A top Guyana Goldfields executive has said that the company has signed confidentiality agreements with six parties interested in buying the company and its Aurora gold project here.
Chief Operating Officer Claude Lemasson told Bloomberg in an interview that “we have been on the radar of many companies, I think, for quite a while.” Guyana Goldfields recently received its license for Aurora, the first issued in Guyana for a large-scale gold mine since 1991. The six companies that have signed confidentiality agreements are “well established, well funded and well respected,” Lemasson said.
The list includes major and mid- tier miners, he said, declining to give more details. The company has a data room open, he said.
The project, which may have an initial cost of US$400 million, is now fully permitted, Lemasson told Bloomberg. 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, according to the report.
The company’s shares rose 3.9 percent to CD$8.44 in Toronto, giving the company a market value of CD$706.5 million (US$673.3 million). The stock rose as much as 13 percent earlier, the biggest intraday gain since October 2009, Bloomberg reported.
Guyana “would probably be at the top of a short list” of potential acquisition targets, Trevor Turnbull, a Toronto-based analyst at Scotia Capital Inc., said in a telephone interview with Bloomberg. “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,” said Turnbull, who rates the shares “sector outperform.”
The company plans to complete a feasibility study for Aurora by mid-January, Lemasson said. 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.
Commercial production at Aurora, at an annual rate of about 250,000 ounces of gold, is forecast to begin in the first half of 2014, Lemasson told Bloomberg.
International Finance Corp., a shareholder, is helping arrange a debt package for the project with other development agencies, Lemasson said. The debt and some equipment financing, which may be in place by the second half of 2012, would probably cover US$150 million to US$175 million of the project’s cost, Lemasson said.
There have been 22 gold-mining acquisitions larger than US$100 million announced this year, valued at US$22.1 billion, according to data compiled by Bloomberg.
