Newmont's Indonesia unit to seek $500 mln via IPO - Reuters

* Listing to value Indonesia unit at about $5 bln - sources
* Newmont to sell 1.128 bln new shares, option for existing shares
* Legal issue regarding share ownership could be an obstacle

PT Newmont Nusa Tenggara (NNT), the Indonesian unit of U.S. miner Newmont Mining Corp , is seeking to raise about $500 million in an initial public offering in Jakarta by selling a 10 percent stake within the next twelve months, sources said on Wednesday.

The IPO would mark the first listing by a gold and copper miner on Indonesia's stock exchange, though it could be delayed by legal issues surrounding the planned divestment of another stake to local partners.

"We're looking at a $5 billion valuation for the whole firm," said one of the four sources with knowledge of the deal, who declined to be identified because the details were not public.
Newmont is expected to sell up to 1.128 billion of new shares and may also sell an option of an additional 880 million existing shares owned by local partner PT Pukuafu Indah, the source added.

The firm could raise more than $500 million if it exercises the option.

Although there is no official mandate for underwriters, sources said UBS has been tapped to be one of the lead underwriters and other banks will be added once the firm completes a deal to divest a 7 percent stake to local partners, two sources said.

UBS is also the advisor for the divestment stake sale, a source said.

"What we can confirm to you now is that NNT's intention to do an IPO has been discussed in its previous shareholders meeting and supported by the majority of shareholders," Rubi Purnomo, Newmont's Indonesia spokesman, told Reuters.

"The IPO plan is one of the financing options for NNT to develop the company's operation," he said. "At the moment, we are focusing on finalizing the divestiture obligation."

Newmont and Japan's Sumitomo Corp , the majority owners in NNT, were ordered by an Indonesian arbitration court in 2009 to reduce their holding in NNT to less than 50 percent by selling to local investors.

Newmont and the government have agreed on $271.6 million as a price for the divestment of a final 7 percent stake, after Newmont sold the rest to PT Multi Daerah Bersaing -- a consortium of the governments of West Nusa Tenggara province, West Sumbawa regency, Sumbawa regency and PT Multicapital, a unit of Bumi Resources Minerals.


However a Jakarta court said in late 2010 that PT Pukuafu Indah was entitled to a 31 percent stake, a ruling Newmont is appealing against.

The Indonesia unit of the world's No.2 gold producer runs the Batu Hijau copper and gold mine in West Nusa Tenggara province. Batu Hijau, on eastern Sumbawa island, is the nation's second biggest copper mine.
"It will be one of the biggest IPOs this year and there should be huge demand for it," said Harry Su, head of research at PT Bahana Securities in Jakarta. "It depends on the timing and valuation, but we expect market sentiment to improve in the second half."

Investors have sold Indonesian stocks this year on worries over inflation and to take profits on a 46 percent rally last year. Still, longer-term sentiment on Southeast Asia's largest economy remains positive because of its resources and growing consumer demand.

The IPO would come after a strong rally in commodity prices, with gold hitting a record high this week and copper hitting a record last month.