About 400 people – including employees, community members, government officials, diplomats and other leaders – gathered in Suriname Wednesday to break ground for the Merian Project. The event marked an important milestone for Newmont in developing a profitable new mine and in establishing a foothold in the highly prospective Guiana Shield.
Adriaan van Kersen, Managing Director, Surgold; Gary Goldberg, President and CEO, Newmont; Jim Hok, Minister of Natural Resources for Suriname; Marc Waaldijk, Managing Director, Staatsolie.
Newmont has spent more than 10 years exploring, engaging with local stakeholders, and laying the groundwork to build Merian according to leading social, economic and environmental standards. During this time, the Surgold team forged a landmark agreement with the indigenous Pamakkan people to define how the two groups will work together to maximize local employment and procurement, monitor the operation’s environmental performance, and create and manage a community development fund.
Surgold will employ up to 2,500 people during Merian’s construction phase and 1,300 when the project reaches commercial production in late 2016.
The Government of Suriname recently took up its option to acquire a 25 percent interest in the project through its state-owned energy business, Staatsolie. Newmont’s wholly-owned subsidiary, Surgold, will operate the mine and mill. Newmont expects to fund its remaining share of capital – estimated at between $600 million and $700 million – through available cash balances and projected cash flows.
Initial development has begun, including work to upgrade roads, build housing for the workforce, and prepare the mine, mill and ancillary infrastructure.
Gary Goldberg, Newmont President and Chief Executive Officer, toured the project prior to the groundbreaking ceremony and remarked, “We have assembled a very strong team here in Suriname and I’m pleased to see the solid progress they have made in the four short months since we received our Right of Exploitation from the government.”
Surgold employees at groundbreaking celebration.
Merian contains gold reserves of approximately 4.2 million ounces1 and is expected to produce an average of 400,000 to 500,000 ounces per year in the first five years of operation, with estimated average costs applicable to sales of between $650 and $750 per ounce, and estimated average all-in sustaining costs2 of between $750 and $850 per ounce.
Legal Cautionary Statement Regarding Forward-Looking Statements:
This posting 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 capital expenditures; (iv) expectations regarding the development of Merian, including expectations regarding commencement of commercial production; (v) expectations regarding the anticipated number of employees; and (vi) 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 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 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 posting, 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 information.
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.