The large scale mining contract that Australia-headquartered mining company, Troy Resources, has with Guyana stipulates that it must legally comply with a land reclamation process and other environmental obligations, as set out by the Environmental Protection Agency, before leaving the country.
But with the abrupt closure of its mining operations, the company’s compliance with its legal obligations remains unclear.
Though the company announced that it was moving in the direction to liquidate its assets, it is still to notify the government of its exit plans, which makes unclear what aspects of the contract would be enforced and against whom, given that none of the foreign directors are in Guyana. The Contract says that Troy Resources may terminate “this Agreement by giving six (6) months written notice to the GoG and the Commission” provided that it “shall have the right to retract in writing its notice at any time prior to the expiry of such notice period.” The GOG has, under its rights, the entitlement to also terminate the agreement if the company breaches or defaults on any of its commitments. It said that in the case of termination, and “subject to clause 18.5 hereof, [shall] remove and otherwise deal with its property in Guyana as provided in clause 18.6; 18.4.2 restore the areas used and damaged as provided in clause 6.4 and the ESIA” and “pay any fees due hereunder up to the time the termination becomes effective; submit complete reports and evaluations, maps, assays, samples, drilling tests and related articles to the Commission.”
Before the company is entitled to remove its property from Guyana and before any payments due to it are returned, it must “obtain from the Commission a certificate of compliance with its obligations under 18.4 hereof.” In the event of the termination of the Agreement in accordance with clauses 18.1, 18.2 or 18.3, the contract says that the following provisions shall apply: “All fixed plant, equipment and other immovable assets of the “Company” and all materials, supplies, vehicles and other moveable assets of the “Company” shall be offered for sale at their fair market value to the Government within 30 days from the effective date of termination.”
“If the Government does not accept such offer within 30 days from the date thereof, the “Company” shall sell, remove or otherwise dispose of all such property prior to the expiry of 120 days after the effective date of such termination; all such property not so sold, removed or otherwise disposed of shall become the property of Guyana without charge.”
But not notwithstanding the foregoing, upon termination of the Agreement, “the Government may by notice to the “Company” require the removal or destruction of any assets of the “Company” located in the Mining Area, and if the “Company” does not remove or destroy such assets within a period of 120 days from the date of the Government’s notice to that effect, the Government may effect such removal or destruction and the “Company” shall assume the reasonable costs, which must have been incurred by the Government at competitive rates, of such removal or destruction.” No formal notice has yet been issued to government and Minister of Natural Resources Vickram Bharrat told the Stabroek News that the Guyana Revenue Authority was preparing to “take over” the company.
The contract says that “upon the termination of this Agreement, the “Company” shall leave the Mining Area and everything thereon in safe condition in accordance with the closure plan as set out in the ESIA as updated and approved from time to time.”
Further it adds, “In this connection, unless the Government otherwise directs, the “Company” shall in accordance with good mining industry practice, make safe all holes and excavations to the reasonable satisfaction of the Government.
In the event that the “Company” fails to do so, the Government may perform such acts as may be necessary to make the Mining Area safe and the “Company” shall assume the reasonable costs, which must have been incurred by the Government at competitive rates, of said acts. To the extent that the “Company” complies with the terms of the Final Economic Assessment and the ESIA in the form accepted by the Commission in respect of the matters described in this clause 18.6(c), the “Company” shall be deemed to have fulfilled their obligations hereunder; and (d) the “Company” shall have the right to enter upon the Mining Area for the aforesaid purposes, subject to the rights of surface owners or others, for a period of one (1) year from the effective date of termination or such longer period as the “Company” may reasonably request.”
In the event that Troy Resources decides to suspend operations under the relevant provisions of clause 4.3 of the contract, the agreement stipulates that it “shall not be entitled to dispose, by sale or otherwise, of its Assets referred to in clause 18.6(c).” In a notice of liquidation of assets, in Stabroek News’ Thursday edition, the company announced the sale of its assets and sources told this newspaper that the company has basically shuttered its Guyana operations and is waiting on the administrator to give word of the final day…”
Local company representative, Michael Rodrigues, referred all questions to the Australia head office. There was no notice on the company’s website where plans are normally posted. Assets to be sold comprise mining and exploration equipment, shipping containers, catering and accommodation equipment and facilities and office equipment and furniture. At the Karouni site in Region 7, this newspaper understands that there has been daily theft of equipment which resulted from scaled down security and persons in the surrounding areas were aware of this.
Sources also told Stabroek News that while it is premature for government to say what the future is for the lands the company holds permits for, it is assessing the contract to determine obligations and penalties and may look at re-leasing the area for mining.
“If any dispute or conflict, contractual or not in nature, arises in connection with the Project or under this Agreement or any Schedule, the Mining Licence or the Environmental Authorization or the breach, termination, validity, performance or interpretation thereof (any of such occurrences being hereinafter referred to as a “Dispute”) the Parties shall resolve such dispute in the manner hereinafter set forth in this article 17”, the contract signed in December of 2013 when Pharsalus was rebranded Troy Resources states.
It points out that any Party to the Dispute may commence proceedings under the said article 17, “by convening a meeting between high-ranking representatives of the Parties (or such other representatives specifically designated for such purpose). Such representatives shall meet within 30 days from the date of the notice convening the meeting and shall use their best efforts to achieve a negotiated settlement to the Dispute in good faith for a period not exceeding ninety (90) days from the date of the aforesaid notice.”
It added: “Any Dispute, except for matters under article 9, which is not resolved pursuant to 17.3 hereof or otherwise shall be referred for determination to final and binding arbitration, under the Rules of the International Arbitration Rules (the “Rules”) of the American Arbitration Association (the “Court”) applicable as of the date of the Dispute provided that the Rules may be supplemented, if required and applicable, by international law, including general principles of law recognized by civilized nations and principles applicable to contracts between States and foreign private parties, to the extent necessary to give full effect to the true intentions of the Parties as set forth in this Agreement and its Schedules. Notwithstanding the foregoing, the arbitration shall be conducted in accordance with the following provisions,” the contract added.
This newspaper understands that the liquidation process was triggered after the deadline for payment of taxes owed had expired and it had been notified that the Guyana Revenue Authority was preparing to levy.
“The GRA is moving to take over now,” the Minister of Natural Resources had said on Thursday. “They owe taxes and no word has been said on how it will be paid. Government has also not been told as yet of what their plans are but we see them trying to sell assets. If they can’t meet their [contractual] obligations, then the state could freeze those assets,” a government source has told Stabroek News while another said that when taxes are owed, assets of the Company will be seized. As to the fate of the employees, they too have not been officially notified of Troy’s exit plans and what benefits they might be entitled to, even as many of them are currently owed salaries, sources informed. “Nothing has changed from yesterday. Australia has to officially give the directive. We are supposed to have a meeting with the administrator to know what the next steps are but that has not yet happened,” one source explained.
The company still has not replied to questions from this newspaper. This newspaper reported that the company is closing its gold mining operations in Guyana as it no longer finds the market feasible anymore, according to sources. Troy Resources had commenced major mining operations in Guyana in 2015 in a blaze of high expectations. It encountered serious difficulties in October, 2019 after geologist, Ryan Taylor, died in a cave that he was working in. The then APNU+AFC government caused the mine to be closed for an investigation and hundreds of workers were laid off. In November of last year, Troy Resources had announced plans to return to gold mining and production at its Smarts Under-ground Site in the fourth quarter of 2023 and had said that it was in the preparatory phase of its resumption timeline. The Australian mining company had also notified that it was revising its business model and was looking at an immediate capital investment of US$10 million for its Karouni operations.
