-scale of operations to eclipse Omai’s
THE Government of Guyana (GoG) on Friday inked an agreement that allows Canadian mining company, Guyana Goldfields Inc. (GGI) to develop and operate its Aurora Gold Project as part of what has been described as the largest single private investment in Guyana, eclipsing even Omai Gold Mines.
The signing was done  at the Office of the President, with Prime Minister Sam Hinds, the minister responsible for mining, appending his signature on behalf of the Guyana Government, and Patrick Sheridan, Founder and Chief Executive Officer of GGI,  signing on behalf of the company.
President Bharrat Jagdeo, presidential candidate Donald Ramotar, Adviser Sir Shridath Ramphal, Finance Minister Dr. Ashni Singh, and retired Major General Joe Singh, current Chairman of the Guyana Geology and Mines Commission (GGMC), were among those witnessing the historic signing.
The GGI recently signed a Memorandum of Understanding (MOU) on a Mineral Agreement (MA) with the government in October last.
The MA is the company’s permit to build and operate the Aurora Gold Project, and since OMAI in 1991, is the first large-scale mining licence to be issued in the gold sector in Guyana.
The validity of the document is immediate, and lasts for an initial 20-year term, with provisions for extension on application by the company.
It will allow the advancement of the mine development project in Cuyuni, Region 7 (Cuyuni/Mazaruni) under a clear and stable fiscal and royalty regime.
Construction work on the mine site facilities and the mill will begin in the first quarter of 2012, and is scheduled to be completed over a period of 24 months, which includes contingency time.
It is planned that the mine and mill would be fully operational by the first quarter of 2014.
In remarks prior to the signing, GCI’s Patrick Sheridan said that GGI had begun exploration in the Cuyuni in 1996, and had, in the ensuing years, found that the Aurora Gold Project represented a world-class discovery.
To date, the GGI has spent in excess of US$120 million in Guyana.
He said that measured and indicated resources at Aurora amount to 5.8 million ounces and growing.
He disclosed: “We recently drilled the deepest hole ever in Guyana, to a depth of 2.2 kilometres. Our drilling has established that gold in Guyana can have deep roots.”
He reiterated that the GGI operation at Aurora will be the first significant underground mine in Guyana’s history, and will bring new insights and strategies to exploration, which translates into new skills and technologies for the development of the industry.
Sheridan thanked President Bharrat Jagdeo, Prime Minister Samuel Hinds, Finance Minister Dr Ashni Singh, Works Minister Robeson Benn, and the staff of the GGMC both for their support of the project and for concluding an equitable and fair agreement for all stakeholders.
He said: “This project grew up under this administration and owes a great deal of its success to this fact. This project deserves to be part of this government’s legacy.”
The GGI’s MA details all fiscal, property, import/export procedures, taxation provisions, and other related conditions for the continued exploration, mine development, and operation of the Aurora Gold Project.
The significant terms include:
* Mining royalty of 5% on gold sales at a price of gold of US $1,000/oz or less
* Mining royalty of 8% on gold sales at a price of gold over US $1,000/oz
* Corporate income tax rate of 30% and no withholding tax on interest payments to lenders; and
* Duty and value added tax exemptions on all imports of equipment and materials for all continuing operations at the Aurora Gold Project, including the construction and operation of a planned port facility, road and power improvements, and the construction and operation of the mine.
In brief remarks prior to the signing, Prime Minister Samuel Hinds said that the MA sets the conditions for the development of a large gold mine, and was similar to the one hammered out with OMAI.
He said: “I visited the GGI operations on the Cuyuni five years ago, and am very pleased that they have maintained their persistence, and that we have reached this point today, where we have signed this agreement which sets the stage for the development of the Aurora mine.”
The Chairman of the GGMC, retired Major General Joe Singh, congratulated those who were part of the process of ensuring that there is balance between Guyana’s development and the  stewardship of its resources.
He urged Guyanese not to see the development as a ‘them and us’ situation, but to see themselves as partners in the entire process.
He also assured GGI of the continued support and collaboration of the GGMC as it continues to evolve  the process of exploration and development it had started since 1996.
In total, Guyana Goldfields has over four sites, covering 500,000 acres, and all those sites are being explored. In addition to Aurora, there are operations at Aranka, Peters Mine and Arakaka.
The  company has developed a full-time office in Thomas Street, Cummingsburg, and a gateway community at Buckhall, located on the west bank of the Essequibo River, is being constructed.

Roads have been developed to the mining site, with pontoon facilities to cross the Cuyuni River, and already camp sites are under construction.
GGI has indicated that the Aurora Gold Project has a mine life of a minimum of eighteen years, and a potential for many more.
At Sulphur Rose, not far from the Cuyuni River, another discovery has been made, with estimates standing at around 460,000 ounces of gold.

Over the life of the mine, approximately US$1 billion will be spent on the project.
In the construction phase, approximately 900 workers will be directly employed by GGI.
Based on the current price of gold, it is anticipated that the GGI will provide directly to the GoG US$1.6 billion through royalties and taxation,  which will be exclusive of taxes paid by  employees working on the project.
GGI continues to work towards completing its updated resource estimate at Aurora by mid-December of this year, and deliver its Feasibility Study by January 16, 2012.
On November 9th last, the GOG signed a similar agreement with ETK Inc/Sandspring Resources Limited, another Canadian mining company, for the 2015 commencement of gold mining operations comparable to OMAI at Toroparu in the Mazaruni District.
The ETK Inc/Sandspring Mineral Agreement represents investments of US$700M, and will employ 1000 Guyanese.