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Trading and deficits…Gold Board basks in turnaround year, despite lower declarations
The year 2017 is coming to an end, with a few days of trading and declarations left for the Guyana Gold Board (GGB). But despite lower-than-projected declarations, overall, it has been an excellent one by any means. And the performance is due to prudent stewardship of buffer stocks on the international trading market, along with work to improve trust with stakeholders.
Gold Board’s Chairman, Gabriel ‘GHK’ Lall and GM (ag.), Eondrene Thompson.
Speaking with Kaieteur News last week, Chairman of GGB, Gabriel ‘GHK’ Lall, explained the board inherited a tough situation, with over $14B in deficits racked up at the Bank of Guyana.
He said that prior management could be likened to hunting elephants, expecting big returns from rising prices, with Guyana left holding the bag when prices fell.
After a heartening run of a few years, with prices reaching almost US$1,900 per ounce, the prices started tumbling in 2012. It was reported that between 2012 and 2013, the Gold Board borrowed large sums from the national treasury to trade in gold, which resulted in massive losses from lower prices.
Lall explained that there were no effective downside protection hedges, with players operating over their heads and out of their depth. As a result, Gold Board was saddled with the fallout.
This year has been good for Gold Board on all accounts. It is not expected that the 700,000-plus ounces of last year, a record-breaking one, would be repeated.
As of this past week, excluding Thursday and Friday, the declarations were about 620,000 ounces. There were a number of exports, by dealers, involving thousands of ounces that are not included in that figure.
But the declarations are not really bad news. In fact, GGB is expecting foreign currency earnings for the industry from exports to be in excess of US$700M, even higher than last year, despite lower declarations.
This is how Lall described the turnaround: “There was prudent, patient stewardship of our buffer stock, and we were able to improve our monitoring, advancing positions, pulling the trigger and content with conservative gains.
From a position of over $14B in deficit, the Board and management managed to pull back the situation by a remarkable 65 percent, to $6.7B.
The Chairman is not taking kudos for himself and board.
“Ms. Eondrene Thompson, General Manager (ag) and her staffers managed with considerable skill, and deft moves to bring us to where we are at. She is a main performer in the deficit reduction. We at the board level have to commend her.”
There is likely to be lower declarations this year for gold, but earnings are up because of better prices.
However, the official was not unimpressed with the challenges facing that state-owned entity.
There have been talks about a reduction in the mandate from buying to one of more monitoring.
However, the current board has made it clear that the Board should continue buying from miners and dealers to ensure the stabilisation of the market.
“There is still a way to go. We are working on a combination of revenue-generating measures and cost management exercises. It is the vision for Gold Board to stand on its own feet and be self-sufficient. In fact, the board and management are working assiduously to enhance trust and confidence in the sector. This entails constant engagements with partners, and of course the public.”
Lall made it clear that the Gold Board is not unaware of the challenges and hurdles that remain.
These include both technological and human challenges.
The Gold Board has been facing a tough year. In a major scandal this year, that involved the police, three senior officials were sent home for allegedly being in collusion with a gold dealer.
The licence of the gold dealer was yanked. The police are handling that matter.
A few weeks ago, two officials, the accountant and a clerk, were sent home for allegedly manipulating assay records for miners.
The gold trade has been the biggest foreign currency earner for the country over the last few years. A number of concessions were announced recently for miners.
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