The Guyanese mining sector is looking to Canada for investment and support as the South American nation moves to further develop its mineral resources.
Geologically, Guyana belongs to the same Guiana-Shield geological setting as western-neighbour Venezuela, which has recorded more than 100 million oz. in total gold discoveries over the past 20 years.
“When a lot of the early work was being done in Venezuela in the 1980s, Venezuela was seen as being more politically friendly. Guyana at that time had a socialist government that wasn’t all that welcoming to the international mining community,” said Lawrence Roulston, editor at Resource Opportunities, in an April 2011 interview with Mining Markets. “So the mining industry naturally took the easier path and went into Venezuela and made a lot of discoveries, and Guyana just fell by the wayside.”
Guyana’s government is trying to raise the profile and accessibility of the country’s resource sector. A Guyanese delegation, led by Natural Resources and Environment Minister Robert Persaud, attended the Prospectors and Developers Association of Canada (PDAC) conference in Toronto in March.
“We have close to 27 Canadian companies, a lot of them in the business of exploration and prospecting in gold, as well as oil and gas and manganese,” Persaud said during a news briefing before the conference. “And there’s also some interest in new areas because while we’ve been doing well with gold mining, we also want to diversify our portfolio, and we see a lot of interest from Canada.”
He outlined Guyana’s plans to join the Extractive Industries Transparency Initiative, and its joint-venture negotiations with a foreign consortium to develop a gold refinery in the country.
In a speech at the PDAC, Canadian High Commissioner to Guyana David Devine said that Canada accounted for 90% of foreign investment in the country’s resource sector. He highlighted joint initiatives with the Canadian International Development Agency, including the creation of a geo-technology education program.
Guyana Goldfields (GUY-T) and Sandspring Resources (SSP-V) are two Canadian-listed companies with advanced-stage Guyanese gold projects.
Guyana Goldfields has been operating in the country since 1996 and its Aurora gold project, east of Georgetown along the Cuyuni River, is the only large-scale, licensed gold-mine development in Guyana. The company released a feasibility study on Aurora in February, and expects production to start in late 2014.
“It’s a great opportunity for the country moving forward, it’s going to place this project at the beating edge of development, gold mining development particularly, in the country,” commented company president Claude Lemasson by conference call from Toronto. “There is potential for more mining and development in Guyana, and we are excited to be leading the charge with the support of the people and the government.”
According to the feasibility study, Aurora has an after-tax internal rate of return (IRR) of 12.7% with an after-tax net present value (NPV) of US$432 million, assuming a 5% discount rate and a US$1,300-per-oz.-gold price. Estimated initial capital expenditures for the surface and open-pit operations stand at US$525 million, with underground development funded from cash flows.
Aurora has proven and probable reserves of 45 million tonnes grading 3.2 grams gold for 4.6 million contained oz. gold.
Guyana Goldfields also continues with exploration programs at its Aranka land package 30 km northeast of Aurora. In early March the company discovered new gold mineralization at the site with intercepts that include 29 metres grading 1.06 grams gold starting from 36 metres, and 20 metres carrying 4.35 grams gold from 134 metres, with a higher-grade intercept of 1 metre at 53 grams gold from 141 metres.
Sandspring, meanwhile, released the first technical report on its fully owned Toroparu gold project 220 km southeast of Georgetown on March 12.
Toroparu was discovered in 2007 and, according to the new report, has measured and indicated resources of 241 million tonnes grading 0.78 gram gold for 6.03 million contained oz. gold, at a 0.28 gram gold cut-off. The project has inferred resources totalling 179 million tonnes grading 0.68 gram gold for 4 million contained oz. gold.
Current figures peg the project’s after-tax IRR at 17.9% with a US$540 million after-tax NPV, assuming a 5% discount rate at a US$1,255 per oz. gold price.
Vancouver-based Stronghold Metals (Z-V) is at the advanced-exploration stage with its Eagle Mountain gold project, aiming for an updated resource estimate and economic assessment by third-quarter 2012.
Eagle Mountain is 5 km south of the Mahdia township in west-central Guyana. According to re-audited and compliant 2009 reports, the property has an inferred resource of 18 million tonnes grading 1.27 grams gold for 733,500 contained oz. gold at a 0.5-gram-gold cut-off.
Stronghold spent US$4.1 million on the project in 2011, completing additional infill drilling at the site. The drill program hit highl;ights such as 19 metres from surface grading 3.13 grams gold and 8 metres of 30 grams gold starting at 36 metres depth, including a 2-metre intercept carrying 119 grams gold.
The company has a joint-venture agreement with Iamgold (IMG-T, IAG-N), which owns 16% of Stronghold’s shares.
Guyana Frontier Mining (GYG-V), GMV Minerals (GMV-V) and Arrowhead Gold (AWH-V) are three more Vancouver-based companies conducting early stage drill programs on Guyanese land holdings, and they all expect assay results later this year.
Guyana Frontier holds the rights to working interests in 1,384 sq. km of prospective claims, including its flagship Marudi Mountain project 500 km south of Georgetown.
GMV Minerals has acquired land rights to 2,180 sq. km, creating what it calls “the largest hard-rock claims portfolio in Guyana over producing alluvial ground.”
Arrowhead is drilling to follow-up on a trenching program that uncovered multiple quartz-vein systems on its Puruni gold project, 160 km southwest of Georgetown.
Guyana has a second major metal export in bauxite aluminum ore, which is used in pyro-metallurgical industries to manufacture steel, cement and glass.
Toronto-based First Bauxite (FBX-V) is looking to continue nearly a century-long tradition of bauxite mining in the country.
The company has completed a feasibility study on its Bonasika project in Guyana’s historic coastal bauxite belt outside of Timehri. The operation would have an 18% IRR with an US$124 million NPV at a 7.5% discount rate.
Bonasika has reserves of 11 million tonnes at 57.7% aluminum oxide and a projected 44-year mine life.
Chief executive officer Hilbert Shields met with Guyanese President Donald Ramotar in late February, and the company already has mineral agreements with the Guyanese government and full environmental permitting.
The company is raising the US$150 million capital needed for the project’s development.
Production is scheduled to start in the first half of 2014. The company is aiming to market the resource to heavy industrial consumers in China and India, having signed its first offtake agreement in December.
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