Guyana Goldfields sizes up Aurora gold project

Guyana Goldfields (GUY-T) will release the findings of a definitive feasibility study on its Aurora gold project in late February following a four-week peer review, the company says, and a revised resource estimate will be out before the end of March. Official development and construction is expected to kick off in 2012’s second quarter.

In the meantime, the exploration and development junior has confirmed flagship project parameters that include a combination of open-pit and underground mining over a 22-year mine life, based on Aurora’s measured and indicated resource of 47 million tonnes grading 3.83 grams gold per tonne for 5.71 million contained oz. gold.

Surface and open-pit development will begin before June and continue for 24 months. Production from the open pit is expected to start in 2014’s second quarter and continue for eight years.

The mining operation would include six pits within a square mile, with bottom depths varying from 70 metres to 315 metres.

Underground development would start in 2015 and capital expenditure would come from cash flow. Commercial production would start in 2019 and last 16 years.

A semi-autogenous-grinding and ball-mill combination would have a daily design throughput of 8,000 tonnes, and annual gold production in the second through ninth years of 250,000 oz. gold.

On-site heavy fuel oil generators would be used for power.

Located in the Amazon craton, the Aurora property is made up of a number of gold deposits on the eastern side of the Aurora intrusion in the Guiana Shield’s Cuyuni greenstone belt.

Guyana Goldfields, which received its Aurora mining licence from the Guyana government in November 2011, has operated in the South American country since 1996. The company has $36 million in cash, guaranteed short-term investment certificates and no debt.

At presstime the company traded at $7.60 per share within a 52-week range of $6.32-$10.58. It has 83 million shares outstanding.

Dan Rollins, an analyst at UBS Investment Research, holds a “buy” rating on the stock with a 12-month target price of $11.25 per share. Adam Graf of New York-based investment bank Dahlman Rose also has a “buy” rating on the company, with a price target of $14.34 per share.