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Other officials present at the signing were Minister of Natural Resources and the Environment Mr. Robert Persaud, advisers to Sandspring Sir Shridath Ramphal and Major General (Ret’d) Norman McLean and Vice President Exploration of ETK Inc., Mr. L Werner Claessens.
The project is being referred to as the Kumarau River Hydropower Project (KRHP) – Kumarau being a waterfall on the Kurupung River.
The Canadians want to determine whether it would be feasible to construct the hydro power facility to provide clean energy for their gold and copper project at Toroparu mine, located almost midpoint between the Cuyuni and Mazaruni Rivers.
Prime Minister Hinds disclosed yesterday that the KRHP had been evaluated by the United Nations Development Programme (UNDP) in the 1970s as a potential site for the development of hydropower generation.
The UNDP survey, he disclosed, had estimated that the KRHP could produce 86 MW with a reservoir of 8,120 acres.
Sandspring subsidiary, CM Power, has stated that it could develop the KRHP to produce 70% of the power of the UNDP project with only 40% of the reservoir size which had been proposed by the UNDP.
Hinds disclosed that Sandspring was granted permission to undertake feasibility studies for the KRHP in December 2010.
In November 2011, in accordance with a Mineral Agreement signed by the Guyana government for Sandspring, CM Power was granted the right to continue feasibility surveys for the KRHP.
The Prime Minister disclosed that the information obtained to date has determined that the KRHP is feasible from both economic and technical standpoints and could provide a firm supply of clean hydro electricity to the Toroparu mines which at the moment has announced an initial resource estimate of over four million ounces of gold.
The MOU signed yesterday was pursued by the company for the purpose of providing security to its shareholders who will be required to commit further resources for the KRHP.
Hinds explained that the MOU gives CM Power exclusivity to continue studying the project site and to develop plans to the level of an application for a licence to be approved for construction of the project.
He said: “ Along the way there will be of course an Environmental Impact Assessment to give opportunity to persons who may be involved or affected, to get them to know what is intended, to give them an opportunity to raise their concerns and to seek ways in which reasonable concerns may be ameliorated or mitigated.”
Among other things, the terms of the agreement states that it is exclusive with a term of five years providing that construction of the Toroparu gold mining project owned by Sandspring Resources Ltd starts by December 2014 and gold production in any month achieves a rate of not less than 100,000 ounces per year by June 30th 2015.
CM Power is required to complete the required studies and finalise all surveys of lands to be occupied by the Hydro project and to submit those to the Government of Guyana for review.
It is also required to apply for an environmental permit to construct and operate the hydro project and conduct Environmental Impact Assessments in accordance with the Environmental Protection Act and conduct an analysis on the project.
It is also required to submit to the Guyana Government bi-annual status reports on the progress made with respect to the project.
Minister Persaud said that with an initial resource estimate of four million ounces of gold, the Toroparu project is one of the leading projects that can adequately and properly develop Guyana’s natural resources.
“It is very important in terms of moving up and having large mines.”
He said that the KRHP project is most welcome from the environmental standpoint and that he was quite sure that if it is moved to completion it would be a catalyst for the development not only of mining , but of creation of new settlements and development of agriculture within the area..
CEO of Sandspring Resources Ltd. Rich Munson said that the company was very impressed with the foresight that government has shown by recognising that the successful implementation of long-term and large- scale mining operations in Region 7 will be enhanced by access to a long- term, stable power supply.
He said that while Sandspring will certainly enjoy long-term cost savings, the company also saw the project as a win -win situation for the people of Guyana and industry.
“Having an electrical power supply of this nature in Region 7 will certainly attract other industries as well as other mining companies so this is a very significant event obviously not only for Sandspring but for Guyana also.”
He added : “From the company’s standpoint, knowing that we have definitive supply from a hydro power facility and knowing the cost of that power as we move forward will allow us to expand and enhance our operations recovery significantly.”
The company would in this case , he said, target production of gold up to 10 million ounces which will benefit Guyana in terms of more income tax, royalty payments and much more certain tenure of long-term jobs and employment.
