VANCOUVER — Guyana Goldfields (TSX: GUY; US-OTC: GUYFF) has wrapped up its first commercial quarter at the Aurora open-pit gold mine in Guyana, and the results hint at an operation that’s about to hit its stride. The company cranked out over 41,000 oz. gold in the quarter at all-in sustaining costs of US$778 per oz. gold.
This represents a margin per ounce of US$418, and free cash flow of US$18.3 million, or US12¢ per share. The mine exceeded its nameplate throughput of 5,000 tonnes per day during the quarter, with a daily production record of 6,586 tonnes per day.
“The operation is meeting — and in some cases exceeding — our expectations,” president and CEO Scott Caldwell said on a conference call. “Our all-in sustaining costs over the quarter, though a very good number, were slightly higher than expected. This was due to a higher-than-expected number of employees, or as I call it, the ‘construction hangover.’”
He added that “the mine itself performed well and exceeded production estimates, tonnes mined and milled, and ounces delivered and produced. Recoveries are steadily improving, and we’re confident we’ll achieve design levels.”
Production came from total mill throughput of 462,600 tonnes at a head grade of 3.07 grams gold and 89% recoveries, though the company reported recoveries had reached 93% near the end of the quarter. Guyana Goldfields reported run-of-mine stockpiles totalling 78,700 tonnes at 1.98- grams gold per tonne.
Aurora is on track to hit the firm’s annual guidance of between 130,000 and 150,000 oz. gold, at all-in sustaining costs ranging from US$587 and US$637 per oz. gold.
Many of Guyana Goldfields’ calculations, including all-in sustaining costs and reserves, assume a conservative US$1,000 per oz. gold.
“We completed a study one year ago near spot gold prices, and it’s near a feasibility level,” Caldwell commented. “We just need to refine some of the sustaining capital variables. What it did was increase the open-pit mine life by four years. It also added a bit to our underground potential, and we’re going to work on that study this year to help with the detail on a mill expansion.”
The mine’s 17-year life is modelled on proven and probable reserves of 27.4 million tonnes grading 2.91 grams gold for nearly 3.1 million contained oz. gold.
The current project is being developed as a stand-alone open-pit mining operation, with only an eight-year life.
Aurora is divided into four major gold zones: Rory’s Knoll, Aleck Hill, Walcott Hill and Mad Kiss. Mineralization in Guyana’s Golden Mile area is controlled by a series of northwest- to southeast-trending shear zones, which orient subparallel to the dominant northwest structural trend throughout the property.
The company has geological potential at Aurora, but will only earmark US$3 million for exploration this year.
“It’s a modest exploration budget, but we intend to work on a target we call ‘Powis Hill,’ which is a couple kilometres from the mill site,” Caldwell said. “We’ve trenched the area … we’re looking to do a little reverse-circulation drilling and identify a supplemental feed of open-pit, saprolite ore.”
Scotiabank’s mining desk noted on May 10 that the results represent a “strong first quarter of commercial production,” and that the balance sheet is “building,” while it pays down debt principal and outstanding accounts payable.”
Guyana Goldfields has traded in a 52-week range of $2.48 to $8.31, and closed at $8.11 per share at press time. The company has 154 million shares outstanding for a $1.3-billion market capitalization, and reported a US$41.7-million cash balance at the end of March.
“We expect to enhance the overall profitability of what I consider a world-class mine,” Caldwell said. “I can’t overemphasize the success we’ve had to date, and it’s a direct result of our team. When you have a great mine with great grades, you can expect good results moving forward.”