Newmont Mining Corp. to Invest up to $1 Billion to Develop Suriname Gold Mine

   By Maria Armental 
 

Newmont Mining Corp. (NEM) plans to invest up to $1 billion in cash to develop the Merian gold mine in Suriname.

The mine, expected to produce an average of 300,000 to 400,000 ounces of gold annually, would begin production in late 2016 under the banner of Surgold, subject to the necessary approvals from the government of Suriname, Newmont said Tuesday.

Higher grade ore and throughput in the early phases would boost annual production to an average of 400,000 to 500,000 ounces of gold per year in the first five years, cutting the payback period, the company said in a release.

"This decision marks an important milestone in our portfolio optimization process--we have divested nearly $800 million in non-core assets to help fund the next generation of lower cost projects in our portfolio," President and Chief Executive Officer Gary Goldberg said, adding, "Equally important, we established community agreements and are working with experts to minimize our impact on the environment--getting it right from the beginning is critical."

Shares of Newmont, which is expected to release second-quarter results Tuesday, rose nearly 2% to $26.01 in recent after-hours trading on the news.

The Greenwood Village, Colo., goldminer, the second largest by production, has been one of the worst performers in the S&P 500. Its stock has fallen more than 60% since 2011 and last year it posted the largest loss in its history.

Like others in the industry, the Greenwood Village, Colo., goldminer, the world's second largest by production, has been struggling with lower gold prices, high costs and declining accessible gold grades. In 2013, gold prices fell 28%, the largest annual drop since 1981. But gold prices have been on the rise for much of 2014, suggesting results should improve.

Some investors have been calling for merger talks with Toronto-based Barrick Gold Corp. to restart or for Newmont to break up. The Newmont-Barrick deal unravelled in April amid what people familiar with the matter described as clashes over governance issues.

Through Tuesday's close, the company's stock was up nearly 11% for the year.

Write to Maria Armental at [e-mail]

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