TORONTO, Cananda – Guyana Goldfields Inc. (TSX:GUY) has revised up the total capital cost of its Aurora Gold project to US$249 million and approved a spending plan to bring it to commercial production.
The new estimate is above the US$205 million Guyana had said it would take to build the project, but well below an earlier estimate, after the company scaled back its plans earlier this year.
The earlier estimate for the project in northern Guyana had proposed a $525-million cost for a mine with a life of 22 years and total production of nearly 4.4 million ounces of gold.
The company says its board has approved to spend US$238 million at its Aurora Gold project, whose capital cost is now estimated to be US$249 million, of which US$11 million has been spent to date.
The Toronto-based miner said it would keep a close eye on expenditures and was examining opportunities to reduce the capital expenditure for the project, including contract mining as well as third-party ownership and operation of the power plant.
It’s also reviewing the potential of extending open pit production and deferring the capital required for the planned underground expansion.
The company had reduced costs to US$205 million in January, saying the estimated cost in a later feasibility study included several changes, such as a phased mining and milling approach, a reduced footprint for the mine site and facilities and an optimized mobile equipment fleet.
That plan called for production of 3.29 million ounces of gold over an initial 17-year mine life at an operating cash cost of US$527 an ounce — estimates that the company said Monday had not changed.
Average annual gold production over the life of mine is expected to 194,000 ounces, and 231,000 ounces a year over the first 10 years.
Guyana said the revised capital costs allocated additional funds to engineering, integration management, more robust operational readiness, and costs associated with the schedule delay.
The new budget includes US$137 million for the engineering, procurement and construction of the initial processing facility and power plant at the project, which will initially produce 5,000 tonnes per day.
It has set a “not-to-exceed amount” of US$137 million.
Construction is anticipated to last 18 months, with commissioning of the mill beginning in the first quarter of 2015 and commercial gold production expected to be achieved by mid-2015.
“This is an extremely significant milestone for the project and for the company,” said chief executive Scott A. Caldwell.
“We are excited to be moving the Aurora Gold project forward and have engaged an excellent team whose strengths complement each other.”
Trading in Guyana Goldfields shares had been halted pending the announcement. Its shares closed down a nickel at $3.76 on the Toronto Stock Exchange on Friday.