The government last night announced that the agreement with Australian gold miner Troy Resources Limited has been cancelled and swift action has been taken to secure the Region Seven mining site.
The announcement followed a report in yesterday’s Stabroek News that Troy Resources appeared to have abandoned its Guyana operations without abiding by the terms of its agreement and for reclamation of the area which was mined at Karouni since 2015.
In a statement at around 10 last night, the Ministry of Natural Resources said that in light of Troy Resources Guyana Inc.’s failure to remedy its default concerning several matters, inclusive of the outstanding royalties, rental fees, non-compliance with the work programme, and matters relating to environmental management the government has taken necessary actions.
“The Karouni Mineral Agreement issued to Troy Resources Guyana Inc. (TRGI), Troy Resources Limited and Pharsalus Gold Inc., and the Mining Licence are now both cancelled and Terminated”, the statement said.
It gave a timeline for the key facts surrounding Troy’s presence here
● On October 16, 2014, the GoG entered into a Mineral Agreement with TRGI and other stakeholders, which centred on the development and operation of a mining project at the Karouni Property.
● TRGI commenced operations with the first gold poured in November 2015.
● After a few years of mining operations TRGI reportedly encountered “operational issues and required organisational restructuring.”
● The company went into “care and maintenance” in early 2021 and despite commitments to resume its operations, TRGI failed to do so and even approached the government with proposals to liquidate its assets. This was rejected for several reasons including the fact that the payment of outstanding sums was not being addressed promptly under the proposal. However, the GoG remained engaged with a view to have mining restarted and outstanding debts settled.
● TRGI owes the government above $2.6 billion for unpaid royalties. This substantial financial liability, coupled with other concerns, has led to the cancellation of the licence. The Office of the Attorney General has taken the necessary steps to have these sums paid.
● It is important to note that despite the Guyana Gold Board’s (GGB) disapproval and the suspension of TRGI’s exports due to outstanding royalties owed, the Ministry of Finance in 2019, under the former APNU+AFC administration took the decision to override the GGB export restrictions and thus TRGI was allowed to resume exports, hence the royalties owed to the GoG.
● Furthermore, the GoG learnt that Troy Resources had reportedly entered into receivership and initiated the process of liquidating its assets and holdings.
● The lack of management and abandonment of the site by TRGI led to the raiding of the mining lands, larceny of items, destruction of key assets, and a series of other illegal activities.
● A significant number of companies and sub-contractors are reported to be owed millions of dollars for goods and services provided and were awaiting payment from TRGI. We have seen reports of workers who were not paid for extended periods, these matters are engaging the Ministry of Labour.
● Cognisant of the above-mentioned information the Government of Guyana has cancelled and terminated the Mineral Agreement and Mining License. Further, the Government has taken possession of the mining site and all remaining materials.
To date, the statement said that the government has taken proactive measures to ensure the Karouni mining site remains viable and does not fall into ruin. The GGMC, Corp of Wardens, Guyana Revenue Authority (GRA) and the Guyana Police Force (GPF) are all involved in the monitoring and enforcement patrols at the Karouni site, the statement said.
The collapse of this gold mining operation would be a major embarrassment to this administration and the preceding two. In 2014, the Ramotar administration had inked the deal with great expectations.
Troy Resources had commenced operations in Guyana in 2015 under the Granger administration in a blaze of high expectations and encountered major difficulties in October, 2019 after geologist, Ryan Taylor, died after a cave that he was working in collapsed. The then APNU+AFC government caused the mine to be closed for an investigation and hundreds of workers were laid off. The virtual abandonment of the operations under this government will raise numerous questions.
In November of last year, Troy Resources had announced plans to return to gold mining and production at its Smarts Underground 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.
This was not to be and the company then advertised that it was liquidating its assets which prompted an August 11, 2023 report by Stabroek News that the company was closing its gold mining operations in Guyana as it did not find the market feasible anymore. It is unclear what action the Irfaan Ali government took between that report and yesterday to ensure that the company’s debt to the state was taken care or in the absence of that, legal action instituted.
President Irfaan Ali had told this newspaper that Guyana “will pursue all legal avenues,” when he had been asked about this matter last month.
But how government oversight agencies will tackle the contractual agreements relating to the environment and the statutory mine closure plan, remains unclear.
Government had said that it would not spare penalties as matters of pollution or destruction to the environment would also face the full brunt of the law.
This newspaper last month reported that a demand letter was sent to the company, giving it 60 days to pay up some $2.6 billion it owes in royalties. Otherwise, the government would exercise “its rights of pursuing the available legal and equitable remedies under the contract and law, including but not limited to recovery of all monies owed, interests thereon, damages as compensation, restitution and termination of the agreement and licences.”
Against the background of the Troy move, the government said that it was sending a message to all foreign investors that although it welcomes their investments, it will not allow exploitation. Pointing to the newly assented to Foreign Judgments Act, government said it will not allow any foreign company to believe it can just walk away from its contractual obligations and will pursue legal avenues to retrieve this country’s due.
“While we welcome foreign investments and we believe that foreign investment is crucial to the development of our country, these investors must appreciate that we are a country governed by the rule of law and they must comply with the laws of Guyana. And more specifically, they are obliged to discharge the letter and spirit of their… duties, both to the state and to Guyanese, with whom they interact in their transactions,” Attorney General Anil Nandlall declared, as he emphasised that the Ali government’s policy posture is one that protects Guyanese and Guyana.
On the environmental side of the contract, it stipulates that before leaving the country, Troy Resources must legally comply with a land reclamation process and other environmental obligations, as set out by the Environmental Protection Agency.
According to the contract, Troy Resources may terminate “this agreement by giving six months written notice to the Government of Guyana and the Commission [GGMC]” 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, [it 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.
Troy Resources’ last reported production figure of 2,653 ounces of gold was in February 2021 up from 2,113 ounces in January 2021, putting production for the first two months of the year at 4,766 ounces compared to 4,195 ounces for the last quarter of 2020. By contrast, and prior to encountering major difficulties, Troy Resources produced 58,118 ounces of gold in 2018 and 70,207 ounces in 2017. As of September that year, Troy had had 450 employees. When mining resumed eventually, the operation was affected by the COVID-19 pandemic. One source told Stabroek News that since the company’s Managing Director, Ken Nilsson passed away in 2021, “the Guyana operations never recovered”.
