Guyana Goldfields approves US$238M for commercial gold production

-600-person camp facility for mine site

The US$238 million in capital costs needed by Guyana Goldfields Inc. to take the Aurora project towards the commercial production phase has finally been approved and the company still hopes to be able to produce gold by early 2015.

Guyana Goldfields Inc. is a Canada-based company focused on the exploration and development of gold deposits in Guyana.

The overall cost needed to bring the long-awaited large-scale operations to commercial production is US$249 million and company representatives, in a presentation yesterday to stakeholders on progress made, disclosed that US$11 million of this amount has already been spent since January this year on enabling infrastructural facilities.

The Aurora Project’s operations
The Aurora Project’s operations

These facilities include the construction of the wharf at Buckhall on the Essequibo River in Region One, the access road from Buckhall to the project site, crossings, and work on the quarry. Currently, plans are being made to transport a 600-person camp facility, which was bought in October at the cost of US$3 million, to Aurora in Region Seven.

Stabroek News was told by a company representative that around US$160 million has also already been spent in the exploration phase of the project, which has been ongoing for around 10 years. This time frame though long, said President and Chief Executive Officer (CEO) of Guyana Goldfields Inc. Scott Caldwell, is quite typical for mining projects all over the world.

The remaining US$238 million will be provided in-part through debt financing with the assistance of the International Finance Corporation (IFC), of the World Bank Group, which will lead the coordination of the overall debt syndicate with other commercial banks and multilateral and development institutions.

In all, the IFC will make available close to US$200 million in loans, while the company itself will put up more than US$100 million. The mandate letter needed to conclude the agreement between Guyana Goldfields and IFC was signed recently although the transaction will not be completed until the second quarter of 2014.

Stabroek News was told that representatives from the international financial organisation have been coming to Guyana over the last six years, interacting with the project’s stakeholders, and assessing the prospects of making an investment in the project. Ultimately, a company representative found that Guyana will be a good partner to work with and he added that they were also satisfied that the project will be making them money which guarantees them the repayment of the loan at the rates and time periods agreed upon.

Once the capital investment aspect of the project is finalized, the company hopes to commence construction of the power plant, which will fuel the mining operation. Construction of this facility is expected to take eleven months, lasting from April 2014 to March 2015. While the plant is being built, construction works will also begin on the Open Pit Mine.

Some of the camping units which are to be transported to Aurora
Some of the camping units which are to be transported to Aurora

This is expected to last from April 2014 to December of the same year. Also, the company intends to focus on amassing a competent workforce capable of running the operation. This training will start in August 2014 and is expected to run until March of 2015. The company’s intention is to have a capable workforce in place by the time the Aurora project is brought to the commercial production phase in mid-2015.

Once completed, the mine is expected to produce 3.3 million ounces of gold over its initial 17-year life-span, and operate at a cash cost of US$527 per ounce. Further, it is expected that the open pit mine will see production levels of 5000 tonnes per day (tpd). This amount is expected to increase to 10,000 tpd when underground mining commences in 2018.

These levels of production will be enabled through the use of a 5.5 MW SAG mill

The expansion underground will cost about US$153 million and will be funded via cash flow generated from the company’s operations. Since the company is expecting to see gold recovery rates of more than 94%, the cash flow is expected to be substantial. From 2018 to 2031, an additional US$356 million will be invested as sustaining capital.

But the project may continue to produce a lot of gold beyond 2031. According to Caldwell, the Aurora project has extensive additional mineralisation at depths beyond the current mine plan and he said that there is also the possibility of expanding the open pits. Also, he said that the company can endeavour to carry out further exploration exercises.

Chief Operating Officer of Guyana Goldfields Inc. Peter Galassi says that the completion of the wharf at Buckhall is especially important since it will facilitate the transportation of the more than 1,000 containers of materials that will have to be transported to the project site. The state of the wharf will also affect the shipment of the 600-man camp to the project site. This camp is a necessity if the company is to send contractors when the time comes.  He explained that the wharf will be fitted with the required customs clearance and other services which are expected to be executed quickly to facilitate the quick clearance of materials.

The project will present many positive outcomes for the company but Guyana and its people are also expected to enjoy benefits in the form of investment capital, training, revenue, and employment.

It is estimated that over eleven hundred Guyanese would have been involved in the exploration, pre-development and development of the project by early 2014. And, as the project rolls beyond commercial production in 2015, 400 to500 Guyanese are expected to be involved in the operations.

Overall, the company says that 90% to 95% of the operational workforce will be Guyanese. In addition to job opportunities, these Guyanese workers will also receive additional training to enhance and expand their skills, as well as health and other medical benefits.

The actual construction of the processing facility and power plant will be done by joint venture partners Sedgman Limited and Grana y Montero, with which the company has executed a Heads of Agreement and Term Sheet. Meanwhile, by the end of the project Guyana will have seen in excess of US$1 billion in Foreign Direct Investment injected into the economy, while US$3 million would have been spent annually as the company continues its exploration.

The company also expects to pay about US$341 million in royalties, US$509 million in corporation taxes, US$67 million in payroll taxes, and US$43 million worth of excise taxes throughout the life of the project.

Meanwhile, noting the implications all mining operations have on the environmental landscape of every country, Natural Resources Minister Robert Persaud stressed the importance of sustainable mining, and urged the company to comply with Guyana’s laws as they carry out their operation so as to ensure the footprint left on the environment is very small.

At the same time he said that it is important that investors, both internationally and locally, be encouraged, and even incentivized to getting into the sector.

Noting the monumental contribution mining makes to Guyana’s Gross Domestic Product (GDP), Persaud said that giving concessions should not be seen as “selling out the country,” but rather as an opportunity to continue economic growth. Such endeavours, he said, coupled with initiatives to ensure sustainable resources extraction will ensure there is balanced development.