Guyana Goldfields down 50% on revised guidance

The Guyana Goldfields Aurora gold mine in northwest Guyana, South America. Source: Guyana Goldfields Inc.

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By Peter Kennedy

The Guyana Goldfields Aurora gold mine in northwest Guyana, South America. Source: Guyana Goldfields Inc.

Guyana Goldfields Inc. [GUY-TSX; OTC-GUYFF] took a steep tumble Tuesday October 30 following a downward revision in its 2018 gold production guidance.

In a press release that also contained the company’s third quarter operational and financial results, the company said 2018 production guidance has been revised downwards to 150,000-155,000 ounces as grades have not rebounded as quickly as anticipated in the fourth quarter.

That is down from a mid-year-forecast of 175,000-185,000 ounces, and a January 2018 estimate of 190,000-210,000 ounces.

The AISC (all-in sustaining cost) guidance was also raised to US$1,025-US$1,050 an ounce from the previous US$945-US$995 an ounce. “Looking forward, a revision of the life-of-mine production profile is anticipated,” the company said.

In addition Tuesday, Guyana Goldfields posted a loss of $2.19 million or $0.01 per share in the three months ended September 30, 2018, a result that was influenced by increased deferred tax expense and management restructuring charges, the company said.

Investors reacted by hitting the exit doors, sending the shares down 50.8% or $1.54 to $1.52 on volume of 10.7 million.

In its press release, the company said it has initiated a review of the underlying resource model. “The company has engaged RPA Inc., an independent firm of engineers and geologists, to assist in the investigation of the geologic controls and grade variability of the deposit,” it said. “The company expects the results from this review to be incorporated in the 2019 guidance and annual reserve and resource update to be disclosed in the first quarter of 2019.”

Guyana Goldfields is a Canadian mid-tier gold producer, primarily focused on the exploration and development of gold deposits in the Guiana Shield of South America. The Guiana Shield is the northern part of the Amazon Craton and covers parts of Guyana, Venezuela, Suriname, French Guyana and northern Brazil.

Its primary operation is the 100%-owned Aurora gold mine, which reached the commercial production stage in January 2016.

The company signed a mineral agreement with the Government of Guyana and received the mining license in November 2011 to build the Aurora gold project.

“We acknowledge and share the disappointment surrounding the revised production guidance and are actively positioning ourselves to address the grade variability,” said Guyana Goldfields President and CEO Scott Caldwell. “We have engaged independent engineers and expect to deliver a full report in the first quarter of 2019,” he said.

Earlier this year, the company released the results of an optimized life-of-mine plan for its Aurora mine.

The new optimized life-of-mine plan includes an increase in mineral reserves to 4 million ounces, marking a 12% increase from the previous estimate. Other highlights included average annual gold production of 270,000 ounces over the next five years at an average cost of US$523 an ounce.

Development of the underground operation was scheduled to commence in the fourth quarter of 2018, with first production anticipated in 2019.

In Tuesday’s press release, Caldwell said the company is excited to advance underground development to help alleviate the cyclical production nature of the Aurora open pits and the contractor has already mobilized and initiated field work earlier this month, with the portal collar scheduled to be completed in the four quarter.

In a separate press release, Guyana Goldfields said its board of directors has accepted the resignation of Patrick Sheridan Jr. as a director, effective immediately.

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