A proposed gold exploration deal involving presidential advisor Odinga Lumumba has raised eyebrows in the mining sector over the manner of the sale of a property and intended sale of exploration data for US$250,000 ($51.2m).
The queries surfaced last week when the Canadian partner Shoreham Resources Ltd issued a release on the likely deal with the recently formed Mariwa Mining in which Lumumba has an interest. Contacted at Parliament yesterday, Lumumba confirmed that he has an interest in Mariwa but said he could not answer Stabroek News’ questions until today.
Shoreham said in its release it is pursuing a letter of intent (LOI) which would ultimately see the company acquiring 100% interest rights in Mariwa Mining Company Inc which had applied and had its application for a prospecting licence over a project in the Sardine Hill area in the Essequibo approved by the authorities here. That licence was approved by the Guyana Geology and Mines Commission (GGMC) just days ago on December 28, 2009 and a deal had apparently been in the making all the time.
According to a release from Shoreham on December 30, 2009, the company is proceeding with a letter of intent (LOI) (referred to as ‘the Sardine Hill LOI’) pursuant to which it has the right to acquire 100% interest in Mariwa Mining Company Inc which has applied for a prospecting license over the 10,880 acre Sardine Hill/Mariwa property on the left bank of the Mariwa River in Region Seven (Cuyuni/ Mazaruni). Mining regulations require that small and medium scale mining operations be fully owned by Guyanese and queries have been raised about whether this deal meets this criterion
According to the Shoreham release, both parties are awaiting the execution of a definitive agreement which will supersede the LOI, and according to the release, in order to acquire 100% interest in Mariwa Mining, Shoreham Resources is required to pay to the local company, an aggregate of US$1m ($205m) and also to issue to Mariwa a total of 1.5m common shares. In addition Shoreham will also pay a total of US$250,000 for exploration data and files from work programmes dating back to 1993, as well as undertake a consulting agreement with the former project manager of the company. The data, however, according to the regulations, belongs to the GGMC and is usually not for sale.
Roraima
Sources within the mining industry here told Stabroek News recently that the Sardine Hill property had long been a controversial issue ever since its previous owner, Roraima Investments, a locally-based company acquired ownership of the property in the early 1990s. The source stated that Roraima Investments lost ownership of the property and it was subsequently reclaimed by the GGMC owing to the non-payment of rentals, which amounted to some $25M. Roraima principal, Grantley Walrond, could not be contacted for comment despite attempts over several days.
According to the source, Roraima Investments ap-pealed the decision of the mines commission and approximately five years ago the company was granted a one-year extension by the authorities, even though then mines commissioner Robeson Benn was not in favour of the decision. The Prime Minister’s Office subsequently gave the company another extension, this time for a three-year period on the condition that if the property is sold, all sums owed to the GGMC will be fully repaid. Roraima Investments then failed again to honour its rental payments and the property was again reclaimed by GGMC. This time it was put up for auction.
The source stated that in 2007, Afro Alphonso and Chunilall Babulall of the C&BR mining company based in Bartica, paid a sum of $80M to the GGMC for the property but the execution of the sale was halted after Roraima Investments secured an injunction from the courts restraining the mines commission from continuing with the sale. Alfonso and Babulall subsequently discontinued the arrangement and reclaimed the sum paid on the property from the GGMC, and after a year, were paid the sum in full.
During this time previous owner of the Sardine Hill property, McNeal Enter- prises, owned by Lumumba, which had sold the property to Roraima Investments in the 1992, became involved in the matter on the basis that he had been the former property holder.
Sources say an instruction was recently handed down by the authorities that the property be handed over to Roraima Investments and the previous owner, Mc Neal Enterprise and the necessary paperwork was executed. It is unclear if anything else was paid for the property. Roraima Investments withdrew the matter from the courts and the property was gazetted by the GGMC on November 14 last.
When Shoreham entered the picture and pursued its interest in the property, the source noted, Roraima Investments and the previous owner of the property McNeal Enterprises formed a new company, Mariwa Mining Company Inc in October last year.
According to miners within the industry, this last move to form the new company, Mariwa Mining Company leaves unanswered questions, since according to them the award of the property was intended for Roraima Investments and McNeal Enterprises, and last year no one knew about the new company, Mariwa Mining Company until investigations by persons in the industry were carried out.
The source stated that when Alfonso and Babulall pursued the property in 2007, they would have been afforded exploration data, and files from work programmes carried out on the said property at no cost. He explained that this information usually is kept confidential when the licensee, in this case Roraima Investments has ownership of a property. However, when it is reclaimed by the authorities and put up for auction, the information is no longer confidential and becomes available to those interested in it. He said the clause in the agreement between Shoreham Resources and Mariwa where the former will pay to the local company US$250,000 for exploration date and files of previous work programmes leaves a few questions, reiterating that the exploration information should be available to the interested party with no cost attached.
He also questioned what would happen to the rental sums owed by Roraima Investments to the GGMC.
When contacted for a comment on the clause in the LOI on the exchange of exploration data, GGMC Commissioner William Woolford told Stabroek News that he needed to see the Shoreham release. It was subsequently forwarded to him via fax.
In reply, he produced excerpts from the mining regulations which outlined the terms of an agreement a licensee is expected to honour, including the supply of quarterly reports, information acquired by the licensee relating to the area allocated, as well as analytical, field statistical data etc. This information becomes the property of the GGMC and on conclusion of exploration operations or at the expiration of a license, whichever happens first, the Licensee is expected to hand over to the GGMC full information and records in the form of a geological map of the area and a report that would satisfy the GGMC that bona fide exploration of the area has been undertaken.
According to the release from Shoreham Resources, the Sardine Hill property is subject to a systematic evaluation and the company plans a compilation of all previous work and rapid advancement to systematic drilling this year. The company, based in Langley, British Columbia, Canada, stated that the Sardine Hill property is a high priority opportunity for the company as a result of its heritage of previous work, proximity to established infrastructure and a style of mineralization amenable to large scale development.
Mulgravian
Shoreham has also entered into an agreement with another overseas–based company, Mulgravian Ventures Corp., in which the company has granted Mulgravian the option to acquire a 51% working interest in its pursuit of the Sardine Hill Property.
According to the company’s website, a budget of US$1M has been allocated for the first year’s work on the Sardine Hill property.
