Newmont Mining (NYSE:NEM), the world's No.2 gold producer by output, has begun production at its newest mine, Merian, located in Suriname, South America, on time and almost 20% below budget.
Newmont's initial projections estimated Merian to cost between $900 million and $1 billion, but the company said the mine was completed more than $150 million below that initial forecast.
The Denver-based miner noted that it poured its first gold and officially declared commercial production on October 1, having achieved sustained average mill throughput of 80% and gold recovery of more than 90% over the previous 30 days.
Operating costs at the new mine are expected to be among the lowest in Newmont's portfolio, averaging between $650 and $750 per ounce.Merian, which will operate under the banner of Newmont Suriname and will be managed as part of the company's South American region, holds gold reserves of 5.1 million ounces. Annual production is expected to average between 400,000 and 500,000 ounces of gold at competitive costs during the first five full years of production, according to Newmont
Operating costs at the new mine are expected to be among the lowest in Newmont's portfolio, averaging between $650 and $750 per ounce in all-in sustaining costs in the first five years.
Merian is 25% owned by the Suriname government and currently employs about 1,100 people, 20% of whom are indigenous Pamakkans, plus 200 contractors, Newmont said.
The miner is in the midst of an aggressive investment (and divestment) program that could help it climb to the top of gold production stakes. Merian is one of Newmont's five self-funded growth projects - along with Long Canyon, expansions at Tanami and Carlin, and the recently completed expansion at Cripple Creek & Victor.
Taken together, the assets should add one-million ounces of gold to the company's overall production over the next two years, the firm said.
Newmont, the only gold company that forms part of the S&P500 index, has more than doubled in value this year. As of Oct.4, the firm had a market capitalization of $19.6 billion in New York.