Providing a break from the hustle and bustle at the PDAC conference in Toronto, investors gathered at the Guyana Day Seminar on Monday for an in-depth look at the mining industry in the country.
The dominant theme of the event, which was held at the Westin Harbour Castle Hotel in Toronto, was that the mining sector is the driving
force behind Guyanese growth, with "the country having one of the highest GDP growth rates of all Carribbean countries in the past year".
The event was started with welcome remarks from Chairman Bobby Gossai, Jr. of the Ministry of Natural Resources & the Environment of Guyana, followed by a speech from the High Commissioner of Canada to Guyana, David Devine, and key note remarks from the Honorable Minister of Natural Resources in Guyana, Robert Persaud.
This was followed by five presentations from Canadian companies operating in the region, including Guyana Goldfields (TSE:GUY), Sandspring Resources (CVE:SSP), First Bauxite Corp (CVE:FBX), Reunion Gold Corp (CVE:RGD) and Sacre-Coeur Minerals (CVE:SCM).
High Commissioner Devine emphasized Canada's commitment to Guyana in helping the country through to the next stage of development, including offering technical training courses to miners.
While Persaud touched on the issue of corruption in the country, alluding to one unnamed company at the event specifically, he stressed the importance of transparency and that Guyana is open for investment, with levels of foreign direct investment so far illustrating the optimism toward the country's future.
"Not a single geologist that I've spoken to so far globally is not optimstic about the future of Guyana. There is a high level of optimism, and certainly we can talk in the near future about moving away from exploration and prospecting to discovery and development," Persaud asserted to the audience.
He added that just a few days ago, he was able to sign a memorandum of understanding, or MOU, in terms of partnering and providing support, with the government of Trinidad and Tobago - "not only for exploration, but also for potential development, as they too recognize the potential of Guyana."
Indeed, Guyana's declaration of gold increased to around 439,000 ounces in 2012, more than 20% higher than the previous year's record output. Total export value was US$716.9 million for 2012, which is over 38% more than the value of gold exports for 2011.
The Minister said he hopes gold output in Guyana this year will surpass in excess of 450,000 ounces, with all of it coming from alluvial/elluvial mining, meaning there is no large scale mining operation as of yet.
But the hope is that this will all change as investment into the mining sector in the country grows.
The first up to present Monday afternoon was Guyana Goldfields, whose president emphasized the company has $122 million in cash, and zero debt
, with the IFC of the World Bank Group being a shareholder for the past six years. The company boasts 3.48 million ounces of life-of-mine gold production from its Aurora project, with a projected start up date in the first quarter of 2015, and the potential to employ some 400 persons per year.
The project, with an estimated 17-year initial mine life, has a net present value of US$800 million and a 38% internal rate of return (IRR) using a $1,300 gold price. Life of mine cash costs have been pegged at US$527 an ounce.
A feasibility study for the project is expected this month, with the company planning on a staged approach for the mine. It intends to start with a processing rate of 5,000 tonnes per day initially, eventually boosting it to 10,000 tonnes a day.
"There is also upside potential for exploration success, with a land package of some 400,000 acres which for all practical purposes remains unexplored," said president and COO Marcel DeGuire.
All together, the company has 6.5 million ounces in the measured and indicated categories, and another 1.8 million ounces in the inferred category, with its Aurora project being fully licensed and permitted.
Next was Reunion Gold, which is actually focused on manganese, with a large, strategic land position in north-western Guyana and Eastern Suriname. Last month, the company announced its initial resource estimate for the Matthews Ridge manganese project, and aims to have a pre-feasibility out by June of this year.
Total constrained measured and indicated resources measure 29.1 million tonnes grading 14%, at a cutoff grade of 6-8% manganese, a widely used metal in steel production, which Minister Persaud said has the potential to transform Guyana in terms of economic stability.
The company has an aggressive exploration program in place for its land package, armed with what it calls an in-country experienced team.
Shortly after was a presentation from First Bauxite Corp, a company focused on becoming a near-term, medium-size producer of refractory grade calcined bauxite - the main source of aluminum and an area into which Guyana is looking to expand. According to the company's CEO, only China and Guyana supply high grade refractory bauxite.
