Canadian mining company Sandspring Resources Inc yesterday signed a multi-million dollar gold/copper mining agreement with the government, which could see some 1,000 jobs being created for its Toroparu, Region 7 project.
Sandspring had announced in May 2009 that it was merging with Guyanese company ETK Inc, which is owned by businessman Alfro Alphonso, for the project.
The signing paves the way for the US$600 million to US$700 million investment to go on stream and the company said production is expected to be between 250,000 to 300,000 ounces of gold and 20 pounds of copper over a 15-year period. According to the company, at current prices, the mine would contribute approximately US$550,000,000 annually to Guyana‘s Gross Domestic Product.
The company said yesterday that the completion of the mineral agreement and the project itself is good for Guyana, adding that it “sends a clear message to the international mining community that Guyana is a good place to do business.”
The company’s board chairman John Adams was quoted as saying that the agreement was fair for both parties and can serve as a model for future mineral agreements.
Adams said a highlight of the agreement is that government has requested an increase in the gold royalty payments from 5% to 8% when the price of gold is above US$1000. He said that in the light of the current gold price, the company understands the government’s position. He said too that the government has required Sandspring to follow strict environmental standards which meet or are on par with those in the United States and Canada.
Adams expressed appreciation to the government and its representatives who negotiated the agreement.
Works at the project site are expected to begin some time in 2015 and several environmental studies as well as an impact assessment are expected to commence shortly.
In March this year, the company announced that it had received a positive Preliminary Environmental Assessment (PEA) for further undertaking of its Toroparu project.
In a statement issued on July 4 Sandsprings reported that its ongoing drilling operations “continue to confirm the Toraparu Gold/Copper Project and provide evidence to extend the resource.” The company said that based on the unfolding results of its drilling operations it has extended its drilling operations to areas “where additional resources are expected laterally and to depth. The company‘s current pronouncements are being made based on what it says is a total of 22,162 metres of results. “Sandspring’s objective is to enlarge and optimize the existing resource and continue preparation of a definitive feasibility study”, it said.
Various expert analyses of the Toraporu project express considerable optimism of its prospects for success. According to mining expert David West of Salman Partners the project has a total resource of 4 million ounces of gold and 565 million pounds of copper According to West, additional results suggest potential extensions of gold-copper mineralization to the south and southeast of the deposit,
A second expert analysis done by Barry Allen of McKie Research says that the results of the drilling operations undertaken by Sandsprings so far “increase our overall confidence in the deposit, particularly in the SE area of the proposed pit outline where a higher-grade starter pit has emerged, potentially enhancing economic viability.”
The mineral property is located in the Upper Puruni River area in the Cuyuni/Mazaruni and the company noted on its website that access the area from Georgetown is facilitated via air, river and a newly constructed road, with travel time being approximately one day in the dry season.
In his remarks, GGMC Chairman Joe Singh said the “tremendous contribution” that the mining sector has been making to the economy of Guyana should be recognized.
“Last year 9 percent of GDP was attributed to the mining sector and our export earnings, 50 percent of our export earnings were attributed to the mining sector not just gold but also bauxite. Gold, because of the high (price) of gold.
“So we want to make full use of the opportunities presented through a favourable investment climate but at the same time ensuring that we do not compromise from the environmental standpoint the other initiatives which are being taken such as the Low Carbon Development Strategy which is in fact the instrument for change from our economy giving primarily the primary products and moving into the area of value added which is the way also the mining sector needs to go instead of just focusing on the primary products. We also need to look at the value add on processing.
He added that the GGMC wants to make certain that all of these investments are conducted in a manner that is socially responsible. “We have obligations to hinterland folk, we have obligations to the environment, we have obligations to the future generations and we want to make sure things are done in a transparent manner, with a high degree of integrity and also, from an economic standpoint, what accrues from investments such as this will help to stimulate the economy, the development of other enterprises so that we are not compromising ourselves because mining is not a renewable resource”, he said.
Adams thanked a number of people for their help. According to remarks released by the Government Information Agency, he said:
“First and foremost, I would like to thank President Jagdeo and compliment him for having the vision to believe that responsible development of Guyana’s mineral resources can coexist with a Low Carbon Development Strategy.
“I would like to thank the representatives of the people of Guyana who negotiated this Agreement on behalf of the Government; Prime Minister Sam Hinds, Finance Minister Ashni Singh; and Chairman of GGMC, Mr. Joe Singh and their respective staffs were all instrumental in moving the process to a favorable conclusion.
“We want to thank our Guyanese partners, Alfro Alphonso and Sons for discovering the Toroparu property and for their co-operation in moving this property to large scale development.”
He also thanked advisor to Sandspring, Sir Shridath Ramphal.
