Newmont Mining has signed an agreement to sell its interests in Indonesia’s PT Newmont Nusa Tenggara (PTNNT) to PT Amman Mineral Internasional (PT AMI) for $1.3bn.

PTNNT operates the Batu Hijau copper and gold mine in Indonesia on the island of Sumbawa.

The total amount comprises cash proceeds of $920m and contingent payments of $403m tied to metal price upside and development of Elang.

Owned by Sumitomo, Nusa Tenggara Mining has also agreed to sell its ownership stake to PT AMI.

“We believe PT AMI will be well-positioned to continue operating the asset successfully.”

Newmont Mining president and CEO Gary Goldberg said: “Selling our stake in PTNNT for fair value is aligned with our strategic priorities to lower debt, fund our highest margin projects and create value for shareholders.

“We believe PT AMI, supported by Batu Hijau’s experienced team, will be well-positioned to continue operating the asset successfully.”

The transaction is subject to receipt of regulatory approvals and satisfaction of other conditions and is expected to close in the third quarter of this year.

The conditions include government approval of the PTNNT share transfer; a valid export license at completion and closing of PT Multi Daerah Bersaing’s sale of its 24% stake to the buyers.

Newmont holds a 45% stake in PT Newmont Nusa Tenggara, while Japan’s Sumitomo holds an additional 35% and Indonesia-based PT Pukuafu Indah owns the remaining 20% stake.

Since 2013, Newmont has generated $1.9bn in proceeds from the sale of non-core assets and lowered net debt by 37%.

The company acquired Cripple Creek & Victor in Colorado and added five million ounces of gold reserves by the drill bit last year.