The next major step for the would-be gold miner is project financing which on the low-end will be in the 5 million range.
Guyana Goldfields (TSX: GUY) blazed a clear path to get its five-million ounce Aurora gold project in Guyana to production, announcing on Friday it had received a mining license from the country’s federal government.
“We’re now ready to go and start construction on the project,” said Jacqueline Wagenaar, Guyana Goldfields vice president corporate communications.
Just how much the project will cost to build will soo be pinned down in a forthcoming feasibility study, due out in early 2012. But Guyana Goldfields has given a rough estimate of what it expects the project outline to look like in that feasibility study. Assuming an open-pit and underground mine respectively running at 5,000 – 9,000 tonnes per day and 3,600 – 4,400 tonnes per day, Guyana Goldfields suggests each would cost 5 million to build, for a 0 million total. A mine, with concurrent open-pit and underground operations, would churn out about 300,000 ounces gold a year from a mill working at 9,500 tonnes per day.
Cash costs would fall into the 0 per ounce range, Guyana Goldfields has suggested, in large part thanks to enviable open pit gold grades. In all, Guyana Goldfields counts 5.7 million ounces gold in measured and indicated resources comprised of 20 million tonnes @ 3.34 g/t gold in open pit resources and 27 million tonnes @ 4.09 g/t Au in underground resources.
Wagenaar said that as the feasibility study deadline approached Guyana Goldfields was maintaining its guidance on costs to build and run the project.
Yet in speaking with Wagenaar it became clear that Guyana Goldfields is sensitive about overwhelming the market with a combined capital costs for a concurrent open pit and underground mining operation in the 0 million dollar range. Wagenaar said in preparing the feasibility study Guyana Goldfields is looking at a variety of mining scenarios. It is a two-pronged approach: one case will consider the concurrent option, the other, a staged approach beginning with an open pit and then, funded from cash flow, an underground mine to come online a few years into production.
That would suggest at a minimum Guyana Goldfields will be looking at 5 million in financing were it to opt for the open pit first start-up scenario. Though Wagenaar stressed no decisions have been made – that will be up to the company’s board of directors – it sounded as if Guyana Goldfields may be tilting in favour of this open-pit first option.
The enduring question for the mine developer is: who’s got the money? While Guyana Goldfields does not have financing in the bag yet – though it already has a solid million cushion in cash and cash equivalents – a mining license will certainly help bring onside financial institutions.
“Certainly we’ve noticed a lot of interest,” Wagenaar said, referring to major banks.
Wagenaar, describing tentative financing options, suggested that, among other financial institutions, the International Finance Corporation, already a significant Guyana Goldfields shareholder, might consider debt financing to the tune of 0 million. Then Wagenaar said Guyana Goldfields could put together another 5 million through equipment credit and bring up the rear with equity.
(Source http://www.mineweb.com/mineweb/view/mineweb/en/page66?oid=140043&sn=Detail&pid=102055)
