Guyana has issued its first large-scale mining licence in the gold sector since 1991 – giving Guyana Goldfields (GUY-T) the permission the company needs to build and operate its Aurora project.
Terms of the licence include a 5% mining royalty on gold sales at a gold price of US$1,000 per oz. or less, and an 8% mining royalty on gold sales at a gold price over US$1,000 per oz. The corporate income tax rate has been set at 30%. The agreement also outlined duty and value-added tax exemptions on equipment and material imports required for continuing operations at the project, including the planned port facility, road and power improvements, and the construction and operation of the mine. The licence is valid for an initial 20-year term with provisions for extension.
Adam Graf, a director at New York-based investment bank Dahlman Rose & Company, said in a note that the mining licence “sets the stage for other future large-scale mining operations in Guyana,” and has a “buy” rating on Guyana Goldfields with a target price of $17.68 per share and an expected return of 119%.
At presstime the company traded at $8.40 per share within a 52-week range of $6.82-$10.95. Guyana Goldfields has 83.71 million shares outstanding.
The Aurora project has measured and indicated resources of 47 million tonnes grading 3.83 grams gold per tonne for 5.71
million contained oz. gold. The company expects to file a revised resource estimate in mid-December, followed by a completed
feasibility study in mid-January 2012.
Guyana Goldfields says construction on the mine-site facilities and mill will begin in next year’s first quarter and be completed over 24 months. The mine and mill are expected to operate in the first quarter of 2014.
The Aurora property holds a number of gold deposits on the eastern side of the Aurora zoned instrusion in the Guiana Shield’s Cuyuni greenstone belt in the Amazon craton.
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