By Savita Iyer-Ahrestani
Think Advisor
For investors keeping tabs on frontier markets, the development of the new Merian gold mine, by Newmont Mining Corporation in Suriname, may signal the start of yet another potential investment opportunity.
Not only does the mine bode well for Suriname’s economy in the medium-term (the $1 billion investment is likely to double the country’s industrial gold output by 2016, at a time when production is expected to tail off as existing mines reportedly reach maturity), it’s also likely that the South American nation’s government will finance the 25% stake it can take in Merian through a potential $200 million syndicated loan.
The issue would be Suriname’s first commercial sovereign borrowing and would be backed by revenue streams from the mine.
Details for the potential syndicated loan are not yet finalized but the issue could prove interesting to frontier market investors looking for new opportunities, particularly since the political commitment to the Merian project is strong and significant preparatory work has been undertaken by Newmont to ensure that the mining project takes off, said Cesar Arias, associate director for Latin America at Fitch Ratings.