $600 million in capital.

NNT is expecting to continue to dig ore from its open pit mine until 2018, after which its plant will process low and medium- rank ore up to 2030.

The Batu Hijau mine, which started producing in late 1999, is believed to have a reserve of 1.1 billion tons of ore, which will bring 11 billion pounds of copper and 12 million ounces of gold.