Newmont Mining will invest in developing the Merian gold mine in Suriname with, it reports, “strong local support for the project and expected all-in sustaining costs of between $750 and $850/oz 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% 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 Moz and is expected to produce an average of 300,000 to 400,000 oz/y of gold 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 oz/y of gold 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 Suriname Gold Co (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 Moz at an average grade of 1.22 g/t
• Estimated average annual gold production of between 400,000 and 500,000 oz/y in the first five years, and 300,000 to 400,000 oz/y for the life of the operation (11 years)
• Estimated average costs applicable to sales of between $650 and $750/oz in the first five years, and between $725 and $850/oz for the life of the operation
• Estimated average all-in sustaining costs of between $750 and $850/oz in the first five years, and between $825 and $960/oz 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 ha, with exploration continuing to show promising results.

The Merian project includes the development of three open pits, a processing plant and the associated infrastructure such as waste rock disposal areas, a tailings storage facility and a worker accommodation camp. Merian consists of a series of saprolite and fresh rock orebodies containing gold.  It is located some 66 km south of the town of Moengo, and 30 km north of the Nassau Mountains in an area of moderate relief, with elevations up to 100 m above sea level.