Aurora Gold

completed

Scope of the Project and IFC’s Proposed InvestmentThe total Project cost is estimated at US$300 million, comprising: (i) an estimated initial capital expenditure of US$250 million; (ii) working capital, operating losses during construction, interest during construction and financing fees of US$30 million; and (iii) potential cost overruns of US$20 million. The Project owner and developer is Guyana Goldfields, a TSX listed Canadian-based mineral exploration and development company primarily focused on the acquisition, exploration and development of gold deposits in the Guiana Shield of South America. The Company is developing the Aurora Gold Project through its local subsidiary AGM Inc. (“AGM”), a company registered in Guyana. IFC’s involvement in the Company dates back to 2006 with total investments of $26.1 million in Guyana Goldfields through a series of equity investments. IFC’s current outstanding equity investment in Guyana Goldfields is $23.4 million which represents 5.5% ownership in the company.The proposed IFC investment is a US$50 million A loan for IFC’s own account, for up to 7.5 years (including up to two years grace) to Guyana Goldfields and/or its wholly-owned subsidiaries. A further US$150 million will be mobilized from a combination of official financial institutions and commercial banks through parallel and/or B loans.The total debt financing is estimated at US$200 million (including US$20 million for potential cost overruns). The remaining total project cost will be funded by the sponsor’s equity contributionThe Aurora Gold Project is located in a remote and largely uninhabited area about 170 km west of Georgetown and is connected to the Buckhall Port on the Essequibo River by a 150 km access road (with a barge crossing of the Cuyuni River at Tapir). Since 2004 the Company has conducted extensive exploration drilling, outlining several gold deposits and progressing from an early stage prospect to a feasibility study stage project with a current measured and indicated resource estimate of 6.5 million ounces (in 63 million tonnes at a grade of 3.24 g/t) with proven and probable reserves of 3.5 million ounces (in 40 million tonnes at a grade of 2.74 g/t). Mineral reserves are included in mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Following the granting of the prospecting license in 2004 by the Guyana Geology and Mines Commission (“GGMC”), a 20-year mining license was granted to the Company in 2011 by GGMC (together with entering into a mineral agreement), becoming the first gold sector license to be granted in Guyana since 1991. Reference is made to the Company’s technical report entitled “NI 43-101 Technical Report, Updated Feasibility Study, Aurora Gold Project, Guyana South America” dated January 29, 2013 and prepared by Glen Cole, P.Geo., Jarek Jakubec, P.Eng., John Lambert, P.Geo., D. Erik Spiller, MMSA, and Richard Tocher, P.E., each a qualified person within the meaning of National Instrument 43-101.The main components of the Project include the Aurora mine site, located on the south bank of the Cuyuni River, within the boundaries of a 5,802 hectare (ha) A1 Mining License; the Buckhall logistics support facility on the west bank of the Essequibo River; the Barama (M3) road, built in the 1990s to provide access to a large hardwood timber concession north of the Cuyuni River owned by Barama Company Ltd., and the Aurora (M3) road extension; a new 33 km road constructed by the Company in 2011-2012 connecting the Barama road to Tapir Crossing (a vehicle barge landing on the Cuyuni River), and extending west to the Aurora site.The current mine plan aims to produce 3.3 million ounces of gold over an initial 17 year mine life. Commercial production is expected to commence in the first quarter of 2015. Gold production is phased with initial open pit mining commencing in 2015 (continuing through 2023) and underground mining commencing in 2018 (continuing through 2031). It is estimated that the Project will employ approximately 900 people during construction and 500 people during operations. Approximately 90% of these workers are expected to be Guyanese nationals.Activities anticipated in the major phases of the Project include:Pre-construction Phase: This phase will include completion of a new camp at the mine site, clearance activities for major earthworks and the open pit area of the mine, completion of local access roads and stabilization of all access road right of ways (ROWs). Major Construction Phase: This phase will include the construction of crushing, milling, mineral separation and cyanide detoxification plant infrastructure; construction of the tailings and reclaim water pipelines; construction of the first raise of the Tailings Management Area (TMA), Fresh Water Pond (FWP), and Mine Water Pond (MWP); decommissioning and reclamation of a temporary man-camp at Tapir Crossing (the permanent camp will remain); completion of the wharf and supporting facilities at Buckhall; installation of electrical power generation equipment, wastewater treatment systems, explosives magazines, fuel storage and fuelling areas, and sanitary landfills; pre-stripping of the pad for the first waste rock stockpile; construction of two protective dikes between the Cuyuni River and the pit mining areas and renovation of the Aurora site airstrip. Operations Phase: It is planned that mining operations will be conducted around the clock, 365 days per year. Ore will be crushed to a milling size in three stages. The mill and mineral separation facility will be designed to treat a nominal 1.75 Mt/a increasing to 3.5 Mt/a in later phases of operation. All ore types will be amenable to conventional cyanide leaching using a modified carbon in leach (CIL) circuit for leaching followed by carbon desorption and separation of doré bullion via electro winning. Process tailings will be treated using an air/SO2 cyanide detoxification system, operated to achieve a nominal weak acid dissociable (WAD) cyanide concentration of 0.5 mg/l in the tailing stream as it enters the tailings pipeline and is deposited in the TMA.Decommissioning, Reclamation, and Closure Phases: It is expected that mining operations will cease approximately 17 years after the start of open pit mining operations. When mining ceases, the final stockpile of Run of Mine (ROM) ore will be processed, and the Project will enter a period of decommissioning and closure. Ownership of the Project airstrip, the Aurora (M3) road extension to the end of the Barama road, the ferry landings at Tapir Crossing, and the Buckhall logistics center is expected to revert to the Government of Guyana, as required under the Guyanese regulatory framework, at the end of mine life, and these features will therefore not be decommissioned.Although remote and heavily forested, the general area of the Project has been traversed or investigated over the years by groups or individuals engaged in Artisanal Small Scale Mining (ASM), hunting, and other human activities. However, no legal or illegal ASM operations have been or will be displaced by Project activities. Two informal communities are considered to be in the Project’s social area of influence; Aranka Mouth, an informal settlement engaged primarily in ASM, located on the north bank of the Cuyuni River approximately 16 km downstream from the Aurora site, and approximately 10 km due north of the Aurora (M3) road extension; and Buckhall, an informal community at the eastern end of the Barama (M3) Road, in the vicinity of the Company’s logistics facility of the same name. The Buckhall community is on the western bank of the Essequibo River, due south of the Barama Company Ltd. timber concession, with residents engaged primarily in logging, ASM, and light commerce.The Project’s environmental area of influence does not encroach on (nor is adjacent to) any titled Amerindian lands or lands frequented by Amerindians. The nearest Amerindian community is Kurutuku, located approximately 40 km upstream from the Aurora site on the Cuyuni River. Mining is a key driver of Guyana’s economy and represents about 20% of Guyana’s GDP. However, this is almost entirely from small-scale gold miners as the last large-scale gold mine, the Omai Gold Mine, closed in September 2005. The Aurora Gold Project is one of only a handful of large-scale mining projects in the country and its development will help drive local economic growth through employment, provide fiscal receipts to government and help establish environmental and social benchmarks in Guyana’s mining sector.