Canadian gold miner Guyana Goldfields Incorporated (GGI) has informed the employees of the Aurora Gold Mines (AGM) that a significant number will be made redundant since the size of the workforce will be reduced over the next month to facilitate a transition from open pit to underground mining.
While the exact number of workers affected is still not known sources familiar with the company have estimated the number to be in the hundreds.
“It could be as many as 85% of all employees and we have about 530 employees most of whom are Guyanese. We do not have the final number, so it could be lower or higher,” Senior Vice President of Strategy and Corporate Affairs, Perry Holloway told Stabroek News yesterday.
The company has indicated that later this week it will advise on the timing and positions impacted but explained that the reduction in workforce is expected to take place between mid-May 2020 and the end of June 2020.
GGI is in the process of being taken over by Canadian silver miner Silvercorp pending the approval of shareholders.
In a memorandum signed by Chief Executive Officer Alan Pangbourne, GGI stated that as part of its transition from open pit mining to underground mining there will be an interruption in operations at the Aurora Mine site in the Cuyuni/Mazaruni and a reduction in the workforce.
“This reduction in the workforce will take place at all levels including both national and expatriate employees as the company will transition its mining operation into a state of Care and Maintenance for an undetermined period,” the memo states.
It says that the “undetermined” timeline results from multiple factors including financial conditions, COVID-19 issues, travel restrictions, and pending approval from Guyana’s Environmental Protection Agency of their Revised Environmental and Social Impact Assessment (ESIA) permit for underground mining.
According to Holloway, the company is running out of gold in the open pit mine making the operation unprofitable.
‘We need to go to underground mining [a transition which] depends on financing and COVID-19,” he said, adding that because of the pandemic the underground exploration was halted in March.
Pangbourne has also stated that these reasons have made it impossible to ensure business continuity explaining that the company has reached the point where it needs to institute manpower adjustments.
He explained that the company will follow the Termination of Employment and Severance Pay Act and will make those positions which are no longer needed redundant.
“Those of you affected will be paid their statutory notice period and severance entitlements in keeping with the Act. This will include recognition of your years of service with AGM, as applicable. We will ensure that each of you will be treated in a respectful and thoughtful manner,” he promised.
This aspect of the statement has found favour with the National Mining Workers’ Union (NMWU) which holds a certificate of recognition from AGM.
According to President of the Union, Sherwyn Downer if AGM does properly compensate the workers NMWU will be satisfied for now.
“We accept this as opposed to having workers’ years of service with AGM roll over to Silvercorp metal without a guarantee or mechanism to protect the employees’ years of service. We however would like to see them given first preference for re-employment in the new mine,” he explained.
This announcement that AGM is moving into “care and maintenance” comes a mere two weeks after the disclosure on April 26 that Canadian silver miner Silvercorp Metals Inc is moving to buy GGI.
According to a press statement from the two companies they have entered into a CDN$105m definitive agreement whereby Silvercorp – with China-based silver mining operations – will acquire all of the issued and outstanding shares of Canadian gold miner, Guyana Goldfields by way of a plan of arrangement under the Canada Business Corporations Act.
Holloway however cautioned that until the offer has been accepted by the company’s shareholders the deal cannot move ahead.
“None of the things in the deal will happen until two thirds of the shareholders have approved and the shareholders meeting is scheduled for June,” he indicated.
The new measures have also come one week after GGI announced that gold output for the first quarter of this year was 23% less than the corresponding period last year. At the time the company also announced the demobilisation of its open pit contractor, Stracon of Peru.
In recent years Guyana Goldfields has had to grapple with various problems including a slumping stock price, diminished production, regulatory issues over underground mining and a boardroom battle for control of the company.
GGI’s inaugural gold bar in August 2015 from the Aurora mine came 19 years after its first foray into the Cuyuni region in search for gold and US$249 million in capital costs.
The company at the time said it was targeting production of 3.29 million ounces of the precious metal over 17 years with at least 500 jobs and projected corporate income tax to the economy of US$509 million.
