GUY Investor Presentation March 2014


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GUY Investor Presentation March 2014

  1. 1. Investor Presentation March 2014
  2. 2. Forward Looking Statement This presentation of Guyana Goldfields Inc. (the "Company") contains statements that constitute "forward‐looking statements." Such forward‐looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or developments in our industry, to differ materially from the anticipated results, performance or achievements expressed or implied by such forward‐looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "aims," "plans," "anticipates," "believes," "intends," "estimates," "projects," "potential" and similar expressions, or that events or conditions "will," "would," "may," "could" or "should" occur. Information inferred from the interpretation of drilling results and information concerning mineral resource and mineral reserve estimates may also be deemed to be forward looking statements, as such information constitutes a prediction of what might be found to be present when and if a project is actually developed. Forward‐looking statements this document includes are statements regarding: the Company's expectations regarding drilling and exploration activities on properties in which the Company has an interest; and the Company's statements regarding estimates of reserves and resources on properties in which the Company has an interest. There can be no assurance that such statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements, and readers are cautioned not to place undue reliance on these forward‐looking statements that speak only as of their respective dates. Important factors that could cause actual results to differ materially from the Company's expectations include among others, risks related to fluctuations in mineral prices; uncertainties related to raising sufficient financing to fund planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company's properties; uncertainties involved in the estimation of resources and reserves; the possibility that required permits may not be obtained on a timely manner or at all; the possibility that capital and operating costs may be higher than currently estimated and may preclude commercial development or render operations uneconomic; the possibility that the estimated recovery rates may not be achieved; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of cost overrun or unanticipated expenses in the work program; the risk of environmental contamination or damage resulting from the Company's operations; risks associated with title to mineral properties; and other risks and uncertainties discussed appear elsewhere in the Company's documents filed from time to time with the Toronto Stock Exchange and Canadian securities regulators. These statements are based on a number of assumptions, including assumptions regarding general market conditions, the availability of financing for proposed transactions and programs on reasonable terms, and the ability of outside service providers to deliver services in a satisfactory and timely manner. Forward‐looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. Except as expressly required by applicable securities laws, the Corporation undertakes no obligation to update these forward‐looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change. This presentation uses the terms "Inferred Resource", "Indicated Resource", “Measured Resource” and "Mineral Resource". The Company advises readers that although these terms are recognized and required by Canadian securities regulations (under National Instrument 43‐101 "Standards of Disclosure for Mineral Projects"), the US Securities and Exchange Commission does not recognize these terms. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, "Inferred Resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that any part of an Indicated or Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre‐feasibility studies, or economic studies except for a Preliminary Assessment as defined and permitted under National Instrument 43‐101. Readers are cautioned not to assume that part or all of an Inferred Resource exists, or is economically or legally mineable. The Mineral Resources stated in this presentation are not Mineral Reserves and, in the absence of a current feasibility study, do not demonstrate economic viability. The determination of Mineral Reserves can be affected by various factors including environmental, permitting, legal, title, taxation, socio‐political, and marketing issues. TSX : GUY 2
