The board of the International Finance Corporation (IFC) is expected to vote on February 28, 2014 on a US$200 million debt package for Guyana Goldfields’ Aurora gold mine project.
Last month, the company had announced that the US$238 million in capital costs needed to take the Aurora project towards the commercial production phase was approved. The company hopes to be able to produce gold by early 2015. Guyana Goldfields Inc. is a Canada-based company focused on the exploration and development of gold deposits in Guyana.
The overall cost needed to bring the long-awaited large-scale operations to commercial production is US$249 million and company representatives, in a presentation to stakeholders on progress made last month, disclosed that US$11 million of this amount has already been spent since January last year on enabling infrastructural facilities.
The total project cost is estimated at US$300 million, comprising: an estimated initial capital expenditure of US$250 million; working capital, operating losses during construction, interest during construction and financing fees of US$30 million; and potential cost overruns of US$20 million.
In all, the IFC was expected to make available close to US$200 million in loans, while the company itself will put up more than US$100 million. The mandate letter needed to conclude the agreement between Guyana Goldfields and IFC was signed last year although the transaction will not be completed until the second quarter of 2014.
The debt package will now come before the IFC board on February 28. The IFC recently said that its proposed investment is a US$50 million A loan for IFC’s own account, for up to 7.5 years (including up to two years grace) to Guyana Goldfields and/or its wholly-owned subsidiaries. A further US$150 million will be mobilized from a combination of official financial institutions and commercial banks through parallel and/or B loans.
“The total debt financing is estimated at US$200 million (including US$20 million for potential cost overruns). The remaining total project cost will be funded by the sponsor’s equity contribution,” the IFC said.
The Aurora Gold Project entails the construction and development of a gold mine in Guyana, about 170 kilometres west of Georgetown. The mine site is connected by a 150 kilometre access road (with a ferry crossing of the Cuyuni River at Tapir) to the Buckhall port on the Essequibo River.
The project comprises an open pit and underground gold mine, process plant, tailings management area and other associated facilities. The Buckhall port facility will also be upgraded to accommodate ocean going vessels and will provide facilities for cargo, fuel and personnel handling during project construction and operations.
The mine aims to produce 3.3 million ounces of gold over an initial 17 year mine life. Gold production is expected to average 194,000 ounces per year over the life of mine, and average 231,000 ounces per year over the first ten years. Commercial production is expected to commence in 2015. Mining will be phased with initial open pit mining commencing in 2015 (continuing through 2023) with underground mining commencing in 2018 (continuing through 2031).
The process plant will also be designed in two phases with an initial capacity of 1.75 million tons per annum and subsequently being expanded to a capacity of 3.5 million tons per annum. The gold will be recovered from the ore using well established technology (carbon-in-leach) and gold ore will be produced on-site and stored in a secure vault prior to being transported offsite.
The resulting tailings will be treated prior to disposal into the tailings management area.
The IFC said that the expected development impact from this project will include: (i) employment creation of about 700 to 900 jobs; (ii) fiscal payments in the form of royalties and taxes paid to government estimated at US$850 million over the 17 year mine life or US$50 million per year on average (based on US$1,300 per ounce gold); and (iii) setting good benchmarks in environmental and social sustainability for other potential projects in the region.
