A projected US$120 million investment by a Canadian company in bauxite mining at Bonasika appears to have floundered over financing and the project had not taken off as planned.
In his budget presentation last year, Minister of Finance Dr. Ashni Singh had announced that First Bauxite Incorporated was slated to start construction of a US$120 million calcined operation in late 2013 at Bonasika. However, that has not happened and the company has faced financing issues.
In its interim financial statements for the three months ending December 31, 2013, which was released last month, First Bauxite Corporation announced losses of over CDN$2 million for the three months and concern was expressed about the company’s ability to continue as a going concern.
Management said that the unaudited consolidated interim financial statements were prepared on a going concern basis, which assumes that the company will be able to realize its assets and discharge its liabilities in the normal course of business. It had noted that the company does not currently have revenue-generating properties and has incurred a loss of CDN $2,010,984 for the three months ended December 31, 2013. As at December 31, 2013, the company had an accumulated deficit of CDN $45,470,518.
“These conditions along with other matters indicate the existence of material uncertainties that may cast significant doubt about the company’s ability to continue as a going concern. While the financial statements have been prepared on the basis of accounting principles applicable to a going concern, adverse conditions may cast substantial doubt upon the validity of this assumption,” the report said.
It added that the company’s ability to execute its work plan, meet its administrative overhead obligations, discharge its liabilities and fulfill its commitments as they come due is dependent upon its success in obtaining additional debt or equity financing and, ultimately, on attaining future profitable operations.
“The company has completed an update of the feasibility study on certain exploration properties, and management is analyzing its options for project development and construction and to cover administrative and other operational expenses. While management has been successful in raising additional funds in the past, there can be no assurance it will be able to do so in the future,” the report said. It added that in the event the company is unable to arrange appropriate financing, the carrying value of the company’s assets could be subject to material adjustment. Furthermore, certain market conditions may cast significant doubt upon the validity of the going concern assumption.
“These unaudited consolidated interim financial statements do not reflect any additional adjustments to the recoverability and classification of certain recorded asset amounts, classification of certain liabilities and changes to the statements of loss and comprehensive loss that might be necessary if the company was unable to continue as a going concern,” the statement noted.
In November 2011, the company had said that it was moving towards acquiring the necessary funds to commence construction of a bauxite mine at Bonasika, in the Essequibo River, in 2012. This was disclosed following the signing of a multi-million dollar mineral agreement with the Government of Guyana.