  3. 3. Corporate Snapshot Symbol: TSX: GUY 19.7% Van Eck 13.4M 10.6% Franklin Resources (Templeton) 11.6M 9.9% IFC (World Bank Group) 6.9M 5.5% 6.5M 5.2% 4.2M 3.3% 3.0M 2.4% 2.9M 2.3% Sprott Asset Mgmt 2.3M 1.8% Fidelity Emerging Markets Fund 52 week: Hi/Lo 24.9M Fidelity Investments Fully-diluted shares The Baupost Group AMG Analysen Warrants % Jennison Options Shares Patrick Sheridan Jr. (Founder) Basic Shares Issued Top 10 Shareholders 2.1M 1.7% 126,143,899 9,631,250 0 135,775,149 C$3.39 / C$1.17 Market Cap (at C$ 3.09) C$390 million Cash Position (Oct 31, 2013) C$109 million Debt TSX : GUY $0 3
  4. 4. Executive Summary  Life of mine production of 3.3Moz at average cash costs of $527/oz (royalty included), in lower  quartile range  After‐tax NPV of $735M and IRR of 31% at $1,300/oz gold and 5% DR  Payback of just over 4 years at $1,300/oz gold  New management team focused on advancing Aurora Project to production Staged Approach Minimizes Capital  Initial open pit mining at 5,000 tpd mill, with underground development and mill expansion to 10,000 tpd funded by operating cash flows. Simple Mine Plan  Infrastructure build is already in progress Open Pit  Compact design and low strip ratio Simple  Metallurgy  Free milling gold ore with excellent gold recovery of +94%  Examining contract mining for open pit, third party ownership and operation of power plant and fuel  supply, and potentially deferring underground expansion  Aurora is fully licensed and permitted  Extensive additional mineralization at depth beyond current mine plan and potential expansion of open pits  Large exploration land package Robust Economics Experienced Management Team Mining &  Metallurgy Opportunities Mining Friendly Jurisdiction Growth Potential TSX : GUY 4
  5. 5. Mine Plan Financials @ 5% Discount Rate Gold Price Base Case ($/oz) Mine Life Initial Production Start Date  Average Mill Throughput (tpd) Mine Depth (metres) Strip Ratio (waste:ore) Average Gold Grade (g/t) Gold Recovery (%) Total Gold Production (Moz) Avg Operating Cash Cost w/Royalty LOM ($/oz) Jan 2013  43‐101 Feasibility  Study $2.42 4.7:1 $13.68 $19.28 $13.78 $3.83 Operating Costs Open Pit cost per tonne Open Pit strip ratio (waste : ore) Mining cost per tonne to the mill Underground cost per tonne Processing cost per tonne G&A cost per tonne TSX : GUY Jan 2013  43‐101 Feasibility  Study 1,300 17 yrs Q1 2015 5,000/10,000 1,037 (970mbsl) 4.7:1 2.74 97(sap) 94.4(fresh) 3.29 527 5
  6. 6. Capital Costs Capital Expenditures (Millions of US$) January 11, 2013 Updated Feasibility Study:  Capital Required up to  Commercial Production Process Plant Engineering & Procurement $65 Process Plant Construction 60 Integration Management 0 Lump Sum Fixed Price sub‐ total $125 Plant Infrastructure Buildings 3 Plant Earthworks and Roads 4 Mine Infrastructure Buildings 3 Tailings Dam 7 Water Dams and Dykes 3 Site Services Water & Power 5 Logistics 7 GSJV – sub‐total $157  Owner’s Cost Infrastructure 18 Owner’s Costs ‐ Operational Readiness 0 16 Owner’s Costs – Other Owner’s G&A 14 Total Capital  $205 Less Spent to Date (Jan 11/13 to Oct 31/13) Remaining Capital Costs to Commercial Production TSX : GUY Changes to  Revised Capital Costs to  Capital  Commercial Production Costs (6) 8 10 $12 (1) 2 (2) (1) 1 4 1 $16    2 9 9 8 $44 59 68 10 $137 2 6 1 6 4 9 8 $173 20 9 25 22 $249 ($11) $238 6
  7. 7. Robust Economics Financials @ 5% Discount Rate Units $850/oz gold price¹ $1,000/oz gold price¹ $1,150/oz gold price¹ $1,300/oz  gold price¹² Average Operating Cash Cost (LOM) $/oz 423 423 423 423 Average Operating Cash Cost w/Royalty (LOM) $/oz 465 473 527 527 Pre‐Tax NPV $M 236 533 759 1,046 After‐Tax NPV $M 162 374 533 735 After‐Tax IRR % 12 20 25 31 Payback (After‐Tax) Years 6.8 5.6 5.0 4.4 2015 EBITDA (1st year of partial production) US$M 18 26 32 39 2016 EBITDA (1st year of full production) US$M 60 80 95 115 2021 EBITDA (Peak year) US$M 145 192 227 272 Cumulative Cash Flow³ US$M 506 975 1,330 1,784 1. Royalty rate of 5% at a price of gold of US$1,000 per ounce or less, royalty rate of 8% at a price of gold above US$1,000 per ounce 2. Base Case 3. Cumulative cash flow defined as revenue less operating costs less capital expenditures. TSX : GUY 7
