Canadian-owned Guyana Goldfields Inc (GGI) has estimated its total gold reserves at 2.24 million ounces and an estimated total gold contained in Measured and Indicated Mineral Resources (inclusive of Mineral Reserves) of 3.82 million ounces and is betting heavily on its proposed underground mine.
According to a GGI release, this statement was part of a report by the company on Friday in Toronto, Canada where the company announced the results of an updated Mineral Resources and Mineral Reserves estimate and an updated life of mine (LOM) plan on its 100% owned Aurora Gold Mine located in Guyana.
In its summary, GGI stated that its Measured and Indicated Mineral Resources (inclusive of Mineral Reserves) of 3.82 million ounces represented a 2% reduction in year-over-year total Mineral Reserves which were estimated using a gold price of US$1,200/oz, and Mineral Resources using a gold price of US$1,500/oz, consistent with the prior year’s gold price assumptions.
The LOM is estimated at 14 years and includes a transition of the mine from open pit to underground operations by mid-2021. Gold production is estimated to average approximately 170,000 ounces per year for the first five full calendar years (2022-2026) of underground operation. Under the proposed plan, the company states that the maximum depth of its pit will be reduced by 65 metres and the majority of the ore that was previously contemplated to be mined from the open pit would be recovered from underground operations. This approach to the ore body, it says, “is now considered more practical than continued deepening of the pit due to extensive pit stripping requirements and timing issues related to continuous ore release, among other factors.”
With regard to financing, the report states that initial capital expenditures of US$141 million (inclusive of 20% contingency) to develop the underground mine in 2020 and 2021 are proposed “….to be partially funded by cashflows from the operations.” However, it added, “the company continues to explore financing and strategic alternatives to support the execution of the LOM Plan and is in discussions with various financing parties.” The peak funding requirement is expected to be approximately US$100 million which includes the amounts required for additional waste stripping for the open pit and for underground development.
According to GGI, this update “represents the result of a comprehensive mine, production and cost savings plan review announced by the Company on October 30, 2019 and assisted by Roscoe Postle Associates Inc as independent technical consultant.” It did however caution that the proposed LOM plan was developed before the onset of the Covid-19 virus pandemic and therefore does not take into account “any potential delays, deferrals, reduced productivity or other constraints on operations or financing that may arise from the rapidly changing world reaction to the virus.”
GGI Chief Executive Officer, Alan Pangbourne, in expressing his optimism declared, “We believe that the new LOM Plan contemplates an attractive path forward, contingent on obtaining adequate funding to execute against it,” adding, “We look forward to negotiating a financing arrangement which will enable the Company to deliver the next stage of its growth by executing on the LOM Plan contained in RPA’s [Roscoe Postle Associates] report.”
Open pit and underground Mineral Reserves were estimated using a $1,200/oz gold price (the same as the company’s December 31, 2018 estimate), incorporating updated and supportable operating cost assumptions, pit slope angles, underground development rates, dilution and mining loss factors, gold recovery and mining constraints. Final designs were developed to optimize mine design parameters and ore production schedules, the release added.
On March 18 this year, Guyana Goldfields announced that as a result of the coronavirus travel restrictions in and out of Guyana, the Company had temporarily suspended underground development at its Aurora Gold Mine in Region Seven.
However open pit and processing plant operations were unaffected, the company said in a statement.
On February 25th this year, Guyana Goldfields announced its fourth quarter and full year 2019 production figures showing total output lower than that of 2018.
The company which had last year seen a battle for control of the board, a plunging share price and a strike by workers, also said there will be an ore-supply gap of four to six months and it needed further financing for additional waste stripping at its open pit and for underground development.
According to a Guyana Goldfields release on February 25th, gold production at the company’s mine totaled 28,300 ounces in the fourth quarter of 2019, up 28% from 22,100 ounces in the third quarter of 2019 but down 28% from 39,100 ounces in the fourth quarter of 2018. For the full year of 2019, gold production totaled 124,200 ounces, down 17% from 150,400 ounces a year earlier.
Gold production included 1,500 ounces for the fourth quarter and 1,600 ounces produced for the full year from the company’s underground project development which is considered pre-commercial production ounces.
