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Guyana to pocket US$3.4B from Toroparu Gold Project
(Kaieteur News) – Guyana is set to reap an estimated US$3.4 billion in taxes and royalties from the Toroparu Gold Project, which Canadian-based Aris Mining Corporation expects, will generate US$14.7 billion in gold sales based on a base gold price of US$3,000 per ounce over its 21-year mine life.
The Toroparu Project located in Region Seven (Cuyuni-Mazaruni) is being developed through Aris Mining’s local subsidiary, ETK Inc. The project is 100 per cent owned by the Canadian firm.
Aris Mining logo (CNW Group/Aris Mining Corporation)
According to the Preliminary Economic Assessment (PEA) recently published, at a base gold price of US$3,000 per ounce, the project is expected to contribute US$2.2 billion in income taxes and US$1.2 billion in royalty payments to the Government of Guyana, bringing the country’s total projected earnings to US$3.4 billion. At the same gold price assumption, the Toroparu gold project is projected to deliver an after-tax Net Present Value (NPV5%) of US$1.8 billion, an Internal Rate of Return (IRR) of 25.2%, and a payback period of three years.
The PEA results confirm plans for a large-scale, long-life open-pit operation expected to produce an average of 235,000 ounces of gold per year over more than two decades. The project’s life-of-mine production is estimated at 5.0 million ounces of gold, 4.9 million ounces of silver, and 260 million pounds of copper.
According to the PEA, under the Mineral Agreement with the Government of Guyana, the project will pay an 8% royalty on gold sales, 1.5% on silver, and 1.5% on copper. It was stated that the royalties are deductible from taxable income under Guyana’s 30% corporate tax rate. Notably, a 2011 mineral agreement between ETK and the Government of Guyana established a tiered gold royalty of 5% for prices up to US$1,000 per ounce and 8% for prices above that.
The report outlines gold production costs at US$826 per ounce, with an all-in sustaining cost (AISC) of US$1,289 per ounce.
The large-scale open-pit mine will require an initial construction capital of US$820 million, which includes pre-production costs and a US$96 million contingency. Aris Mining said this figure represents a US$38 million reduction compared to a previous fleet-purchase plan. The cut results from the company’s Original Equipment Manufacturer (OEM) leasing strategy, which lowers the upfront cost of the mining fleet from US$73 million to approximately US$35 million during construction. The company explained that this leasing approach will ensure access to modern, well-supported mining equipment under comprehensive maintenance and parts-supply programs throughout the 20-plus-year mine life.
The report also stated that the mine life of 21.3 years comes with opportunities for further expansion through continued exploration.
According to information from the company’s website, the project site was first mined by Alfro Alphonso in 1997 and explored by ETK from 1999 under a joint venture with Alphonso. ETK acquired full ownership in 2020, paying US$20 million to exercise its option, while Alphonso retained certain alluvial rights and access privileges, ETK also secured an investment agreement with GO-Invest granting tax exemptions on project-related imports.
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How about taking that US$3.4 Billion is Gold Bullion, instead of cash- to use
as a Hedge Fund for later in bad times ?