CANADA-BASED company, Guyana Goldfields, on Tuesday, issued a statement declaring that it intends to vigorously defend a class action lawsuit filed with the Ontario Superior Court of Justice, seeking unspecified amount of damages for alleged misrepresentations that the company made in public disclosures during the period December 14, 2017 to October 30, 2019.

The announcement comes weeks after the company’s stock took a major hit following the release of a report on February 25, where the company’s production results showed that 2019 fourth quarter gold production declined by 28 per cent, when compared to that of the 2018 fourth quarter.

According to Monday’s statement, the claim is being filed against the company and its former President and Chief Executive Officer (CEO), Scott Caldwell, who had stepped down in April 2019 amidst controversy among the shareholders. The statement also notes that the claim has not yet been served on either of the defendants.
“It has not been certified by the Court as a class action, nor has the required leave of the Court been sought under Section 138.8 of the Securities Act (Ontario) to commence the lawsuit,” the statement said. Caldwell had served at the company as a director since 2012 and as President and CEO since 2013.

Guyana Goldfields is the parent company of the Aurora Gold Mines (AGM), with gold mining operations in Aurora, Region Seven. The company started commercial production in January 2016.
Last month the company forecast a four to six months’ ore gap, starting in the second quarter, after

“smaller operating areas resulted in reduced productivity rates from increased congestion and delays in drill, blast load cycles.

The company also announced cash flow constraints. “While the Company previously anticipated generating sufficient working capital  and cash flow to cover operating requirements  through  2020,  it  is  now  clear that this  objective  is  no  longer  achievable  and  there  will  be  a  need  for additional  financing  for  the  cost  of  additional  waste  stripping for the open pit and the development of the underground mine,” the company said in its February 25 report.

For 2019 the company’s annual gold production stood at 124,200 ounces, falling below initial estimated projection of 145,000-160,000 ounces of gold. The 2019 output represented a 17 percent decline from the 150,400 ounces that were declared by the company in 2018.

This represented successive declines by the company, with the 2018 production representing a decrease of 10,050 ounces compared to production from 2017. In terms of financial gains, Guyana Goldfields said earnings from mine operations were $36.6 million for 2018, a decline of $21.6 million from 2017.

Over the years the company has seen its fair share of issues including disputes among shareholders. In April 2019, the company announced that it had “reached a settlement with a group of shareholders who had requisitioned a special meeting of the Company’s shareholders, including Patrick Sheridan, the Company’s former Executive Chair”.
As part of the settlement, the company appointed two experienced mining executives, Alan Pangbourne and Allen Palmiere, to join the Board as independent directors, while two long-serving independent directors stepped down.

This also saw Caldwell stepping down, and Palmiere being appointed interim CEO in April 2019. Replacing Palmiere, Pangbourne was appointed as the company’s President and CEO, in November 2019. In July, 2019, the company was forced to temporarily suspend operations at AGM, owing to industrial unrest by workers that saw the employees striking for a number of days.

The company has been facing challenges as it transitions from an open pit operation into an underground mine. In the February 2020 report the company said that it was exploring financing and strategic alternatives to fund additional waste stripping at its open pit and for underground development.