Guyana Goldfields Inc (GGI) yesterday celebrated its first gold pour with a grand opening ceremony in the Cuyuni that saw a pledge of a 20 to 30-year relationship with the country and President David Granger used the occasion to stress the importance of the industry to the economy while at the same time warning of improvements that were needed.
Following the August 4, 2015 pouring of its first gold bar—marking the culmination of a 19-year search for the precious metal at the Aurora mine site—the Canadian mining company flew in dozens of guests for a tour of the mill and the unveiling of a plaque.
The Ministry of the Presidency said that the projected corporate income tax over the life of the mine is estimated at US$509 million. Projected payroll taxes are estimated at US$67 million; excise taxes, US$43 million.
In a stirring address, Granger stated that the presence of the mine in the middle of the Cuyuni/ Mazaruni region was a symbol of Guyana’s determination to develop its national patrimony and demonstrate its sovereignty over the Essequibo region, a clear reference to recent sabre-rattling by Venezuela.
Declaring that “Guyana’s children must never be poor again,” Granger said that a little part of what was produced yesterday at the Aurora Gold Mine and in the future will be deposited into a Sovereign Wealth Fund, which his government is in the process of designing, and kept for posterity.
Amid the sweltering jungle heat, the President said that he was looking forward to increased gold production by the company and the honouring of its commitment to creating needed jobs, evidence of which he said he saw yesterday. He also called for full respect of the country’s occupational health and safety laws and said that Guyana Goldfields could become a model for large-scale gold mining and environmental compliance.
“We commit our government’s support to you and the entire gold mining sector,” Granger said while contending that the development of the hinterland is inextricably bound to the development of the people and the gold industry.
Turning to the challenges facing the industry and tracing its 150-year history including the gold rush of the 1890s, Granger noted that gold for several years had been the largest foreign exchange earner for the country but that the 2014 drop in the price had hit production, declarations and earnings. Rising costs, he said, had also led to the closure of small operators, the loss of hundreds of jobs and a decline in growth.
Describing gold as an important pillar of the economy, Granger said that the country would be better off if the industry was placed on sounder economic bases. He pointed out that in 2014 gold accounted for 7% of the Gross Domestic Product, US$469 million in foreign exchange earnings and a whopping US$648.5 million in 2013.
“We want the good times to come back,” Granger said, stating that the industry employs 15,000 persons directly and sustains about 90,000 in 18,000 households.
Speaking in the presence of former prime minister Sam Hinds and former minister of public works, Robeson Benn, the President referred to the three types of mining: the individual or placer, the entrepreneurial/medium scale and the large scale and said that all three will be supported by his government.
Arguing that the industry was traditionally poorly managed even though profits were huge in the boom years, he said the introduction of mining regulations at the start of the last century constricted the industry as “easy come, easy go.”
Adverting to the collapse of the gold price from over US$1,800 to just over US$1,000 in the last few years, Granger said the industry has to be put on a sounder footing and he listed a number of things that had to be done for and by the industry.
Pointing out that four key gold nodes: Mabaruma, Bartica, Mahdia and Lethem remain but mere villages today and do not provide the type of services they should, he challenged the respective ministers in his government to ensure that the delivery of education, health and social protection are improved. He cited trafficking in persons and high mining fatalities. He added that there must be a public-private partnership to build infrastructure in these areas to enable safer transport.
He then argued that the industry has created problems for itself as there are persons who try to evade royalties and smuggle gold. In the backdrop of a major ongoing investigation into gold smuggling, Granger alighted on what he called the notorious case of 2012 when 476 lbs of gold believed to be from Guyana was stolen in Curacao and another in 2008 at Moleson Creek, Corentyne involving 30 lbs.
He said that the time had arrived for strategic policies and long-term plans in the industry.
First, he said, “we must have improved infrastructural development” arguing that the resource richest parts of the country like the Cuyuni had the worst infrastructure. Roads, bridges, stellings will lead to greater economic activity, he argued, adding that infrastructure must be seen as an investment and not a liability.
Second, there must be improved security, Granger said. Noting the presence in the gathering of Commissioner of Police Seelall Persaud and Chief of Staff of the GDF Mark Phillips, the President said he would be having a meeting with them today. Advising that a plan was being developed for better security and was open for public input, the President said that there must be better security as gold mining had become increasingly dangerous, miners were being killed and criminal elements were moving into the area.
Addressing mining pit accidents was the third area of concern cited by Granger. He expressed anguish that 62 men had died in 60 months and 25 in 16 accidents – including 10 at Mowasi – between June 2014 and May 2015. “Mowasi…Mowasi,” the President intoned, adding that foreign leaders had condoled with him on the tragedy. He said the death of 10 men in a population this size was a catastrophe and declared that the lives of men and women were more precious to him than mineral resources. He said that safety standards must be upheld. Citing the Commission of Inquiry that had been conducted into mining pit deaths, Granger said that enforcement capabilities will be strengthened and warned that legal action will be taken against companies and individuals in violation.
Perhaps the most impassioned part of his address referred to the protection of the environment. He stressed that land reclamation and reforestation of mined out sites must be mandatory and not optional. “Do not leave huge abscesses on the landscape… The days of a free for all are all over…we need to be more environmentally conscious.” He charged that entire communities were threatened by unsafe practices and river banks had been destroyed. “Rivers that looked like tea are now looking like chocolate,” due to high turbidity, the President said, urging that the industry pay attention to the impact of bad practices on human settlements.
The President also said there must be a firm stance against white collar corruption and illicit activities. Systems at the Guyana Geology and Mines Commission are to be improved and Granger said that mines officers have to be incorruptible. He declared that no one who pays bribes to a public officer will escape the long arm of the law.
He reiterated that the government wanted the three forms of gold mining to co-exist and to benefit from a level playing field. He however called for an upgrading of technology to lift the mining sector from the 19th century into modernity. “Guyana has to take a leap forward, a leap outward and a leap upward,” he urged.
He added that the administration is working on a 10-year plan to incorporate specific policies and to ensure that the gold industry remains a major contributor to the economy.
Guyana Goldfields’ investment here dates back to 1996.
The company expects to produce between 30,000 ounces to 50,000 ounces of gold in 2015, depending on how quickly full ramp-up is achieved, and around 120,000 ounces to 140,000 ounces of gold in 2016.
According to the plan for its Aurora Gold Project, the mine is designed to produce 3.29 million ounces of gold, averaging 194,000 ounces per year, over an initial 17-year mine life.
On October 5, 2011 GGI had announced that it had clinched a Memorandum of Understanding with the government for the Aurora Gold Project which sets mining royalties and paved the way for a mining licence.
The MOU had set out the key terms of the Mineral Agreement, also known as a Fiscal or Stability Agreement.
It said that significant among the terms of the MOU are:
-Mining royalty of 5% on gold sales at a price of gold of US$1,000/oz or less
-Mining royalty of 8% on gold sales at a price of gold over US$1,000/oz
-Corporate income tax rate of 30%
