Photo by: Bloomberg
TORONTO (miningweekly.com) – Denver, Colorado-based gold producer Newmont this week announced that it would proceed with developing the $1-billion Merian gold mine, in Suriname, the first new big gold-mining project announced by a major miner since a wave of project cancellations, deferrals and sell-offs hit the industry, driven in part by rising costs and the sharply lower gold price last year.
NYSE-listed Newmont said on Tuesday that the new mine was expected to start production in late 2016, pending receiving a right of exploitation from the Suriname government.
Merian, which contains gold reserves of 4.2-million ounces and was expected to produce an average of 300 000 oz/y to 400 000 oz/y of gold, was expected to produce yellow-metal ounces at all-in sustaining costs (AISCs) of between $750/oz and $850/oz in the first five years of its 11-year life, and between $825/oz and $960/oz for the life of the operation.
Higher-grade ore and throughput in the early phases would boost yearly output to an average of 400 000 oz/y to 500 000 oz/y of gold in the first five years and reduce the payback period.
The project has a capital investment budget of between $900-million and $1-billion, and the Suriname government has the option to earn a 25% fully funded equity stake, including all project capital and operating expenses and an initial earn-in contribution. Newmont said it expected to fund its share of development through available cash balances and projected cash flows.
“This decision marks an important milestone in our portfolio optimisation process – we have divested nearly $800-million in noncore assets to help fund the next generation of lower-cost projects in our portfolio. Equally important, we established community agreements and are working with experts to reduce our impact on the environment – getting it right from the beginning is critical,” president and CEO Gary Goldberg said.
Merian would operate under the auspices of Surgold, a South American Newmont subsidiary.
Among the initial development work to be undertaken were upgrading roads and preparing the camp, mine and mill sites. Surgold expected to employ 2 500 people during project development and 1 300 during full operation, and would launch processes to facilitate local employment and procurement once the exploitation right had been granted.
The project has gold reserves of 4.2-million ounces at an average grade of 1.22 g/t.
Q2 FINANCIALS
Newmont also on Tuesday reported a second-quarter adjusted profit of $182-million, or $0.20 a share, beating analyst expectations of an adjusted profit of $0.19 a share for the period ended June 30.
Newmont, which operates mines in North and South America, the Asia-Pacific region and in Africa, reported net income attributable to shareholders of $182-million, or $0.37 a share, compared with a loss of $2.1-billion, or $4.29 a share, in the second quarter of 2013.
Sales fell 13% year-on-year to $1.77-billion, down from $2-billion in the comparable period last year.
Second-quarter gold output rose 5% to 1.22-million ounces, compared with 1.17-million a year earlier. Newmont also produced 20 200 t of copper in the period, up 4% from 19 400 t.
The company reported average AISCs of $1 063/oz of gold compared with $1 283/oz a year earlier.
Newmont lifted its full-year gold output guidance to between 4.7-million ounces and 5-million ounces, up from 4.6-million ounces to 4.9-million ounces, and said costs would be lower at between $720/oz and $760/oz, down from previous guidance of between $740/oz and 790/oz.
Newmont’s NYSE-listed stock on Thursday fell as much as $0.40 a share to $25.19 apiece in early trading.