Canadian mining firm Guyana Goldfields Inc produced 32,053 ounces of gold at its Aurora mine in Region Seven during the second quarter of this year and its optimism is high that the second half of the year will see better results.
“In its second ever quarter of commercial production, the company generated free cash flow of US$11.6 million and significantly reduced its remaining development cost liabilities as well as satisfying all debt principal and interest payments. With higher grade material expected to be mined and further optimization efforts expected to be realized in the upcoming quarter, the company is in an excellent position to deliver significant results for the second half of 2016,” Scott Caldwell, the President and Chief Executive Officer of the company said in a statement announcing second quarter results yesterday.
The company’s total gold production for this year stands at 73,334 ounces for the first two quarters, following production of 41,281 ounces in the first quarter.
The firm said that in the second quarter, which ended June 30, it sold 36,585 ounces of gold at an average realized gold price of US$1269 per ounce, generating gross second quarter revenues of US$46.4 million. It also said that it finished the second quarter with a cash balance of US$39.9 million made up of cash and cash equivalents of US$16.6 million and restricted cash of US$23.3 million.
The statement disclosed that Guyana Goldfields reduced its remaining 2015 development costs liabilities by US$11.1 million in the quarter, in addition to making a debt principal repayment of US$5.5 million and related interest payment of US$2.4 million.
It also noted that 2016 production guidance has been increased to 140,000 to 160,000 ounces of gold from prior guidance of 130,000 to 150,000 ounces.
The company revealed that it took delivery of three excavators that were placed in service mid-second quarter, while six new haul trucks were received and placed in service at the end of the period.
These additions replaced existing rental equipment that were returned early in the third quarter. During the third quarter, Guyana Goldfields expects to purchase and place into service two new larger excavators. This new equipment is expected to further reduce rental equipment requirements and operating costs, the statement said.
“During the second half of 2016, the company expects to realize the benefits of mining higher grade ore at Rory’s Knoll and reducing its mining costs as it transitions to a company owned mining fleet and substantially eliminates reliance on rental equipment. Other key areas of opportunity for reducing costs include a reduction in labour and reagent costs as mining and milling operations continue to attain steady state operations,” it said.
The firm also noted that the Board of Directors has authorised management to proceed with ordering long lead time items required to expand the Aurora Mine capacity from 5,000 tonnes per day (tpd) to 8,000 tpd, which is expected to be completed in 2017. In addition, management has been authorised by the Board of Directors to significantly reduce the company’s debt balance to be funded through a combination of free cash flow and net proceeds from the recently completed public offering.
The statement said that exploration efforts will be ramped up over the remainder of the year at the company’s Sulphur Rose deposit, located approximately 23 km from the Aurora Mine. In addition, the company will expand its review of exploration targets proximal to the Aurora Mine. Exploration activities in 2017 are expected to significantly ramp up and will be results driven, the statement said.
Gold has powered Guyana’s economy in the first half of this year following dismal performances in the other sectors. Last month, Minister of Natural Resources Raphael Trotman disclosed that 327,000 ounces of gold was declared at the end of June. He said this was far in excess of what had been forecast. According to the minister, it is projected that by the end of the year some 600,000 ounces would be declared.
The Ministry of Finance, in its Mid-Year Report on the economy had said that production in the gold industry reached 322,493 ounces during the first half of 2016, an increase of 94.3 percent over the same period in 2015. According to the figures provided, gold exports more than doubled compared with the first half of last year, rising from US$188.3 million to US$390.7 million.
The report said that overall gold production for 2016 is expected to be at an all-time high, rising from the budgeted 450,873 ounces to a projected 650,000 ounces.
Last year’s gold declaration was 451,900 ounces, up from 387,508 ounces in 2014. The increase had been attributed to the production by large mining companies, Guyana Goldfields and Troy Resources.
