Gold production at the Canadian-owned Guyana Goldfields Inc (GGI) for the first half of this year has been estimated at 75,000 ounces and the company has entered an agreement to expand the capacity of its Aurora mine in Cuyuni/Mazaruni.
A statement today from the company said that net proceeds from a new offering of shares are expected to be used to fund an expansion of the Aurora Gold Mine. This is expected to ramp up capacity from 5,000 tonnes per day to 8,000 tonnes per day, with such expansion to be completed in 2017.
The exploration activities, the release said, “will focus on infill drilling at the Aurora Mine targeting near-surface inferred resources and increasing drill density at Aleck Hill, and in addition will include drill-ready targets within a 30 km radius of the Aurora Mine and on the Aranka concession.”
With gold production through June 30, 2016 totalling approximately 75,000 ounces at its Aurora Mine, the company said it is increasing its 2016 production guidance to 140,000 to 160,000 ounces of gold from prior guidance of 130,000 to 150,000 ounces. The primary factors in the revised guidance are increased throughput levels and higher grade than originally predicted in the mine plan.
For the expansion, GGI has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets, Scotiabank and RBC Capital Markets, as joint bookrunners, under which the underwriters have agreed to buy on a bought deal basis by way of a short form prospectus, 10,705,000 common shares (“Common Shares”) from the Company and 1,000,000 Common Shares from Patrick Sheridan, the founder and Executive Chairman of the Company (the “Founding Shareholder”). The price is C$9.40 per Common Share for gross proceeds of approximately C$110 million (the “Offering”). The release said that the Company has granted the Underwriters an option, exercisable at the offering price for a period of 30 days following the closing of the Offering, to purchase up to an additional 15% of the Offering from treasury to cover over-allotments, if any. The Offering is expected to close on or about July 19, 2016. The net proceeds from the secondary portion will be paid to the Founding Shareholder. The Company will not receive any proceeds from the secondary offering.
The company says that cash cost (before royalty) guidance remains unchanged at US$487 to US$537 per ounce of gold while all-in sustaining cost guidance for 2016 has risen from US$637 to US$687 per ounce to US$670 to US$720 per ounce. The increase, it said, is mainly attributable to the unbudgeted purchase of a used Twin Otter airplane “for more efficient and flexible local transportation and supplies, and capital expenditures for various plant facility optimization and infrastructure improvement projects.”
After a huge investment here dating back to 1996, GGI poured its first gold bar in August last year. It reached full commercial production in January this year.