  8. 8. Sensitivity Analysis After‐Tax NPV ($M) Sensitivity  Analysis Base Case ‐20% ‐10% 100% +10% +20% +30% +40% Gold Price 735 384 560 735 910 1,085 1,260 1,435 Opex 735 857 796 735 674 614 553 492 Capex 735 831 783 735 689 640 593 545 After‐Tax IRR (%) Sensitivity  Analysis Base Case ‐20% ‐10% 100% +10% +20% +30% +40% Gold Price 31 21 26 31% 35 39 43 47 Opex 31 34 32 31% 29 28 26 24 Capex 31 39 35 31% 28 25 22 20 TSX : GUY 8
  9. 9. Mining Friendly Jurisdiction & Government  Aurora is fully licensed and permitted  Guyana is the only English speaking country in South America  British common law and secure tenure - part of the Commonwealth  Democratically elected government under parliamentary system  Long history of significant gold production:  Gold was the largest export of the country in 2013 with 458,000 oz  Mining License Received and Mineral Agreement Signed (Nov.18/11):  Royalty:  5%: Gold price $1,000/oz or less  8%: Gold price $1,000/oz +  Corporate income tax:  30% with no withholding tax on interest payments TSX : GUY 9
  10. 10. Logistics & Infrastructure Road  Access to  Aurora TSX : GUY 10
  11. 11. Staged Approach Minimizes Capital Capital Expenditures (US$M) Total Capital  Initial Capital  (2013 – 2014) $ 249 Capital required up to  Commercial Production Capex to Commercial Production  Funded from Cash Flow $ 238 Corporate G&A, Debt Fees and  Exploration to Commercial Production $ 356 $  (11) Total Capital Required $ 153 $ 249 Less: Spent to date (01/11/13 – 10/31/13) Expansion Capital  Sustaining Capital  (2015 – 2017) (2018 – 2031) $   28 $ 266 Cash on Hand (As of Oct 31, 2013) $(109) Debt Funding (Completed by Q2 2014) $(165) Additional Debt Funding $  (25) Cash Reserve to be maintained $    33 TSX : GUY 11
  12. 12. Staged Approach Average of 231kozs/yr 400 Contained Gold Underground Peak at 350koz Open Pit 350 Saprolite Production Ounces (000) 300 Stockpile Reclaim (Sap & Fresh) 250 Evaluation of including known resources outside  current mine plan to offset excess milling capacity 200 150 100 50 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Production Year 2025 2026 2027 2028 2029 2030 2031 3.3 Moz Total Contained Gold with Average Annual Gold Production (LOM) of 194 Kozs TSX : GUY 12
  13. 13. Opportunities Examining opportunities for capital expenditure reductions such as:  Contract mining for the open pit  Third party ownership and operation of the power generation plant and fuel supply facilities  Extending open pit production and delaying the commissioning of the underground in the initial years of the mine life in order to take advantage of the high grade open pit and defer the expansion capital required for the underground. This would provide additional cash flow for funding the underground expansion.  Further updates will be provided as conclusions are reached. TSX : GUY 13
  14. 14. Growth Potential – Resource Upside Aleck Hill Walcott Hill Mad Kiss Rory’s Knoll  Room to grow outside current mine plan:  Below Satellite pits (Aleck Hill, Mad Kiss and  Walcott Hill):  Indicated: 570,000 oz Au at 3.93 g/t  Inferred:   290,000 oz Au at 4.11 g/t Portal  Below ‐970m at Rory’s Knoll:  Indicated: 1,120,000 oz Au at 3.87 g/t  Inferred: 1,280,000 oz Au at 4.25 g/t Decline 860,000 oz in Indicated & Inferred Categories Current Mine Plan Depth of ‐970m Resources Found Outside  Current Mine Plan TSX : GUY  Excess mill and equipment capacity later in the mine life (year 2024 and beyond) allows for throughput flexibility 2.4M oz in  Indicated &  Inferred  Categories 14
  15. 15. Proven Underground Mining Method Open Benching and SLR Mines • Finsch Mine, South Africa • Koffiefontein, South Africa • Ekati Mine, NWT • Diavik Mine, NWT Diavik Diamond Mine, NW Territories SLC Mines • Stobie Mine, Ontario • Granduc Mine, B.C. • Craigmont Mine, B.C. • Ekati Mine, NWT • • • • • • • • Kiruna Mine, Finland Ridgeway Mine, Australia Telfer Mine, Australia Perseverance Mine, Australia Big Bell Mine, Australia Harmony Mine, Australia Mt Lyall, Australia Numerous mines in China  and Russia Finsch Mine, South Africa Ekati Diamond Mine, NW Territories TSX : GUY 15
  16. 16. Site Plan Open pit mining begins at ~5,000 tpd  in Rory’s Knoll and is completed in  two years. Rory’s Knoll underground follows at  ~5,000 tpd while the satellite pits are  mined concurrently also at ~5,000  tpd. Once satellite pits are exhausted,  Rory’s Knoll underground continues  for an additional 8 years. TSX : GUY 16
  17. 17. Construction Progress TSX : GUY 17
  18. 18. Construction Progress TSX : GUY 18
