TORONTO, April 11, 2012 /PRNewswire/ - Guyana Goldfields Inc. (TSX: GUY) ("GGI" or "the Company") is pleased to announce a non-brokered private placement pursuant to which GGI proposes to issue 8,391,069 common shares at a price of $2.91 per share for aggregate gross proceeds of approximately $24,418,010.
The Baupost Group, L.L.C., a Boston, Massachusetts based institutional investor, has agreed to purchase 7,891,069 common shares in the private placement for approximately $22,963,010 in aggregate proceeds. Upon closing of the private placement, The Baupost Group will hold an aggregate of 16,928,669 common shares (or approximately 18.3%) of the Company and will have the right to appoint an independent director to the Company's Board of Directors.
In addition, Patrick Sheridan. Jr., the Chief Executive Officer and Interim President & Chief Operating Officer of GGI, has agreed to purchase 500,000 common shares in the private placement for $1,455,000 in aggregate proceeds.
The offering is scheduled to close on or about April 24, 2012, and is subject to a number of conditions, including, without limitation, receipt of all regulatory approvals, including the approval of the Toronto Stock Exchange, and completion of definitive documentation. The shares issued upon the closing of the private placement will be subject to a 4-month hold period.
Patrick Sheridan Jr, Chief Executive Officer and Interim President and Chief Operating Officer, states, "We are excited to have a large institutional investor as a partner and reaffirms our viewpoint that the Aurora Gold Project continues to be a robust asset. This provides us with a strong capital position to produce a revised Feasibility Study."
The net proceeds of the private placement will be used towards the strategic plans for 2012 outlined below and to continue exploration of the Company's portfolio of gold exploration properties in Guyana, South America.
GGI's strategic plans and milestones for 2012 include:
- Revised Feasibility Study - Due Q4
- Sub-level Retreat Scoping Study - Due Q2
- Revised Aurora Resource Estimate - Due Q2
- Infrastructure Construction - Ongoing
New Feasibility Study
The Company has initiated a revised Feasibility Study ("FS") for the Aurora Gold Project which has the potential to significantly improve the project's economics. The decision to deliver a revised FS resulted from current management's disappointment surrounding the overall mine plan and approach to the optimization of the project, as outlined in the National Instrument 43-101 technical report (dated April 9, 2012) which has been filed on SEDAR. Alternative mining methods are being investigated, specifically for the underground resource. The new FS will be prepared in accordance with National Instrument 43-101 and compiled by SRK Consulting (Canada) Inc. ("SRK"), who authored the prior FS, with additional contributions provided by prominent industry consultants. The new FS is expected to be completed in Q4 and will investigate all opportunities listed below.
- New study will concentrate on mining the deposit from surface to approximately 750m vertical depth
- Removal of the vertical shaft component, refrigeration plant, and paste backfill plant
- Analysis and tradeoff study of underground mining methods
- Examination of contract mining proposals, including possible dual decline access to Rory's Knoll underground
- Removal of some of the smaller open pits considered to be marginal in the current study
- Review and optimization of mobile equipment fleet, ramps, haul roads and strip ratio
- Review of contract mining for open pit pre-stripping
- Optimization of mine site facilities: Overhaul of mine plan with particular focus on improving the location of key facilities such as the waste dumps, processing plant, and tailings area with the objective of significantly decreasing operating costs and reducing the footprint of the overall site plan
- Re-evaluation of the size of the processing plant to maximize throughput in the first ten to twelve years of the mine life
- Full review of all capital expenditure and operating costs, including but not limited to the power plant, general & administration, mobile fleet (trucks), and the processing facility
- Quotes for contract mining will be reviewed during this process
Patrick Sheridan, Chief Executive Officer and Interim President and Chief Operating Officer, states "In the new FS, we expect to demonstrate, from a first principles approach, significantly improved economics at the Aurora Gold Project and look forward to updating the market on these developments in the upcoming months."
Sub-level Retreat Scoping Study
- The Company has commissioned SRK (Vancouver) to complete a separate scoping study for sub-level retreat ("SLR") underground mining method for Rory's Knoll, which is due to be completed in Q2 2012.
- Based on the results from this scoping study, the Company may utilize this alternative underground mining method for Rory's Knoll.
Revised Resource Estimate
GGI plans to report a revised mineral resource estimate for the Aurora Gold Project in Q2 2012 which will provide an update to SRK's previous resource estimate of 5.71 million ounces in the measured & indicated categories (47.040 million tonnes at a grade of 3.83 g/t) and 1.17 million ounces in the inferred category (9.97 million tonnes at a grade of 3.63 g/t) (see press release dated September 9, 2011).
This new resource estimate will be used in the new FS and will include an additional 159 holes completed from May 31, 2011 to the end of March 2012. Drilling focused on improving the geological model with the intent of upgrading inferred ounces at Aleck Hill. The revised estimate will also include exploration results received from Rory's Knoll at depth where new deep drilling extended the mineralization model approximately 530 metres below the known mineralization boundary of 1,556m to beyond 2,100m (see press release dated September 9, 2011).
The Company continues to carry out off-site and on-site civil and infrastructure works that are critical to the start of the mine development and construction. These initiatives include the port facility, camp facilities, and upgrade to the road access already established to the mine site.
The securities described herein have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States unless registered under the Act or unless an exemption from registration is available.
About Guyana Goldfields Inc.
Guyana Goldfields Inc. is a Canadian based company, primarily focused on the exploration and development of gold deposits in Guyana, South America where the Company has operated since 1996. The Aurora Gold Project in Guyana has a current measured and indicated resource of 5.71 million ounces gold (47.040 million tonnes at a grade of 3.83 g/t) (see press release dated September 9, 2011). The Company plans to issue a revised Aurora resource estimate mid-2012 and a new FS by year-end. For further details regarding the Aurora Gold Project, reference should be made to the technical report for the Aurora Gold Project which has been filed on SEDAR at www.sedar.com and on the Company website at www.guygold.com, with no material changes from the February 24, 2012 press release.
At the Aranka Properties, the Company has discovered a deposit at Sulphur Rose and N-1 and other highly prospective targets within a 5-km radius have been identified for drill testing in 2012.
As at the date hereof, the Company has approximately $24 million in cash and short-term bank guaranteed investment certificates and no debt; there are approximately 83 million shares issued and outstanding.
This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the estimation of mineral resources. Often, but not always, forward-looking statements can be identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are based on various assumptions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of GGI to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the final findings set forth in the Feasibility Study , general business, economic, competitive, political and social uncertainties; the actual results of exploration activities; changes in project parameters as plans continue to be refined; accidents, labour disputes and other risks of the mining industry; political instability; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Risk Factors" in GGI's annual information form. Although GGI has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this news release and GGI disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements.
SOURCE Guyana Goldfields Inc.