First Bauxite controls a large land package in Guyana's historical coastal bauxite belt, including the Bonasika Mining License, covering near surface deposits which were drilled in the 1940s-60s by ALCAN.
The company has so far spent $30 million to date, with "everything done for engineering and permitting".
But a 2011 feasibility study of the Bonasika project showed a net present value of $123.6 million after tax at a 7.5% discount rate, less than the estimated capex of $160.8 million. President and CEO Hilbert N. Shields told the audience that the company is looking to boost economics through by-products.
Sandspring Resources followed First Bauxite on the podium, speaking of its multi-million ounce Toroparu gold-copper deposit, which was discovered in 2007 on the company's Upper Puruni property - an area of contiguous mining claims in the Upper Puruni River area of western Guyana. The company is focused on bringing the deposit toward potential large-scale gold and copper production in 2015, and continues to explore its properties for additional deposits through a systematic sampling campaign.
And finally, perhaps the most interesting presentation came from the company with the smallest market cap of the bunch - Sacre-Coeur Minerals.
In what the CEO Gregory Sparks called an "extremely challenging environment" for junior exploration companies, Sacre-Coeur has adapted a paradigm that the company believes best deals with the challenges and opportunities provided in Guyana. It plans to leverage its current operating cash flow for organic growth, without relying on capital markets.
Sacre-Coeur has a half million ounce surface mineable gold resource at its Million Mountain Zone 1 property, with another eight targets situated along the 20 kilometre structural trend.
"We haven't been as fortunate as Guyana Goldfields or Sandspring in finding a giant resource, but we found a half a million ounces at Million Mountain, and we also have current production from our alluvial/elluvial operations," Sparks said.
The company is working to more than double its gold output at its nearby alluvial/elluvial operations in Guyana by early April, targeted at 6,000 ounces per year, giving the company "leverage for developing the Million Mountain hard rock deposit".
By the end of the year, Sacre-Coeur hopes to be in construction at the Million Mountain hard rock mine, and to have more than doubled its alluvial output. Starting in 2014, it is aiming to issue dividends through its cash flow from operations.
Sparks says that favourable results from an internal preliminary economic assessment at the Zone 1 Million Mountain deposit "sufficiently encouraged" the company to move directly toward an NI 43-101 compliant feasibility study, which it recently commissioned and is expected in late June or early July.
Indeed, the hard rock deposit, which is expected to produce an average of 40,000 ounces a year and had a modelled IRR of 115% from internal assessments based on a $1,500 an ounce gold price, is anticipated to come online by the third quarter of 2014.
The company has a strong foothold in Guyana, with its land position spanning some 860 square kilometres of properties.
The junior has already completed scout drilling into some of the eight additional targets along the 20km structural trend on its Million Mountain block of properties. Indeed, scout drilling at Million Mountain Zone 9 - its highest priority for resource development drilling - returned 13 metres of 4 grams per tonne (g/t) gold and several one metre high grade vein intercepts of up to 85 g/t.
"We have only been modestly successful so far in finding mineable resources in Guyana but we believe we have the ground for an Aurora or Toroparu," the CEO said, adding that Sandspring’s Toroparu 5 million ounce gold-copper deposit is its next door neighbour, and Guyana Goldfields is just up-trend.
"We like where we're positioned relative to our big brothers."
Taking up the Minister's earlier comments, Sparks emphasized that Sacre-Coeur chose to operate in Guyana because the region is mining friendly, and "relatively free" of corruption and the issues related to developing nations. He also noted that the workforce is "large, robust and willing", but that considerable technical training is in order, adding that he is pleased to see this is underway.
Just a few months ago, Sacre-Coeur raised more than $6 million through the issuance of gold-denominated bonds, following a $1 million private placement late last year - which it expects will be its last equity raise. The company says another $30 million will be raised this summer through a debt financing to develop the Million Mountain hard rock resource.
"Our proposal is to distribute excess cash flow from multiple producing mines, and not to provide benefits solely dependent on a big discovery. We believe our cash generating model and distribution of dividends is sufficiently attractive, giving our shareholders more shots on gold," Sparks said.
"We believe Sacre-Coeur is fairly unique among our junior resource peers, and that our business model provides an opportunity for a significant return among investors - all in the mining-friendly and politically stable Guyana."