New Canadian gold mine set to earn profits, rules out contract renegotiation

Last Updated on Thursday, 7 November 2024, 9:19 by Denis Chabrol

The President and Chief Executive Officer of G Mining Ventures, Louis-Pierre Gignac on Wednesday ruled out the renegotiation of a contract with the Guyana government that it inherited in the buyout of fellow Canadian company, Reunion Gold, earlier this year but was confident that the country would earn corporate tax because the Oko West Mine would earn profits due to higher gold prices.

“Typically, that agreement is one that we inherit through the acquisition of Reunion so it is not an agreement that is open for renegotiation so it’s one that we intend to honour and abide by and operate by,” he told a briefing session for the media, government officials including Labour Minister Joseph Hamilton and Geologist, Robeson Benn and other stakeholders.

After buying out Reunion Gold in April, 2024 for US$638 million, G Mining Ventures on Wednesday said it was set to invest US$936 million in developing the mine in Region 7 (Cuyuni-Mazaruni) over the next three years, leading to the production of 353,000 ounces annually. The G Mining Ventures official said the company would be investing revenues from its Tocantinzinho gold mine in neighbouring Brazil into the development of the Oko West Mine in Guyana. Mr Gignac added that the company would need an additional US$500 million to cover capital expenses for Oko West.

He said unlike the then Cambior Inc-owned Omai Gold Mines, with which his father had been associated, that never paid corporate taxes because the price of gold was about US$300 per ounce, the price of gold today is much higher and he was optimistic that Oko West would record profits. “Like everything else, you need to be hitting the window at the right moment for profits to be made and corporate income taxes to be paid so we hope to pay those obviously because we do feel that it’s different gold price environment that we’re in and look forward to building this mine to produce in that environment. The price of gold on the London Fix closed Wednesday at US$2,742.55 per ounce. He noted that the payment of corporate tax was linked to profit-making and repaying investors.

Mr Gignac said that at the average 6.5 percent royalty, Guyana would definitely be earning revenue when production begins in 2028. “I think the royalty structure is such that there is always going to be income for the government in the royalty structure because as soon as you’re operating that is going to be paid,” he said. Specifically, the royalty is made up of 8 percent from open pit mining and 3 percent from underground mining.

In contrast to the Tocantinzinho gold mine, which is being powered from Brazil’s electricity grid, the G Mining Ventures President said operational costs in Guyana are projected to be higher because the company has to operate its own power plant and the cost of stripping ore here would be higher. The company also plans to engage in not only open pit but also underground mining.

Like previous large gold mining operations, G Mining Ventures plans to refine the gold on site from 75 to 80 or 90 percent purity and then sent to an overseas refinery to take it to a purity level of 99.99 percent. Mr Gignac said the assay results are shared with the Guyana government in keeping with transparency rules of metallurgical audits.

Typically, the Guyana Gold Board inspects and records gold production at such mine sites and then the gold is shipped to a coastal airport and transferred to a waiting aircraft for export.