Aurora Gold Mines to scale back expansion if gold price continues to nosedive

Last Updated on Thursday, 17 September 2015, 20:13 by GxMedia

President David Granger and CEO of Guyana Goldfields, Patrick Sheridan show off the first gold bar that was produced by the company.

Aurora Gold Mines (AGM) has already decided to delay expansion of operations if the world –price continues to plummet and remains low for some time to come, according to a senior company official.

Chief Executive Officer of Guyana Goldfields, Patrick Sheridan Jr. said investors in the US$250 million gold mine on the right bank of the Upper Cuyuni River had conducted a feasibility at US$1,300 per ounce.

Acknowledging that the continued slide in the price would affect profitability, Sheridan said if the price of the precious yellow metal slides further the company would have to revisit expansion plans. “I don’t expect that there will be any change in total production but we may different stage expansion plans, may delay certain expansion plans if gold was to stay low for a significant period,” he told Demerara Waves Online News.

He said the company’s plans have factored in a “further collapse in the price of gold.”

The CEO said Guyana Goldfields’ lenders have developed financial models at US$1,000 per ounce and so the company still has some room at the existing price of gold.

The price of gold closed at US$1,117.50 per ounce on the London Fix, down from more than US$1,700 in 2012.

Addressing the official commissioning of the mine earlier this week, President David Granger noted the impact of the fall in the price of gold. “Today, the price has collapsed and there is weeping and gnashing of teeth,” he said.

Granger said the repair of the Local Government system could help put the gold industry back on a firm footing through high standards of social services such as primary education and primary health care as well as better roads, bridges, aerodromes and stellings.

The President also identified the need to stamp out gold smuggling that robs the State of valuable taxes.

Located about 200 kilometers from the coast, the AGM is expected to produce about 10,000 to 15,000 ounces of gold per month during the 35-year life of the mine. Overall, about US$411 million in investment capital was spent from exploration 19 years ago to the construction of the mine plant and other equipment.