Newmont Mining's Indonesian unit said one of the main obstacles to a share sale has been resolved, paving the way for a dispute with the government to be settled as set out by an arbitration court.
Indonesia had said that Newmont could not sell a stake in its PT Newmont Nusa Tenggara (NNT) unit, which operates the Batu Hijau copper and gold mine in Sumbawa, because the shares were pledged as collateral for a $1bn loan.
Rubi Purnomo, Newmont spokesman in Indonesia, said Newmont's lenders have agreed to release the 31% stake in NNT as collateral. The company has repaid about $650m-$700m of the loan.
"We hope this confirmation (from lenders) will allow us to transfer the required shares free of any obligation within the 180-day period provided by the arbitration panel," Purnomo said, adding that the unit still needs to repay $300m-$350m of the loan.
Last month, an arbitration court ordered the foreign owners of NNT to sell part of their stake to the government within six months, after a long-running dispute.
Under the contract of works, foreign investors must sell 51% of the shares in the unit to local investors.
PT Pukuafu Indah, an Indonesian mining group, bought 20%. Newmont and Japan's Sumitomo own 45% and 35% respectively.
The arbitration court also ruled that the shares must not be encumbered by any pledge.
A resolution on the case is seen by analysts as crucial for Indonesia which, is keen to attract foreign investment to drive economic growth and create jobs.
The shares in NNT were pledged to a group of banks including the Export-Import Bank of Japan in 1997 as collateral.
Newmont began offering its NNT shares for sale in 2006, initially offering a 3% stake for $109m. The following year it offered a 7% stake worth $282m and another 7% stake worth $426m in 2008.
Newmont has valued the whole of NNT at $4.9bn and has started negotiations with the government over the price.
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