Guyana Goldfields increases financing to $130-million

2016-06-27 10:07 ET - News Release

Mr. Scott Caldwell reports
GUYANA GOLDFIELDS INC. ANNOUNCES INCREASE TO PREVIOUSLY ANNOUNCED BOUGHT DEAL FINANCING TO $130 MILLION OFFERING OF COMMON SHARES
Guyana Goldfields Inc., due to strong demand, has increased the size of its previously announced public offering to $130-million. The Company has entered an agreement with a syndicate of underwriters led by BMO Capital Markets, Scotiabank and RBC Capital Markets, as joint bookrunners, under which the underwriters have agreed to buy on a bought deal basis by way of a short form prospectus, 12,830,000 common shares ("Common Shares") from the Company and 1,000,000 Common Shares from Patrick Sheridan, the founder and Executive Chairman of the Company (the "Founding Shareholder"), at a price of C$9.40 per Common Share for gross proceeds of approximately C$130 million (the "Offering"). The Company has granted the Underwriters an option, exercisable at the offering price for a period of 30 days following the closing of the Offering, to purchase up to an additional 15% of the Offering from treasury to cover over-allotments, if any. The Offering is expected to close on or about July 19, 2016 and is subject to the Company receiving all necessary regulatory approvals.

The net proceeds of the Offering are expected to be used to fund an expansion of the Aurora Gold Mine ("Aurora Mine") expected to increase capacity from 5,000 tonnes per day to 8,000 tonnes per day, with such expansion to be completed in 2017, for expanded exploration activities, potential debt repayment, and for general corporate purposes. The net proceeds from the secondary portion will be paid to the Founding Shareholder. The Company will not receive any proceeds from the secondary offering.

The exploration activities will focus on infill drilling at the Aurora Mine targeting near-surface inferred resources and increasing drill density at Aleck Hill, and in addition will include drill-ready targets within a 30 km radius of the Aurora Mine and on the Aranka concession. The Company estimates that gold production through June 30, 2016 will total approximately 75,000 ounces at its Aurora Mine. As such, the Company is increasing its 2016 production guidance to 140,000 to 160,000 ounces (from prior guidance of 130,000 to 150,000 ounces). The primary contributors to the revised guidance are increased throughput levels and higher grade than originally predicted in the mine plan.

Cash cost (before royalty) guidance remains unchanged at US$487 to US$537 per ounce of gold while all-in sustaining cost (AISC) guidance for 2016 has been increased from US$637 to US$687 per ounce to US$670 to US$720 per ounce. The increase is mainly attributable to the unbudgeted purchase of a used Twin Otter airplane for more efficient and flexible local transportation and supplies, and capital expenditures for various plant facility optimization and infrastructure improvement projects.