TORONTO, Feb. 25, 2020 /CNW/ - Guyana Goldfields Inc. (TSX:GUY) (the "Company") today announced fourth quarter and full year 2019 production and anticipated ore supply gap.
Highlights
- Q4 2019 gold production of 28,3001 ounces, up 28% from Q3 2019 but down 28% from Q4 2018; 2019 annual production of 124,2001 ounces, down 17% from 2018
- Unaudited cash and cash equivalents of US$22.1 million and no debt as of December 31, 2019
- Ore supply gap of 4-6 months expected in 2020, starting in Q2
- Company is exploring financing and strategic alternatives to fund additional waste stripping at its open pit and for underground development
- Comprehensive mine plan review continues; results anticipated to be released by end of March 2020
Production details
Gold production at the Company's Aurora Mine in Guyana totaled 28,3001 ounces in the fourth quarter of 2019, up 28% from 22,100 ounces in the third quarter of 2019 but down 28% from 39,100 ounces in the fourth quarter of 2018. For the full year 2019, gold production totaled 124,2001 ounces, down 17% from 150,400 ounces a year earlier.
The Aurora Mine mill's throughput averaged 7,200 tonnes per day (tpd) in the fourth quarter of 2019, up 4.3% from 6,900 tpd in the third quarter of 2019 and up 1.4% from 7,100 tpd in the fourth quarter of 2018. For the full year, the mill's throughput averaged 7,300 tpd, up 4.3% from 7,000 tpd in 2018.
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| 1 Gold production includes 1,500 ounces for the fourth quarter and 1,600 ounces produced for the full year from our underground project development which is considered pre-commercial production ounces |
The Company's optimized life-of-mine plan announced in late April 2019 (the "Optimized 2019 LOM Plan") proposed ore release from the open pit concurrent with waste stripping by smoothing out waste stripping over multiple years through increased pit phases. Accordingly, during early 2019 the Company implemented smaller mining benches and split pushback phases to accelerate access to the main ore body.
As this work progressed, the smaller operating areas resulted in reduced productivity rates from increased congestion and delays in drill-blast-load cycles. This prompted the new comprehensive review as disclosed by the Company on October 30, 2019 and prompted the processing of low-grade ore stockpiles as ore release from the open pit was slower than expected.
As a result of work done in its ongoing comprehensive review, the Company is ending its prior strategy of implementing smaller mining benches and a pushback in two phases, one directly above the other. In an attempt to find a mine sequence with continuous ore release while maintaining high safety standards, management reviewed a significant number of mine plans and scenarios. However, these objectives were not achievable.
The Company 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 we focus on waste stripping.
The Company expects to disclose fourth quarter and full year financial results on March 30, 2020.
On Track with Comprehensive Mine Plan Update
The Company remains on track for disclosure before the end of March 2020 of the results of its comprehensive mine, production and cost review. Roscoe Postle Associates Inc. is assisting with the review.
The review, including updates of Mineral Reserves and Mineral Resources estimates, is being prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). The review is intended to supersede the previous NI 43-101 Technical Report dated March 29, 2019 and the subsequent Optimized 2019 LOM Plan disclosed on April 30, 2019.
Financing and Strategic Alternatives
While the Company previously anticipated generating sufficient working capital and cash flow to cover operating requirements through 2020, it is now clear that this objective is no longer achievable and there will be a need for additional financing for the cost of additional waste stripping for the open pit and the development of the underground mine.
As such, management is actively exploring financing alternatives to provide additional balance sheet flexibility. While the evaluation of financing alternatives continues, the Company is concurrently conducting a review of strategic alternatives and has engaged RBC Capital Markets as its advisor for the review of strategic and financing alternatives.
"Gold output has been, and will continue to be, affected by an inability to achieve the aggressive waste stripping rates originally proposed in early 2019 as a result of very narrow pushbacks constraining and leading to small, congested mining areas," said Alan Pangbourne, who became President and CEO on January 1, 2020. "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."
Underground Development Update
Underground exploration decline construction was advanced to 512 metres at year end, under the current construction permit issued by Guyana's Environmental Protection Agency ("EPA"). The Company has submitted an updated Environmental and Social Impact Assessment to the EPA for the entire underground project as required and believes it is on target to receive the required environmental approvals from the EPA.
We have also commenced trial mining of a test stope in the Mad Kiss orebody under our construction permit and we expect to batch process this ore through the plant in the coming months.
We obtained the necessary governmental approvals to blast without restrictions underground, which once implemented should allow an acceleration in underground development.
Alan continued, "On behalf of Senior Management and the Board I would like to thank our employees and contractors as well as the Government and the people of Guyana for their support as we progress toward the development of Guyana's first underground mine."