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Newmont Starts Commercial Production at Merian Gold Mine


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Newmont Mining Corporation (NEM - Analyst Report) has concluded the development of the Merian gold mine in Suriname on time and within budget. The capital expenditure incurred for the construction was over $150 million, or almost 20% below the initial capital budget.

Newmont began commercial production at the mine on Oct 1 when the first gold was poured. In the last 30 days, the company achieved an average mill throughput of 80% and gold recovery of over 90%. Nearly 160,000 contained ounces of gold are represented in the stockpiled ore at the mine. The mine currently employs over 1,100 workers, with indigenous Pamakkans accounting for 20% of the force, and 200 contractors. The company signed an agreement with the local Pamakkan community for hiring and procurement along with a community development fund.

The mine is expected to contain 5.1 million ounces of gold reserves, of which the first five full years are projected to see annual production of about 400,000−500,000 ounces at competitive costs on a 100% basis. In the same period, costs applicable to sales are expected to range between $575−$675 per ounce, while the all-in sustaining costs (“AISC”) are estimated between $650−$750 per ounce, making cost among one of the lowest in Newmont’s mines portfolio. Exploration by the company has expanded mine life to 13 years from 11 years. The mine also has an upside potential in the form of 500,000 hectares of land belonging to the company’s Area of Interest, which also includes a new discovery at Sabajo.

In Nov 2013, the Suriname government also exercised its option to participate in a 25% equity ownership stake in the mine. The Suriname government manages its participation in Merian through Staatsolie, a fully government-owned Surinamese company. The mine will operate under the name of Newmont Suriname, and will be run as part of Newmont’s South America region, in accordance with leading safety, technical, social and environmental regulations.

Newmont has four other self-funded growth projects, Long Canyon, expansions at both Tanami and Carlin, as well as the recently concluded expansion at Cripple Creek & Victor. All five projects together are estimated to add 1 million ounces of lower cost gold production over the next two years to the company.

Shares of Newmont closed 3.03% lower at $38.10 on Oct 3.

Zacks Rank

Newmont currently sports a Zacks Rank #1 (Strong Buy). 

Other well-ranked mining stocks include Barrick Gold Corporation (ABX - Analyst Report) , New Gold, Inc. (NGD - Snapshot Report) and IAMGOLD Corp. (IAG - Snapshot Report) .

Barrick Gold has seen its estimates move north in the last 60 days and sports a Zacks Rank #1.

New Gold, also sporting a Zacks Rank #1, has seen its earnings estimates increase over the last 30 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

IAMGOLD’s average earnings surprise over the last four quarters is roughly 32%. The company holds a Zacks Rank #2 (Buy).

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