Inflating the investment package or padding the books? Aurora Gold Mines 'spend' US$30M on lighting towers - each retails in Guyana for US$10,000

Inflating the investment package or padding the books? Aurora Gold Mines ‘spend’ US$30M on lighting towers – each retails in Guyana for US$10,000

May 27, 2018 News

What the lighting tower looks like

As scrutiny continues on the level of concessions that foreign companies are enjoying in Guyana as against what the country is getting in return, the spotlight remains on Aurora Gold Mines Inc.
The Region Seven mines at Aurora by the Canadian company have been coming under criticisms for not only the seeming mismatch of revenues for Guyana versus the tax and duty free concessions, but for its adherence to its agreement with the Government of Guyana.
As a result of its commitment to invest in Guyana, the company was granted hundreds of millions of dollars in annual tax and duty free concessions over the years.
According to documents submitted by Aurora Gold Mines Inc. to Guyana last year, for permission to import items, it wanted almost everything free of tax– from equipment, to radios and cables, cyanide, tyres, trucks and even tent structures.
One of the items that Aurora asked for was lighting towers. A lighting tower is a piece of mobile equipment, with generator, which has one or more high-intensity electric lamps and a mast. They are used in areas where lighting is poor.
Aurora wanted 100 of them.
In a letter to the government last September, Aurora said that 100 lighting towers would cost US$30,000,000. This is equivalent to US$300,000 for each.
The problem is that on the local market, one lighting tower costs a mere US$10,000…or just over $2M apiece.
The total quantity for the 100 would have cost US$1M.
The item is on the list of duty free concessions as one of the costliest and was among 160-plus others for which Aurora wanted duty free concessions.
The effect of the costs, more than 30 times the retail price, raised troubling questions.
According to accountants, it sought to mislead the Government of Guyana into thinking that the company was investing what it promised, according to its stated plans.
It appeared, of course, to overstate the actual investments of the company.
Aurora by overstating those amounts is also in effect inflating its costs, which will have an impact on its shareholders’ dividends.
Suppliers of the lighting towers said that the cost of each in Guyana is upwards of $2M and not more than $2.6M. Buying 100 would attract discounts.
Under the engagements of the Guyana Revenue Authorities, all imports coming to Guyana are supposed to be checked to ensure that prices are realistic.
Whether this was done in the case of the Aurora application last September is unclear.
Aurora is under fire as it appears that it is readying to bring in a Peruvian company to conduct major contract works, including moving stripped gold rocks from its mines to its mills.
The contracts were being managed by local contractors in combination with a number of equipment that the company owns.
Under its agreement with Guyana, Aurora has to provide as much opportunities as possible for locals.
The company is also under fire for bringing in a Twin-Otter plane while local operators who were benefitting have been left out in the cold.