Newmont Mining Corporation (NEM) will invest in developing the Merian gold mine in Suriname with strong local support for the project and expected all-in sustaining costs of between $750 and $850 per ounce in the first five years. The new mine is expected to begin production in late 2016, pending receipt of the Right of Exploitation from the government of Suriname.
The total capital investment is approximately $900 million to $1 billion, and the government of Suriname has the option to earn a 25 percent fully-funded equity ownership stake, including all project capital and operating expenses and an initial earn-in contribution. Newmont expects to fund its share of development 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 300,000 to 400,000 ounces of gold annually at competitive costs over a mine life of 11 years. Higher grade ore and throughput in the early phases will boost annual production to an average of 400,000 to 500,000 ounces of gold per year in the first five years and reduce the payback period.
“We have forged a more efficient approach to developing Merian while upholding our leading safety, technical, social and environmental standards,” said Gary Goldberg, President and Chief Executive Officer. “This decision marks an important milestone in our portfolio optimization process – we have divested nearly $800 million in non-core 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 minimize our impact on the environment – getting it right from the beginning is critical.”
Merian will operate under the banner of Surgold, a wholly-owned entity. Initial development will include upgrading roads and preparing the camp, mine and mill sites. Surgold expects to employ 2,500 people during project development and 1,300 during full operation, and will launch processes to facilitate local employment and procurement once the Right of Exploitation is granted. Project highlights include:
- Gold reserves of 4.2 million ounces at an average grade of 1.22 grams per tonne1
- Estimated average annual gold production of between 400,000 and 500,000 ounces per year in the first five years, and 300,000 to 400,000 ounces per year for the life of the operation (11 years)
- Estimated average costs applicable to sales of between $650 and $750 per ounce in the first five years, and between $725 and $850 per ounce for the life of the operation
- Estimated average all-in sustaining costs2 of between $750 and $850 per ounce in the first five years, and between $825 and $960 per ounce for the life of the operation
- Total capital investment of approximately $900 million to $1 billion
- Newmont’s Mineral Agreement in Suriname covers 500,000 hectares, with exploration continuing to show promising results
Founded in 1921 and publicly traded since 1925, Newmont is a leading producer of gold and copper. Headquartered in Colorado, the Company has approximately 30,000 employees and contractors, with the majority working at managed operations in the United States, Australia, New Zealand, Peru, Indonesia and Ghana. Newmont is the only gold company listed in the S&P 500 index and in 2007 became the first gold company selected to be part of the Dow Jones Sustainability World Index. Newmont is an industry leader in value creation, supported by its leading technical, environmental, and health and safety performance.
Cautionary Statement Regarding Forward-Looking Statements:
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Such forward-looking statements may include, without limitation: (i) estimates of future production and sales; (ii) estimates of future costs applicable to sales and all-in sustaining costs; (iii) estimates of future consolidated and attributable capital expenditures; (iv) plans and expectations to reduce costs and expenditures; (v) expectations regarding the development, growth and exploration upside potential of Merian; (vi)total investment and full funding estimates; (vii) expectations regarding the receipt of the right of exploitation and other rights, permits and licenses; (viii) expectations as to whether the Government of Suriname will exercise its ownership option; and (ix) expectations regarding future funding and cash flow. . Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans, including without limitation receipt of export approvals; (iii) political developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) certain exchange rate assumptions for the Australian dollar to the U.S. dollar, as well as other the exchange rates being approximately consistent with current levels; (v) certain price assumptions for gold, copper and oil; (vi) prices for key supplies being approximately consistent with current levels; and (vii) the accuracy of our current mineral reserve and mineral resource estimates. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements”. Such risks include, but are not limited to, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, political and operational risks, community relations, conflict resolution and outcome of projects or oppositions and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s 2013 Annual Report on Form 10-K, filed on February 21, 2014, with the Securities and Exchange Commission (SEC), as well as the Company’s other SEC filings. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors' own risk.
1 Reserves are presented as of December 31, 2013 on a consolidated basis. On such basis, reserves at Merian were estimated at 108,250 ktonnes of Probable Reserves, grading 1.22 gpt for 4.2Moz, using a $1,300/oz gold price assumption. See http://www.newmont.com/our-investors/reserves-and-resources for the Company’s 2013 Reserves and Resources and additional
2 All-in sustaining costs is a non-GAAP metric and is estimated for purposes of this forward-looking statement as the sum of expected cost applicable to sales (including all direct and indirect costs related to gold production incurred to execute on the current mine plan), remediation costs (including operating accretion and amortization of asset retirement costs), G&A, exploration expense, advanced projects and R&D, treatment and refining costs, other expense, net of one-time adjustments and sustaining capital. See cautionary note on page 2 regarding Forwarding-Looking Statements.
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