JOHANNESBURG (miningweekly.com) – NYSE-listed Newmont Mining has welcomed the government of Suriname’s decision to exercise its option to participate in a fully-funded, 25% equity ownership stake in the Merian gold project, which is currently under construction.
“We look forward to partnering with the government and people of Suriname in the Merian gold project,” said Newmont president and CEO Gary Goldberg on Monday, noting that in addition to anchoring a new, prospective gold district in the Guiana Shield, in South America, Merian represented a profitable mine that would be a catalyst for responsible economic and social development.
Suriname had assigned its right to participate to State-owned corporation Staatsolie Maatschappij Suriname. Surgold, a wholly owned Newmont entity, would be the managing partner with a 75% interest, while Staatsolie would hold the remaining 25% interest.
Staatsolie had made its initial cash contribution of about $83-million to Newmont, which followed the recent sale of Newmont’s stake in the Penmont joint venture, bringing total proceeds of divestments to nearly $1.4-billion in the last 18 months. “With success in divesting noncore assets and confidence in future cash flows, Newmont intends to immediately allocate $100-million to repay a portion of its term loan,” the company explained.
Total capital investment for Merian was about $900-million to $1-billion and the government of Suriname’s fully-funded interest included contributions to all future project capital, operating expenses and exploration within an area of almost 500 000 ha.
The mineral agreement, executed between Suriname and Surgold on November 22, 2013, established the terms and conditions that currently applied to the partnership within the area of interest. Newmont expected to fund its remaining share of capital expense for Merian of between $600-million and $700-million through available cash balances and projected cash flows.
Merian contains gold reserves of 4.2-million ounces and is expected to produce an average of 400 000 oz/y to 500 000 oz/y in the first five years of operation with estimated average costs applicable to sales of between $650/oz and $750/oz, as well as estimated average all-in sustaining costs of between $750/oz and $850/oz.
The construction of Merian includes upgrading of roads and preparing the camp, mine and mill sites. Surgold expects to employ up to 2 500 people during the project development stage and 1 300 during full operation.