  19. 19. Construction Progress TSX : GUY 19
  20. 20. Construction Progress TSX : GUY 20
  21. 21. Construction Progress TSX : GUY 21
  22. 22. Accelerated Timeline to Production Activity Q1 2014 Q2 Q3 Q4 2015 2016 2017 2018 2019 Debt Financing Enabling Infrastructure (Camp, Wharf, Road, Quarry, Communications) Bulk Earthworks (Tailings & River Dyke) Plant Construction Open Pit Mine Construction Open Pit Production Underground Development Underground Production Exploration News flow for first half of 2014:  Securing Debt Financing –by Q2 2014  Updates on construction progress – Ongoing  Material exploration results ‐ Ongoing TSX : GUY 22
  23. 23. Key Risks and Mitigations Key Risks Mitigations Logistics  Access road is year‐round and operational Rainfall    2.5m of annual rain fall Site is designed around water management If heavy rainfall, temporary break for no more than a few hours Country Risk     All permits received Mining friendly jurisdiction and government Stable republic within the British Commonwealth with an elected Head of State Independent since 1966    Pit is 225m away from the river Levee designed towards a 10,000 year flood event  Detailed hydrogeological and geotechnical studies performed and show minimal surface  subsidence    Fully engineered Feasibility Study with latest cost estimates Rory’s Knoll sub‐vertical type ore body suitable for SLR, a top‐down method Much lower operating cost –no backfill required Underground Labour Availability    Lack of U/G mining experience in Guyana Comprehensive training effort planned in pre‐production years Feasibility Study incorporates heavy reliance on expatriate technical staff, supervision and  underground operators Financing   On track to complete debt financing by Q2 2014 Commercial and other high yield debt available as last resort Cuyuni River / Hydrology Underground Costs Too Low TSX : GUY 23
  24. 24. Summary Management Focused on advancing project to production Region Guiana Shield – known gold region Country (government and community) Pro‐mining, excellent relations Sustainability International standards with IFC Aurora Gold Project  Robust Economics After tax NPV $735M, IRR of 31%, 4.4 yr payback  Open Pit & Underground Mining Staged approach minimizing capital  Resource and Grade 6.5M oz M&I and 1.82M oz Inferred @ +3g/t Au  Key Infrastructure Fully functional road access in place  Permitting Fully licensed and permitted  Development Already progressing  Growth Potential Extensive mineralization beyond current plan Exploration Upside TSX : GUY Large exploration land package 24
  25. 25. Appendix
  26. 26. Simple Mine Plan Open pit mining begins at  ~5,000 tpd in Rory’s Knoll  Aleck Hill and is completed in two  North years. [2018‐2022] Rory’s Knoll underground  follows at ~5,000 tpd  while the satellite pits are  mined concurrently also  at ~5,000 tpd. Walcott Hill [2023] [O/P: 2015‐2017] [U/G: 2018‐2031] Aleck Hill [2018‐2023] Once satellite pits are  exhausted, Rory’s Knoll  underground continues  for an additional 8 years. TSX : GUY Rory’s  Knoll Mad Kiss [2018‐2023] Measured Indicated Inferred 26
  27. 27. Simple Metallurgy TSX : GUY 27
  28. 28. Effective Water Management – River Levee 2 river levees, 1.5 km length in total Designed up to 60 metres wide and 9 metres high Dike is engineered to 10,000 year flood event River is 225 metres away from the pit TSX : GUY 28
  29. 29. Mineral Reserves & Resources Gold Price $1,300/oz Proven Reserves O/P Saprolite O/P Fresh Total Proven Probable Reserves O/P Saprolite O/P Fresh U/G Total Probable Total P & P Reserves¹ Quantity (Mt) Grade (g/t) Contained Gold  (Moz) 0.168 2.207 2.375 2.64 3.07 3.04 0.014 0.218 0.232 4.955 6.343 25.851 37.219 39.524 1.70 3.03 2.84 2.72 2.74 0.270 0.618 2.357 3.245 3.477 32.77 30.06 2.62 3.91 2.76 3.78 62.83 3.24 6.54 5.12 11.81 1.54 4.12 0.25 1.56 16.93 3.34 1.82 Measured & Indicated Resources O/P U/G Total M&I Resources Inferred Resource O/P U/G Total Inferred Resource ¹ Mineral reserves included in mineral resources. Underground in-situ cut-off grade of 1.2 g/t for Rory's Knoll. Open pit fresh ore in-situ cut-off grade of 0.5 g/t for all deposits. Open pit saprolite ore in-situ cut-off of 0.3 g/t for all deposits. TSX : GUY 29
  30. 30. The Region TSX : GUY 30
