Jakarta. Listed Indonesian miner Bumi Resources Minerals announced on Monday (24/09) that it has sold a 51 percent stake in subsidiary Dairi Prima Mineral to China Nonferrous Metal Industry's Foreign Engineering and Construction Co, or NFC, for $198 million as part of its debt-reduction efforts.
Dairi Prima Mineral, an underground zinc mining project in Dairi district, North Sumatra, has estimated total resources of about 25 million tons of ore.
"We worked hard to meet all the documentation requirements to finalize this divestment deal. The partnership with NFC is expected to accelerate the first production from Dairi and allow access to low-cost funding from China," Bumi Resources Minerals (BMRS) corporate secretary Muhammad Sulthon said in a statement.
BRMS, a subsidiary of Bumi Resources, Indonesia's largest coal miner, increased its control in Dairi Prima to 100 percent last year after acquiring a 20 percent stake from state-controlled miner Aneka Tambang (Antam) for $57.3 million.
The divestment gives NFC a controlling stake in Dairi Prima, while BMRS owns the remaining 49 percent.
BRMS chief financial officer Fuad Helmy said the proceed from the sale will be allocated to develop the Dairi zinc mine, a gold mine in Palu, Central Sulawesi and a copper mine in Gorontalo, while the remainder will go towards repaying debt resulting from the acquisition of Antam's 20 percent stake in Dairi Prima.
BRMS expects to reduce its debt to an estimated $53 million following the divestment deal. The company's debt stood at $161.31 million as of June 30 this year.
"We expect the company's liquidity to improve significantly once we repay the loan," Fuad said in the statement.
BRMS chief operating officer Suseno Kramadibrata said the company will now focus on the development of its Palu gold mine and Gorontalo copper mine.
The company will start commercial production at these mines by the end of 2020.
BRMS reported debt of $400 million in 2016. It has converted about $232 million of that into equity last year.