The National – Monday, December 6, 2010
MINING giant Ok Tedi Mining Ltd will soon become 100% nationally-owned following the exit of shareholder Inmet Mining Corp next year.
OTML managing director Alan Breens said this was a result of an agreement between the companies in which OTML would repurchase the previously announced 5% net smelter royalty (NSR) that Inmet was to receive from OTML.
The NSR is a fee which is a specific percentage of the revenue generated by a mine by selling its product, minus production expenses.
After seeking approval from the OTML board, Canadian company Inmet will now receive at closing the cash payment of US$335 million in lieu of its entitlements under the NSR arrangement.
Under the prior arrangement for the NSR, Inmet would have exchanged its 18% equity interest to OTML and at closing for that transaction, would have received a cash payment equal to 18% of OTML’s working capital and a 5% net smelter royalty on revenues of product produced from the Ok Tedi mine thereafter.
The NSR would have applied during Ok Tedi’s current mine life.
Breens said the closing of the NSR repurchase was expected to take place on or before Jan 31 next year.
He said OTML would then become 100% PNG-owned, with the state owning 36.6% and PNG Sustainable Development Program (PNGSDP) owning 63.4%.