Guyana Goldfields Approves US$238M Aurora Gold Project Spend; Selects EPC Contractor and Confirms Capital Cost and Schedule
TORONTO, Dec. 9, 2013 /CNW/ - Guyana Goldfields Inc. ("GGI" or "the Company") (TSX: GUY) is pleased to report that the Board of Directors has approved a US$238 Million ("M") expenditure for the Aurora Gold Project (the "Project") to reach commercial production. The Company has executed a Heads of Agreement and Term Sheet, documenting the principal terms and conditions with joint venture ("GSJV") partners, Sedgman Limited and Graña y Montero for the full Engineering, Procurement, and Construction ("EPC") of the initial processing facility and power plant at the Project in Guyana, South America. The proposed EPC contract will be on a "not-to-exceed" basis, valued at US$137M. The updated capital costs and corresponding schedule for the Project set forth below were determined in conjunction with guidance from the GSJV. The capital expenditure is contingent upon successful completion of Project financing and other approvals, which is expected to be finalized by the second quarter of 2014.
Project Finance
The Company recently signed a mandate letter with the International Finance Corporation ("IFC"), of the World Bank Group (see press release dated November 5, 2013), to lead a senior debt facility in the amount of US$165M. IFC has provided indicative financial terms whereby IFC will lead the coordination of the overall debt syndicate with other commercial banks and multi-lateral and development institutions. There are no gold hedging provisions foreseen as part of the facility. Due diligence is proceeding and the completion of the transaction is expected in the second calendar quarter of 2014. Additionally, the GSJV has provided an offer for a level of unsecured funding support which is being considered by GGI. The Company's cash balance as of October 31, 2013 was US$109M. All additional costs incurred by GGI to reach commercial production including corporate general and administrative costs, exploration costs and debt fees, are estimated to total US$28M. Management is confident that it will be able to fulfill all foreseen project financing requirements and is closely monitoring its expenditures and commitments for the Project in order to rationally synchronize spending with the debt financing timeframe. The table below provides a breakdown of cash sources.