-company aiming for 350,000 ounces per year by 2028
G Mining Ventures (GMIN) which this year entered into an agreement with Reunion Gold Corporation (RGD) of Canada for underground and open pit gold mining at the Oko West project in Region Seven, yesterday announced it will pay an average 6.5% in royalty from the 350,000 ounces it projects to produce annually from around 2028.
The royalty rate had not been previously disclosed in the agreement struck this year with government and will be 8% for open pit mining and 3% for underground mining.
With a development capital expenditure pegged at US$936 million over its projected 13-year span for the US$1.5 billion project, the company also said that it will create 1,500 jobs while building capacity and training in the region in collaboration with the Board of Industrial Training (BIT).
“We anticipate the production of over 350,000 ounces a year, the ripple effect which will be the creation of 1,500 jobs, which will focus on local employment and capacity building. Transparency is a core value for us and it drives everything we do,” Country Manager Guyana, Bjourn Jeune, told an information forum hosted by the company yesterday at the Pegasus Corporate Suites in Kingston, Georgetown.
Chief Executive Officer of G Mining Ventures, Louis-Pierre Gignac, gave an overview of the project he termed, “Guyana’s next great gold mine” which covers a 44-kilometre area and for which 30% of the mining will be underground and 70% open pit.
He also provided a breakdown of capital expenditure which showed that US$71 million will go towards infrastructure, US$118 million for power and electrical works, US$16 million for water management, US$46 million for surface operations, US$129 million for mining, US$190 million for the processing plant, US$107 million for construction indirects, $11 million for general services, with pre-production, start up, and commissioning taking US$76 million. The company also had a US$100 million contingency fund.
He also pointed out that the royalty rate will be an average of 6.5% and noted that the projections and estimations are all based on a gold price of US$1,950 per ounce and an All-In Sustaining Cost (AISC) of US$986 dollars. Yesterday’s gold price was US$2,657 per ounce.
Gignac explained that the project, located 95 kilometers south of Guyana’s capital, Georgetown, is currently at the development stage with its PEA [Preliminary Economic Assessment] published in September of this year and “is amongst highest-grade open-pit deposits in the Guyana Shield.”
He said that GMIN hopes to submit an ESIA to the Environmental Protection Agency sometime later this month or before the end of the year.
The company’s Definitive Feasibility Study is planned for the first quarter of next year and it hopes to get the project into operation by 2026 and production by 2028. He noted that a mine of this type can take 17 years to get into production.
Present yesterday for government was Minister of Home Affairs Robeson Benn, a trained geologist who was at the Guyana Geology and Mines Com-mission and has insight into the former Omai Gold Mines Limited (OGML) operations. Several of the principals of OGML are part of GMIN.
He assured that government is ready to work with the company, as part of its economic diversification plan, and that support shows that the administration is not wholly reliant on oil and gas.
Benn said that he hoped that the project will extend more than a decade beyond the 13-year lifespan and that the company can count on the support of government. “Government is fully on board and we hope that the 13 years is broadened into 25 or 30 years,” he said.
“…We have kept our promise of re-energising the national resource sector,” Benn also noted.
The 1,500-person job opportunities, he reasoned, should be lauded and said that that both men and women should take up the opportunities afforded.
The Minister noted that Omai’s [Gold Mines] workforce in the 1990s was 93% Guyanese.
Minister of Labour, Joseph Hamilton, also pledged government’s support as he urged the company to adhere to strict occupational health and safety measures and practices.
He said too that the collaboration with the Board of Industrial Training was one that would see growth and development for this nation’s people, especially in the region and that government would do its part to make it a reality.
‘Most attractive’
In April of this year, RGD and GMIN announced, via a press release, that they had struck a deal for gold mining in Oko West.
The deal, they noted, would see participation from several leading figures from the former Omai Gold Mines Limited (OGML) which extracted the precious metal over a number of years at its mine site near the Omai Creek. Louis Pierre Gignac’s father, Louis Gignac, was the head of Cambior Inc, the major shareholder in OGML.
The release had said that through the transaction, GMIN will acquire RGD’s flagship Oko West Project in the Cuyuni/Mazaruni, described as one of the most attractive mining jurisdictions on the continent.
Noted too was that GMIN planned to move Oko West rapidly through technical studies to a construction decision, utilising the considerable amount of exploration, development, and permitting work that has already been completed by RGD, supported by the expected free cash flow from the Tocantinzinho Gold Project in Para, Brazil, which is trending on schedule and on budget for commercial production in the second half of 2024.
Under the terms of the Agreement, the release said that GMIN and RGD shareholders will receive common shares of a newly formed company (the New GMIN) equivalent to RGD shareholders being issued 0.285 GMIN common shares for each RGD common share. In addition, RGD shareholders will receive common shares in a newly created gold explorer (SpinCo) that will hold all of RGD’s assets other than Oko West. GMIN has agreed to fund SpinCo with CA$15 million.
