…represents investment of US$700M, to employ 1,000 Guyanese
Come 2015, Guyana can see the commencement of a gold mining operation comparable to Omai Gold Mines Limited in the early 1990s, with the signing of an agreement yesterday between the Government of Guyana and ETK Inc/Sandspring Resources Ltd.
The signing of the Mineral Agreement for the Toroparu mine took place at the Office of the President, in the presence of President Bharrat Jagdeo. Signing on behalf of the government were Prime Minister Sam Hinds and Chairman of the Guyana Geology and Mines Commission, Major General retired, Joe Singh. Signing on behalf of ETK Inc. Sandspring Resources Ltd. was John Adams, Chairman of the Board of Sandspring Resources Ltd and ETK Inc., the Guyanese company that is affiliated to Sandspring Resources Ltd. The mine is located between the Cuyuni and Mazaruni rivers.
The investment is expected to be in the neighbourhood of US$700 million, and is expected to employ in excess of 1,000 Guyanese workers. It is expected to have an annual production of between 250,000 and 300,000 ounces of gold, and 20 million pounds of copper, with a mine life of 15 years.
Adams said that the completion of this mineral agreement between ETK/Sandspring and the Government of Guyana “sends a clear message to the international mining community” that Guyana is a good place to do business.
“Government welcomes the development of its natural resources, when carried out in an economically fair and environmentally responsible fashion,” said Adams. “Sandspring believes that it is a fair agreement for both sides, that can serve as a model for future mineral agreements,” he added.
According to Adams, the highlight of the agreement is a change in the royalty payments. He said government has required an increase in the gold royalty from 5 percent to 8 percent, when the gold price is above US$1,000 per ounce. “In light of the current price of gold, we understand their point of view,” he said. At the current gold prices, the mine is expected to contribute approximately US$550 million annually to Guyana’s GDP.
Adams said too that the Government also requires that Sandspring follow stringent environmental standards which meet or exceed those that exist in the U.S. and Canada.
He said that ETK has been in Guyana working on the development of “this world class mine” for the past 12 months.
“I would like to thank the representatives of the people of Guyana who negotiated this agreement on behalf of the Government, Prime Minister Sam Hinds, Finance Minister, Dr. Ashni Singh, and Chairman of the GGMC, Joe Singh and their respective staff were all instrumental in moving the process to a favourable conclusion.
“We have also had the pleasure of working with our new friend, Sir Shridath Ramphal, who had been an adviser to Sandspring for the last few months, and has brought to bear his legendary skill as a facilitator and diplomat to keep both sides moving forward in harmony,” he said.
L. Werner Claessens, Sandspring’s Vice President of Exploration, said that there will be a year-long feasibility study during 2012, after which will be the garnering of resources and the construction of the mine during 2013 and 2015. He said mining operations are expected to commence in 2015.
Sam Hinds said that after a series of prospecting and establishing the presence of favourable reserves, the time has come to prepare for and go into the next phase: the building of a mill and commencement of mining.
“Today we are signing the mineral agreement and this agreement is based on the original Omai agreement, with some adjustments for the particular location and for some updating,” he said, adding that about 95 percent of the elements of the Omai agreement were retained for this new agreement.
Speaking at the signing, GGMC Chairman Singh spoke of how relieved he and others were that the agreement has been signed. “I want to stress the importance of the collaboration and partnership between the Government of Guyana, the GGMC, the EPA, the Guyana Forestry Commission, and all those from a sectoral responsibility standpoint have been involved in this project,” he said.
“This is a step in the direction of having large scale mining operations. We do not currently have any operations after Omai closed, and it should be recognised the tremendous contribution that the sector has been making to the economy of Guyana,” he said. He added that last year, 9 percent of GDP was attributed to the mining sector and that 50 percent of export earnings were attributed to the mining sector.
“We want to make full use of the opportunities being presented through a favourable investment climate; but at the same time, ensuring that we do not compromise from the environmental standpoint the other initiatives that are being taken, such as the Low Carbon Development Strategy (LCDS),” Singh said. He said that the mining sector needs to also focus on value-added activities, instead of just primary products for processing elsewhere.