Aurora Mine Plan

Aurora mine plan (Image Guyana Goldfields)

Guyana Goldfields (GUY.T) is on track to become the next gold mine in Guyana. A 5000 tonne per day SAG mill has been successfully delivered to the site and construction is ramping up.  Production is expected to begin in mid-2015.

Construction is fully funded through the October closing of a $185 million project finance facility.

Over 8 million ounces have been discovered on the project to date with over 3 million of those in the reserves.  The immediate plan is for a 17 year mine life producing 3.29 million ounces, but there is potential for expansion.

The Aurora project has some of the best economics of any mine currently in construction. The project has an after tax IRR of 25% and a payback period of 5 years at $1150 gold.

Cash costs are expected to be in the lowest quartile of the gold industry, as the project has the benefit of high grade (avg 2.74 g/t) and a low strip ratio. Average operating cash cost is projected at $527 per ounce.

Guyana stock is 70% held by institutions including The Baupost Group, Van Eck, IFC, Templeton, Sun Valley Gold, and Sprott.

Scott Caldwell, president and chief executive officer, stated: "We are pleased that the arrival of this critical plant completes yet another key milestone towards the development of Aurora and achieving first production in mid-2015. The safe, efficient transportation of the SAG mill to the Aurora site is a real credit to the entire logistics team composed of our own logistics personnel, local service providers and the EPC contractor, as well as the cooperation of other road users. The arrival of the SAG mill shells was the heaviest component to be transported to site which clearly demonstrates that our logistics chain is fully operational."

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With construction nearing completion, Guyana Goldfields is reaching a stage where mining companies tend to get a re-rating in the stock price, as production begins to generate cash flow.

 

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Investors in Guyana Goldfields should look for the mine begin production on time and on budget with no start-up problems.

If gold can hold current levels the stock has potential to generate solid returns in 2015. Interesting to note: this was a $10 stock in 2010 and the project is much further advanced now.

Symbol: GUY.T
Share price: $2.73
Shares outstanding: 150.33 M
Market cap:  410.4 M

Read: Guyana Goldfields Inc: SAG Mill Arrives At Aurora Gold Project

I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.