Guyana Goldfields faces ore supply gap

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

Share this article

Guyana Goldfields Inc. [GUY-TSX; OTC-GUYFF] shares fell sharply in heavy trading Wednesday February 26 after the company said it is facing an interruption in ore supply from its flagship Aurora gold mine in Guyana. It said the ore supply gap could last for up to six months.

Guyana Goldfields shares tumbled 41% or 27.5 cents to 39.5 cents on volume of 3.31 million. The shares are currently trading in a 52-week range of 47 cents and $1.63.

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, but has recently faced challenges as it transitions from an open pit operation into an underground mine.

News of the interruption in ore supply was released along with Guyana’s 2019 fourth quarter and year end results just after the close of trading on February 25, 2020. It said the Aurora Mine produced 124,200 ounces of gold last year, a decrease of 17% compared to 2018.

Production in the fourth quarter included 1,500 ounces from underground project development, which is considered to be pre-commercial production ounces.

Guyana said an optimized life-of-mine plan announced in April 2019, envisaged ore release from the open pit concurrent with waste stripping by smoothing out waste stripping over multiple years through increased pit phases.

“Accordingly, during 2019, the company implemented smaller mining benches and split pushback phases to accelerate access to the main orebody,” the company said. “As this work progressed, the smaller operating areas resulted in reduced productivity rates from increased congestion and delays in drill-blast load cycles.”

Following a review, the company said it has concluded that waste stripping needs to be suspended temporarily to allow ore production from the bottom of the current pit. Going forward the company now expects that ore production from the open pit mining will be interrupted for between four and six months, starting in the second quarter of 2020 and resuming at the end of the third quarter of 2020, as it focuses on waste stripping.

While the company was previously expecting to generate sufficient working capital and cash flow to cover operating requirements through 2020, it said this objective is no longer achievable. As a result, Guyana needs additional financing to fund the cost of additional waste stripping for the open pit and the development of the underground mine.

“We continue to move toward the transition to underground mining, but we will need additional financing to cover a shortfall in cash flow from open pit gold production,” said Guyana President and CEO Alan Pangbourne.


Share this article

Leave a Reply

Your email address will not be published. Required fields are marked *

×