Guyana Goldfields Inc’s (GGI) gold output for the first quarter of this year was 23% less than the corresponding period last year and it has also announced the demobilisation of its open pit contractor, Stracon of Peru.
In a filing in Canada on April 29 in relation to its annual disclosure documents for 2019 and for the first quarter of 2020, GGI said that gold output at the Company’s Aurora mine in Cuyuni/Mazaruni totalled 28,100 ounces in the first quarter of 2020, in line with the fourth quarter of 2019 (28,300 ounces) but down 23% from 36,600 ounces in the first quarter of 2019.
GGI’s filing came just days after the disclosure on April 26 that Canadian silver miner Silvercorp Metals Inc is buying the company in a CDN$105m deal.
According to a press statement from the two companies they have entered into a definitive agreement whereby Silvercorp – with China-based silver mining operations – will acquire all of the issued and outstanding shares of Canadian gold miner, Guyana Goldfields by way of a plan of arrangement under the Canada Business Corporations Act.
GGI’s filing on April 29 said that during the first quarter of this year, total volume of material mined was 1.9 million tonnes at an average daily rate of 21,200 Tonnes Per Day (tpd), a significant reduction from Quarter 4 2019 and Quarter 1 2019, mainly due to the suspension of waste stripping as announced by the Company on February 25, 2020 and constrained mining space at the bottom of the Rory’s Knoll open pit.
“As announced on that date, the Company needed to temporarily suspend waste stripping in Rory’s Knoll to allow ore production from the bottom of the current pit in a safe manner. The Company continues to expect ore supply from the current mining phase to cease in (Quarter 2). As such, Stracon, the Company’s open pit mining contractor, has commenced demobilization in advance of the end of their contract term on May 5th as the Company no longer requires the additional open pit mining capacity”, the filing said.
During the quarter, the filing said that the mill processed 6,300 tpd of ore which was predominantly all hard rock from Rory’s Knoll. The mill feed grade was 1.66 g/t with an average recovery of 92.1%, both of which were slight improvements over the previous quarter. The grade was, however, 14% lower than the same quarter in the prior year as more high-grade ore was processed in the prior year while low grade ore was stockpiled.
As at March 31, 2020, the filing said that unaudited cash and cash equivalents were US$16.8 million, and the Company had no debt.
It also said that the underground development remains temporarily suspended due to ongoing Guyana travel restrictions arising from the Covid-19 pandemic. The Aurora open pit and processing plant, however, continue to operate and the Company is maintaining critical safety and environmental activities in compliance with Guyana’s international travel ban.
The filing also addressed a Non-Cash Impairment Charge.
It said “… in connection with the ongoing preparation of its Required Annual Filings, the Company has recognized certain indicators of impairment for the fourth quarter of 2019, being the ongoing challenges in achieving a mining sequence allowing for concurrent ore release during waste development in the open pit, as well as the decline in the Company’s market capitalization below the carrying value of its assets. As a result of this and subject to completion of the audit of the Company’s financial statements for the year ended December 31, 2019, the Company expects to recognize a material non-cash impairment charge”.
In recent years Guyana Goldfields has had to grapple with various problems including a slumping stock price, diminished production, regulatory issues over underground mining and a boardroom battle for control of the company.