RGD shareholders will receive estimated consideration of CA$0.65 per RGD common share, an estimated transaction equity value of CA$875 million, based on the closing price of GMIN common shares on the Toronto Stock Exchange (TSX) on April 19, 2024, excluding the value of the SpinCo consideration. The release said that this represents a premium of 29% based on GMIN’s and RGD’s closing price and 10-day volume-weighted average price on the TSX and TSX Venture Exchange as at April 19, 2024, respectively, without accounting for value of SpinCo.
Upon completion of the Transaction, the release said that existing GMIN and RGD shareholders will own approximately 57% and 43% of the combined company on a fully-diluted in-the-money basis prior to the concurrent US$50 million equity financing, and the combined company and RGD shareholders will own 19.9% and 80.1%, respectively, of the outstanding common shares of SpinCo.
The release said that the GMIN team, including through the Gignac family-owned GMS [G Mining Services], has an impressive track-record of executing world-class projects in the Guiana Shield region, on or ahead of schedule and on or below budget, to generate industry leading returns for its stakeholders.
It said that the principals of GMS have been continuously involved in the region since Louis Gignac led Cambior Inc to build its first South American operation in Guyana in the early 1990s.
SpinCo
SpinCo’s focus, the release said, will be on acquiring and exploring gold mineral properties in Guyana outside of a 20-kilometre area of interest surrounding Oko West, and in Suriname. GMIN has agreed to fund SpinCo with CA$15 million and in return the combined company will obtain a 19.9% interest in SpinCo.
The transaction will be completed pursuant to a court-approved plan of arrangement under the Canada Business Corporations Act. To effect the transaction, New GMIN will acquire all of the issued and outstanding shares of GMIN and RGD. New GMIN, to be renamed G Mining Ventures Corp, will apply for listing on the TSX, the release said.
RGD will be entitled to nominate two members to the board of directors of New GMIN, in addition to the appointment of the common director, David Fennell, to the newly created role of Vice Chairman.
The New GMIN’s board of directors, the announcement said, was expected to comprise a total of nine members (5 GMIN nominees, 3 RGD nominees and 1 La Mancha nominee), including Louis Gignac as Chairman and Louis-Pierre Gignac as director, president, and CEO.
‘Not open for re-negotiation’
Yesterday, the junior Gignac presented the new nine-member board complement to the forum. The company also fielded questions from attendees.
Questioned by Stabroek News on the inherited agreement with Reunion and if it would be re-negotiated, the company was swift to rule it out, as Gignac stressed that it was “not open for re-negotiation.”
On accountability and as to how government planned to ensure that the gold mine production was correctly declared, and for an explanation of the export process, no one answered the question, although Benn said that the government was transparent with Omai Gold Mines and will continue to do the same with GMIN.
Minister of Natural Resources, Vickram Bharrat, who was absent from the event for urgent personal reasons, was asked via WhatsApp and he explained that the declaration and export processes will be the same as is done for the large gold mining companies such as Aurora Gold Mines.
It was explained to this newspaper that when large-scale gold mining companies have exports, they would inform the Guyana Gold Board and provide an aircraft and cover the expenses needed to get to their operations. At that site, an official explained that “the Gold Board does the same as it does in Georgetown. It reviews the documents, weighs the gold, inspects the seals, because there is also CANU and GRA, and then they seal and sign off. The exporter then ships the sealed bars to the airport for export. It goes to their refinery and they decide on sales. We collect the royalties which are paid to the GRA and in some instances it goes to the Gold Board, not as Gold Board revenue but for the government. The Gold Board is just like a cashier in that instance.”
On the question of safeguards from cyanide spills given the 1995 OGML dam collapse that fouled the Omai Creek and the Essequibo River, GMIN’s head assured that it follows strict global practices as can be seen in its Brazil operation which has had a stellar record.
It was also pointed out by Stabroek News to Gignac – who was an intern at the Omai mine in 1998 – that OGML never paid corporation tax throughout its operations here as it said it bever turned a profit. He was asked whether the same might be expected of GMIN’s operations. Gignac replied that OGML operated in a milieu where the average gold price hovered around US$300 per ounce, a far cry from the situation today.
Geologist, Marcel Cameron noted the comparisons with the company’s Brazil Tocantinzinho operations, as he pointed to the AISC or production cost variations in the two countries where here it was higher by US$300 (US$986 here and US$681 in Brazil) and questioned why.
GMIN explained that the main factors are because power for the Brazil operations is cheaper as it is sourced from their grid but here they would have to find their own supply. Another factor was that part of the operations here would be underground.
