By Liezel Hill
Bloomberg
Newmont Mining Corp. (NEM) will build a mine in Suriname for as much as $1 billion as the largest U.S. gold producer continues efforts to reduce operating costs following the metal’s decline.
The Merian project will produce 300,000 to 400,000 ounces a year and is expected to start up in late 2016, the Greenwood Village, Colorado-based company said yesterday in a statement. The mine’s forecast costs in the first five years are $750 to $850 an ounce, as much as 29 percent less than Newmont’s total average in the second quarter of this year.
“At current gold prices, we estimate Merian investment could have a payback of less than four years,” Michael S. Dudas, an analyst at Sterne Agee & Leach Inc., said in a note yesterday.
The approval marks the first for a gold project of its size since gold’s 28 percent plunge last year spurred producers to rein in spending, delay expansions and sell less profitable assets to shore up their balance sheets. Newmont has sold smaller assets in Nevada and Australia, as well as holdings in Canadian Oil Sands Ltd. and Paladin Energy Ltd.