  31. 31. Geology Geological Description  Rory's Knoll mineralization: disseminated pyrite and gold mineralization associated with intense silica- fuchsite-sericite-carbonate alteration in tonalite intrusive probably emplaced at the hinge of the folded volcanic rock and metasediments.  Mad Kiss mineralization: disseminated pyrite and gold mineralization associated with intense silica-fuchsite- sericite-carbonate alteration in a quartz feldspar porphyry dyke.  Aleck Hill mineralization: mesothermal gold veins hosted in the shear zones of metavolcanic and metasedimentary rocks; occurs in a zone of pyrite-rich quartz-carbonate veins in volcanic rocks that are enclosed in an alteration envelope which reportedly includes silica-sericite and calcite cement filling fractures. TSX : GUY 31
  32. 32. Experienced Management Team Management  Patrick Sheridan Jr. Founder and Executive  Chairman Management BACKGROUND  Over 20 years of experience in the mining industry  Has actively explored in Guyana since 1996 and is the  founder of Guyana Goldfields and lead the discovery  of the Aurora and Sulphur Rose deposits Paul J. Murphy Executive VP, Finance &  CFO Dan Noone VP, Exploration  Scott A. Caldwell President & CEO   Peter Lello Galassi (“Lello”) COO   TSX : GUY Mining engineer with 30+ years  experience building  and operating gold and base metal mines worldwide Former President, CEO and Director of Allied Nevada  Gold Corp. from 2006 ‐ 2013 15+ years of international project development and 20  years as a senior officer in the United States Air Force. Formerly Senior Project Manager for Rio Tinto Iron  Ore Simandou Project in Guinea, West Africa.  He is based in Guyana and is responsible for daily  operations at the Aurora Gold Project. Violet Smith Country Manager Alexander Po Exploration Manager Jacqueline Wagenaar VP, IR & Corp. Comm BACKGROUND  Over 40 years of financial experience and former  Head of PricewaterhouseCoopers LLP Western’s  World Mining Practice  Over 20 years of experience of international  mineral exploration and development Former VP of Peru for Aquiline Resources   Over 20 years of experience in operations  management and has been involved with Guyana  Goldfields since its inception  Mining engineer and exploration geologist with  strong management experience with projects in a  numbers of different countries  Significant experience with investor relations  programs for several Canadian mining companies  with international assets 32
  33. 33. Scientific, Technical and Securities Information Scientific and Technical Information The qualified person for the mineral resource and reserve estimates and other scientific and technical information herein are as follows: Glen Cole, P.Geo. Jarek Jakubek, C.Eng., John Lambert, P.Geo., D Erik Spiller, MMSA and Richard Tocher, P.E, (the “QPs”) who are independent of the Company and have approved the contents of this presentation. The qualified person for the other scientific and technical information in this presentation, is Daniel Noone, BApSci (Geo), MBA, and has approved the contents of this presentation. Technical and scientific information contained herein, including the mineral resource and reserve estimates relating to the Aurora Gold Project is derived from the “Updated Feasibility Study, Aurora Gold Project, Guyana, South America” dated January 29, 2013 (the “Technical Report”). We have filed the Technical Report under our profile at For details of the data verification procedures employed by the QPs and the key assumptions, parameters and methods used to estimate the mineral resource and mineral reserve estimates, please see the Technical Report. For information about known legal, political, environmental, or other risks that could materially affect the potential development of the mineral resources or mineral reserves, please see the Technical Report. Securities Laws This presentation does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited. This presentation is not an offer to sell, or a solicitation of an offer to purchase, any securities in the United States. The securities referred to in this presentation will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the U.S. Securities Act of 1933 and applicable state securities laws. The information contained in this presentation does not and is not intended to constitute a "valuation," "formal valuation," "appraisal," "prior valuation," or a "report, statement or opinion of an expert" for purposes of any securities legislation in Canada or otherwise. Currency Unless otherwise indicated, all dollar values herein are in United States dollars. TSX : GUY 33