Four million ounces

Jun 01, 2018 Features / Columnists, Peeping Tom

Kaieteur News has been providing a great service to the public by publishing information about some of the deals which have been entered into between the Government of Guyana and foreign companies. For doing its work as a public watchdog, this newspaper is now being accused of being vicious and of orchestrating a politically-motivated campaign to discredit Guyana Goldfields.
Those making this charge do not seem to appreciate the absurdity of their proposition. If Kaieteur News’ reporting of the generous concessions enjoyed by Guyana Goldfields, and the company’s assault on local content, constitutes a politically motivated-campaign, then those making such charges must explain in whose political interest Kaieteur News is acting.
It surely cannot be the APNU+AFC coalition, because the government’s handling of the concessions has been criticized. It is also under the APNU+AFC administration that the company is being accused of trying to reduce its local content obligations.
Kaieteur News surely cannot be acting in the interest of the PPPC. It was the PPPC originally which granted the concessions.
The charge of a politically orchestrated attack against the company is therefore just a smokescreen to attract sympathy for a foreign company whose actions have adversely come under the radar.
Those making the charge of a politically orchestrated campaign seem to have lost all sense of balance. The spread of what is alleged to be false information – is being designated as cyber terrorism. Talk about poppycock!
We are told that Guyana Goldfields is the single largest contributor to the treasury. And that even prior to gold being found, the company had invested billions. No one says that the company is also one of the largest – if not the largest – producers of gold in Guyana, and that this is Guyanese gold for which the company has been given extraction rights. The company invested billions because it is going to make many more billions in return.
Every investor in a productive enterprise is required to make an investment even before production begins. You cannot produce beer unless you build a brewery. You cannot mine for gold unless you put in the infrastructure and equipment. This is basic Business 101.
Guyana Goldfields was therefore not doing anyone any favours by investing billions prior to finding gold. It knew that there is four million ounces of gold in those mines and it has full license to extract the ore containing those four million ounces. It knew that from its exploratory surveys and this is why it made the investment. It has announced on its website that this is reserve of gold in the mines.
Guyana Goldfields was not investing blindly. It was certain that there was gold. It has published that the Guiana Shield contains many multimillion-dollar deposits of gold.
Therefore, Guyana Goldfields was doing itself a favour by investing billions even before production began. It was doing what every investor does – place an outlay of capital in order to achieve profits down the line.
Guyana Goldfields has been given generous concessions. Billions of dollars worth of concessions have been handed to the company on a silver platter. Where is the formula which is supposed to link concessions to employment and other variables?
Gold was trading at US$1300+ per ounce yesterday. Multiply that by a million ounces. Then assume that the cost of production is around US$523 per ounce (it is a large scale mining concessions). Guyana Goldfields is expected therefore, at present prices, to make more than US$3 billion dollars or more than 600 billion Guyana dollars over the life of the gold mines.

Guyana Goldfields is expected to produce 270,000 ounces per year. Over four years, this will be over 1 million ounces. Within a decade and half, all the four million ounces should have been extracted and the mines left barren.
The profits which Guyana Goldfields and its shareholders are making are astronomical. And let us not forget that this is Guyana’s gold. So why is it unreasonable for the Guyanese to not be upset at the importation of an aircraft and trucks which will take businesses out of the hands of locals given all the billions this company is going to make?
If Guyanese had the resources to develop that mine, we would have all been millionaires. But that does not mean that because we do not have the resources that we should bend forward and allow Guyana Goldfields to take advantage of us.
Guyana Goldfields must not become another OMAI Gold Mines, who took out all of our gold and never declared a profit. It is for this reason that the Kaieteur News is paying keen attention to these deals signed under the PPPC and with which the APNU+AFC seems very comfortable.