Guyana expects Omai mine to stimulate future prospects

A new gold mine is about to enter production in this South American nation which is of major significance not only to the owners, Cambior (TSE) and Golden Star Resources (TSE), but to the country.

The open pit Omai project, about 100 miles south of the national capital, Georgetown, is expected to produce 250,000 oz. per year during the first three years of production and bring Cambior’s annual output of the yellow metal to more than 500,000 oz.

And, to be counted among the larger of the South American gold mines when it comes on stream toward the end of this year, Omai will almost quadruple Guyana’s current gold production of about 69,000 oz.

“We feel this kind of development will help to put Guyana on the map,” Winston King, executive chairman of the Guyana Natural Resources Agency, told a group of Canadian journalists. King said the Omai mine will have “a demonstration effect” which should act to draw other foreign investment. The journalists were invited to tour the mine site in its preproduction state (construction has been ongoing 24 hours per day, seven days per week) during the first half of September with Cambior President Louis Gignac and other project officials.

“We’ll start feeding the mill in November and probably reach our commercial production rate in December,” Gignac said. The official opening for Omai is planned for February, 1993.

Cambior is the operator and has a 60% interest in the project; Golden Star has a 35% interest and the Guyanese government a 5% interest. (Golden Star has granted Cambior options to increase its ownership to 70%.) Omai mine manager is George Bell.

The mill referred to by Gignac, a $42-million facility designed by Kilborn and being put together on site from material shipped from North America, will have a rated capacity of about 13,200 tons (12,000 tonnes) per day. Mill manager Eric Konigsmann said he hopes to be able to boost throughput to 15,500 tons per day within six months, and eventually to 17,500 tons per day with the addition of extra equipment. “The ore is very clean,” Konigsmann said of the low-grade material which is free of base metal mineralization. A gold recovery rate of 93.5% is anticipated. A diesel plant is providing electricity for the project.

Current Omai reserves stand at 44.7 million tons grading 0.048 oz. gold per ton. At scheduled operating rates, enough material has been delineated to give the project a 10-year mining life. Operating costs are expected to average US$185 per oz. during the first three years of commercial production, and stay below US$200 per oz. during the life of the mine.

Workers at the project are living on site and at the time of the visit there were about 1,100 persons (including 900 nationals) involved in the construction, placing a strain on living quarters. Once built, the Omai project will house about 600 workers. Wages range between US65 cents per hour for laborers and US$1 per hour for tradesmen. (One U.S. dollar is worth about 125 Guyanese dollars.)

The mine site occupies about 15 square miles of tropical rain forest. A 75-mile paved road runs alongside the Demerara River between Georgetown and Linden (where bauxite is mined). The Demerara River is navigable to the port of Linden. Equipment and machinery being shipped to the Omai project are unloaded at Linden and then trucked along dirt roads built by Cambior to the mine site.

Senior mine geologist Robert Crepeau described the Omai site as having a volcanic environment similar to Canada. The gold is associated with a series of quartz carbonate veins in saprolites.

Three zones will be mined: the Fennell pit, the four Wenot Lake pits and alluvials. The largest of the zones is the Fennell pit (named after Golden Star President David Fennell) with about 38.6 million tons. Drilling indicates that mineralization in the Fennell pit extends to a depth of 800 ft. “There is the potential that the mineralization may extend to the east and west (of the Fennell pit) and between the pits,” Crepeau said. Planned is a mining rate of about 27 million tons of ore during the first five years of operation. The average waste-to-ore stripping ratio will be 3-to-1.

The Omai area has been the site of gold exploration and production for about 100 years. In the 1889-96 period, local prospectors, known as “pork-knockers,” were active. In 1896, a German syndicate acquired the area, engaging in drilling and tunnelling before selling the property in 1907. Pork-knockers then worked the area.

In 1937, Ventures Ltd. of Toronto acquired the property; no record of that company’s program is available. In 1947, Anaconda British Guiana Mines acquired the project and installed a bulk-sampling plant; the company terminated operations there in 1950.

In 1985, Golden Star acquired the Omai project. Two years later, Placer Dome (TSE) entered into a joint venture agreement with Golden Star, only to pull out in 1990 after conducting an exploration program. Cambior replaced Placer as the operator of the joint venture in May, 1990.

Cambior announced a production decision in September, 1991; the Omai construction cost including working capital was estimated to be US$163 million. Cambior then negotiated a 330,000-oz. gold loan worth up to US$120 million to finance 75% of the total investment; the balance is being drawn from Cambior’s cash reserves.

A banking syndicate led by the Royal Bank of Canada and Chase Manhattan Bank of Canada granted the gold loan. A Canadian federal government agency, the Export Development Corp., awarded Cambior political risk insurance coverage worth up to US$163 million.

The Guyanese government has done an about-face regarding its policy on foreign investment inside Guyana. In the 1970s, the government nationalized the bauxite mining operations of Alcan and Reynolds but according to King, there is now no policy of nationalization. “We believe private enterprise is the way to go,” he said.

Currently, managing Guyanese bauxite producer Linden Mining Co. (known as Linmine) is the Australian company Minproc, which was contracted by the government to raise Linmine’s profitability with a view to divestment. King said Guyana recorded economic growth of 6% in 1991 and the government is projecting similar growth for 1992.