Amid growing questions as to how a large-scale gold mining company had been able to depart the country leaving a royalty debt of $2.6b, it has been disclosed that a repayment plan it put forward had been rejected by the GRA and that correspondence to key ministries on the matter went unanswered.
Already owing US$6.8 million in royalties to this country, Australian mining company Troy Resources Guyana Inc (TRGI) had approached the Guyana Gold Board proposing that their Value Added Tax (VAT) returns be transferred to offset royalties associated with gold production exports, a proposal which was rejected by the Guyana Revenue Authority (GRA), sources say.
The company had also asked government for its outstanding balance to be converted into equity but this too was rejected by government.
“TRGI faced a substantial accrued royalties balance owed to the GoG [Government of Guyana], amounting to US$6,857,461. This liability had built up between 2018 and July 2021 due to the company’s operational restructuring and depletion of ore reserves, leading to the suspension of all production activities. During that period, TRGI engaged in discussions with the Guyana Gold Board [GGB] to resolve this issue,” a source close to the project stated.
“An agreement was reached to utilize TRGI’s Value Added Tax (VAT) returns to offset royalties associated with gold production exports, with royalty payments for exports being honoured as they accrued… Unfortunately, a setback occurred when the Guyana Revenue Authority [GRA] denied TRGI’s VAT claims for the years 2018, 2019, and 2020. In response to this denial, TRGI issued a ‘Notice of Default,’” the source added.
A former top GGB official acknowledged that then General Manager of the company, Eondrene Thompson, had been written to in early 2019 and told of Troy’s proposal “but don’t know the details… because the Gold Board has no say whatsoever in the actions of the Guyana Revenue Authority.”
Asked if the GGB had tried to intervene on behalf of Troy Resources, the former official said that, “it would have been brazen and boldfaced for us to have done that.”
Troy in turn issued a notice of default in January of 2021, and later in April issued a Notice of Dispute to the Minister of Natural Resources, Ministry of Finance, and the Guyana Geology and Mines Commission (GGMC). It was also forwarded to the GRA and the Attorney General’s Chambers.
Sources have confirmed that the GGMC had responded saying that the matter would be referred to the Ministry of Finance.
Blackout
However, after the GGMC correspondence, company sources said that there was a communications blackout by government.
The company, sources say, had even written to Finance Minister Dr Ashni Singh last year, outlining a plan for the deferral and repayment of the outstanding debt and subsequently offered a four per cent monthly interest payment on top of the royalties owed. The proposal entailed a deferral of the full amount of accrued royalties owed to this country until January 31, 2024, and it also too went unanswered.
“The lack of response to this proposal has further intensified the uncertainty surrounding the resolution of the outstanding royalty’s issue,” one source with knowledge of the issue from the company’s standpoint said.
The source said that a potential turning point emerged when an international mining company, looking to invest in Guyana, expressed interest in purchasing TRGI and taking over its debt but wanted a payment plan agreement with government and this had been conveyed to government in March of this year.
“Troy Australia agreed to the offer, but approval is required by the Minister of Natural Resources who was informed by both the investing mining company and TRGI. Continual request for feedback from both companies from the Minister went unanswered. A sustainable payment plan for the royalties aligned with gold production was generated and submitted by the international company in which once again, no response was given by the Minister nor the ministry,” the source said.
However, in May of this year, the company had a meeting with the Minister of Natural Resources, Vickram Bharrat, two other persons and a TRGI representative.
“The government conveyed its stance that the proposed deal with the investor was not acceptable due to the extended payment timeline not being in a timely manner and was never officially responded to by the actual investor. They emphasized the need for a shorter royalty payment plan and expressed concerns about the protracted nature of the proposed deal,” the source said.
But while acknowledging TRGI’s breaches of various agreements, the government expressed its reluctance to seize assets or revoke their licence, the source said. “They viewed such actions as burdensome and preferred a solution that would allow the project to resume operations,” the source added while pointing to a meeting held in May of this year.
And while the company announced plans to sell assets without telling government, the source is adamant that at no point in time did TRGI evade its responsibilities to its stakeholders, including the government. “The company consistently expressed its commitment to repaying the outstanding liabilities, as indicated through verbal and written communications. This commitment extended to all obligations, whether in the form of immediate payments or an agreed 12-month deferral to facilitate the company’s relisting on the ASX,” the source said.
The source believes that “the Government of Guyana has shown a lack of support and responsiveness regarding the accrued debt issue dating back to 2018, despite prior agreements that went unfulfilled by both parties. Key agencies and influential figures from both sides, notably the current government, ignored and evaded addressing this matter right up to the final days of TRGI’s existence as a company.”
A government source said that “the company’s recollection of events is correct in terms of meetings and that the issue of a payment plan was ventilated. However, what the company is not saying is that this government [the PPP/C] has tried to reach an agreement but their [the company’s] proposals were always selfish.”
“How can you allow a company so deep in debt to continue to ask for more? The agreement as is, is no different from any other company and what goes for Peter must go for Paul. They can’t go to any other country and propose that nonsense….,” the source added.
`Dropped the ball
Vice President Bharrat Jagdeo has said that his government accepts that it is partially to be blamed for waiting to collect on royalties from the company. But he was quick to point out that the company had the bulk of the royalties that was owed during the 2016 to 2020 period when his government was not in office, coupled with the facts that the company had already ceased works.
“I am accepting that we probably dropped the ball too,” Jagdeo told a press conference on Thursday.
Up to 2018, he said that the royalties owed had totaled $1.5 billion and that then 2019 and 2020 had to be added to that sum. “So that is the bulk of the money already made there in unpaid royalties in 2018, he contended.
And when the PPP/C took office, he said that it had faced issues such as COVID and finding heath solutions which were paramount at that time.
Currently, Jagdeo said that government was searching for assets owned by the company.
A high-value asset of the company is a US$5 million grinding mill the company had bought in 2014. When it was bought the company called it a milestone achievement, both for itself and the development in Guyana.
The Natural Resources Minister told the Sunday Stabroek that “The government of Guyana has taken possession of the entire property, including the processing mill/plant, camp site… et cetera.”
However, he pointed out that the property was vandalised after Troy’s unpaid security had abandoned the site.
On October 16th, government announced that the agreement with the Australian gold mining company had been cancelled, with swift action taken to secure the Region Seven mining site.
The announcement followed a report the day before in the Stabroek News that Troy Resources appeared to have abandoned its Guyana operations without abiding by the terms of its agreement and for the reclamation of the area which was mined at Karouni since 2015.
Aside from royalties, Troy has also departed without fulfilling its mine site obligations and reclamation of the area. These also have a significant cost attached.
At the height of its operations, Troy employed hundreds of workers and produced thousands of ounces of gold per annum.
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.
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.
