Fresh from concluding a final deal with the Guyana Government, Guyana Goldfields Inc says it has signed confidentiality agreements with six parties interested in buying the company and its Cuyuni/Mazaruni Aurora gold project, Chief Operating Officer Claude Lemasson told the Bloomberg news service.
“We have been on the radar of many companies, I think, for quite a while,” Lemasson said in an interview yesterday at the company’s headquarters in Toronto.
The company received its licence for Aurora, the first issued in the country for a large-scale gold mine since 1991, at a ceremony at the Office of the President. The project, which may have an initial cost of US$400 million, is now fully permitted, Lemasson said. According to Bloomberg, he said that the company may sell stock or convertible bonds in the next four months to raise US$100 million to US$150 million to fund development, he said.
The company’s stock rose 3.9 percent to C$8.44 in Toronto, giving it a market value of C$706.5 million (US$673.3 million), Bloomberg said. The stock rose as much as 13 percent earlier, the biggest intraday gain since October 2009.
Guyana Goldfields “would probably be at the top of a short list” of potential acquisition targets, Trevor Turnbull, a Toronto-based analyst at Scotia Capital Inc., told Bloomberg in a telephone interview.
“As a single-asset company with a project that is now fully permitted and essentially ready to go into production as soon as it can build the mine, it offers a great source of production for mid-size companies,” Turnbull told Bloomberg.
Open-Pit Mine
The six companies that have signed confidentiality agreements are “well established, well funded and well respected,” Lemasson said, according to the report. The list includes majors and mid- tier miners, he said, declining to give more details. Guyana Goldfields has a data room open, he said.
Lemasson said that the company plans to complete a feasibility study for Aurora by mid-January. An open-pit mine and processing facilities may cost about US$400 million, he said. The company is still considering how quickly it will start developing underground operations, which may cost another US$375 million to US$400 million, he told Bloomberg.
Commercial output at Aurora, at an annual rate of about 250,000 ounces of gold, is forecast to begin in the first half of 2014, Lemasson reported.
International Finance Corp., the private sector arm of the World Bank, is helping arrange a debt package for the project with other development agencies, Lemasson said.
At the signing ceremony on November 18th Guyana Goldfields Inc founder and CEO Patrick Sheridan said that the company has invested over US$120 million to date and according to him, the company has prospected some 5.8 million ounces of gold in the area, a figure which is growing. He said his company has drilled the deepest hole in this part of the world to a depth of 2.2 km and to date some 1,200 holes totalling 300km have been drilled.
Sheridan said the project represents the largest private investment in the country’s history. He explained that over the 18-year forecasted life of the mining operation, approximately US$1 billion will be expended on the project, adding that in the construction phase, approximately 900 men and women will be employed directly with the company, and that figure will rise above 1,000 as time progresses.
“It is widely believed that for every direct job created, there are between three to eight indirect jobs created,” he added, extrapolating that Guyana will benefit significantly, with between 4,000 to 9,000 jobs.
Sheridan said that based on the current gold prices, the project will result in US$1.6 billion in direct returns to the government coffers, via royalties and taxation. He said that figure did not include taxes to be paid by persons who will be employed by the company.
Sheridan said Guyana Goldfields’ drilling exercises in the Aurora area have established that gold in Guyana can have deep roots, a notion which he stated confirms the faith the Guyana Geology and Mines Commission (GGMC) placed in his company.
Being the first major underground mine in the sector here, Sheridan said, the operation will bring new insight and strategies to exploration as well as new skills and technology to the industry, which will drive its development.
He said the mine will be built with the highest international standards in mind as well as respect for the environment.
“Guyana needs massive foreign investment. We feel that the Aurora project is the tip of the iceberg in what is to become a very attractive place for foreigners to invest,” Sheridan said.
