Guyana Goldfields to accelerate production

VANCOUVER — Guyana Goldfields (TSX: GUY; US-OTC: GUYFF) has updated the mine plan at its flagship Aurora gold operation in Guyana, South America, that could boost its annual production profile to 300,000 oz. within the next five years.

The company intends to accelerate selective underground mining of higher-grade stopes as well as expand processing facilities to a capacity of 7,500 tonnes per day.

The new life-of-mine plan is underpinned by reserves of 43 million tonnes at 2.87 grams gold per tonne for nearly 4 million contained oz. gold, which represents a 12.3% increase from last year’s 3.5 million oz. estimate. The increase is attributed to depth extensions at Rory’s Knoll underground.

Guyana Goldfields indicates that Aurora’s open pits will now operate through 2030, while the underground operation is scheduled to kick-start in the fourth quarter, with initial production expected in 2019.

A gold pour at the Aurora project. Credit: Guyana Goldfields.

“The real focus of this study was to look at a variable cut-off grade strategy for the underground mines to move those ounces forward, and we were successful in achieving that,” president and CEO Scott Caldwell said during a conference call. “It’s a very realistic development program with a conservative advancement rate, as we start to drive the drift later this year. I’d also point out the great production profile over the first five years, and the ground conditions we’ve encountered thus far look excellent.”

The company said the plan assumes “a more selective mining method of long-hole open stoping at Rory’s Knoll beginning in 2020,” which it expects will create a higher-grade profile.

Aurora’s 5,600-tonne-per-day process circuit involves cyanide leach and carbon adsorption. The proposed plant expansion would be done in two phases. The first phase is underway and scheduled for completion in the first quarter. It includes adding three leach tanks, a pre-leach thickener, carbon-management systems and expanding the elution circuit.

Guyana Goldfield’s second phase is expected before December, and involves a pre-crushing circuit and ball mill from a previously bought 1,000-tonne-per-day modular processing plant.

The upgrades could boost overall gold recovery to 95%.

The Aurora gold operation sits 170 km west of Georgetown, Guyana. Credit: Guyana Goldfields.

“It’s a simplified plan on the mill side that won’t require any more power capacity,” Caldwell said. “We can fund it all with internal cash flow and have a lot of underground expertise in the company.”

The company expects to produce between 190,000 and 210,000 oz. gold this year at all-in sustaining costs ranging from US$830 to US$880 per ounce.

Caldwell said the plan would add 75,000 oz. gold to the production profile over the next three years, and “provide an ideal platform to potentially upgrade and expand the underground resource.”

BMO Capital Markets analyst Andrew Breichmanas has an “outperform” rating on Guyana Goldfields alongside a $4.43-per-share target price. He notes that the new mine plan increases near-term production, enhances operational flexibility and improves long-term cash flow, but cautioned that “2018 now appears to be a transition year, and execution risks have been increased.”

Shares of Guyana Goldfields have traded within a 52-week range of $3.96 to $7.90, and closed at $4.69 per share at press time. The company reported a US$75-million cash balance at the end of 2017.