The government of Guyana has inked a multibillion-dollar deal with Sandspring Resources Incorporated, a Canadian company, for the establishment and operationalisation of a new large-scale mine located between the Cuyuni and Mazaruni Rivers respectively.
President Bharrat Jagdeo, PPP/C presidential candidate Donald Ramotar and advisor Sir Shridath Ramphal look on as Prime Minister Samuel Hinds hands over the Toroparu mineral agreement to Sandspring Resources Chairman Inc John Adams
The agreement was signed on Wednesday afternoon at the Office of the President in the presence of President Bharrat Jagdeo, Advisor to the Canadian Firm, Sir Shridath Ramphal; Guyana Geology and Mines Commission Advisor Norman McClean and PPP/C presidential candidate Donald Ramotar among others.
The new agreement could see a whopping US$550 million added annually to the country’s Gross Domestic Product. It will also result in the creation of more than one thousand jobs for Guyanese workers while at the same improving the livelihood for thousands of other Guyanese indirectly.
With the sealing of the deal, the company now has permission to establish and operationalise a mine at Toroparu that could cost US$700 million to construct.
Under the agreement, Sandspring Resources would be working to produce between 250,000 to 300,000 ounces of gold along with 20 million pounds of copper annually.
The life expectancy of the mine is approximately 15 years.
The agreement requires the mining company to comply with stringent environmental standards which meet or exceed those that exist in the U.S. and Canada. It will also be required to pay a royalty of eight per cent to the government in the event that gold prices rise above US$1000.
Signing the agreement on behalf of Guyana were Prime Minister Samuel Hinds who has direct responsibility for mining and Guyana Geology and Mines Commission Chairman (retired) Major General, Joe Singh. Chairman of the board of directors of Sandspring Resources and its Guyana affiliate, ETK Incorporated, John Adams also inked the deal.
Prime Minister Samuel Hinds said that he was very pleased that the deal was finalised, noting that mining and mineral agreement is based on the original OMAI agreement with some adjustments for the particular location among other things. He underscored the importance of the country’s natural resources, explaining that they were integrally linked to Guyana social and economic development.
“Our natural resources are important and can lay the basis for our development,” Hinds noted.
He explained that the natural resources also provide the means through which there can be continuous creation of employment and capital that can also lead to development of the country’s socio-economic standing.
Echoing similar sentiments was Major General (retired) Joe Singh who noted that the agreement was a step in the right direction.
“We do not currently have any actual operation after OMAI closed and it should be recognised, the tremendous contribution that this sector has been making to the economy of the country,” Singh said.
He added that he was proud that Guyana took advantage of the investment offer, while maintaining its stance with respect to the protectionism that is needed in the environmental realm.
“We want to make sure that all of these investments are conducted in a way that is socially responsible. We have obligations to hinterland folk, we have obligations to the environment, we have obligations to the future generations and we want to make sure things are done in a transparent manner, with a high degree of integrity and also, from an economic standpoint, what accrues from investments such as this will help to stimulate the economy, the development of other enterprises so that we are not compromising ourselves because mining is not a renewable resource,” Singh submitted.
Meanwhile, Sandspring Resources Chairman John Adams said that the agreement represents an important development in the country’s mining sector. “We believe the completion of this mineral agreement between ETK/ Sandspring and the government of Guyana sends a clear message to the international mining company that Guyana is a good place to do business and that the government welcomes the development of natural resources when carried out in an economically fair and environmentally responsible fashion. Sandspring believes this is a fair agreement for both sides that can serve as a model for future mineral agreements,” Adams noted.
The mining sector contributed nine per cent to the country’s GDP in 2010, including 50 per cent of export earnings and anticipation is high about the chances of discovering oil with the commencement of the drilling of the Jaguar Well in the Guyana offshore area.
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