Government of GuyanaMinistry of Natural Resources

and the Environment

Extractive Industry Opportunities in Guyana Hon. Robert M. Persaud, MBA, MP

Minister of Natural Resources and the Environment

PDAC International Convention, Trade Show & Investors Exchange – Mining Investment Show

March 4–7, 2012, Toronto, CanadaMetro Toronto Convention Centre – South Building

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Guyana’s principal wealth are the natural resources both inland and offshore

along with its forest and the assets therein. The Government have been able to sustainably manage our forests to derive economic benefits for the economy and create livelihood opportunities for our people while at the same time maintaining one of the lowest rates of deforestation in the world.

In doing so we have also created a new economic opportunity through avoided deforestation (REDD+) for which Guyana is one of the first countries to be paid. This administration will continue to focus on expanding and diversifying the economy on the basis of rationale use of Guyana’s natural resources.

To facilitate this effort, the Ministry of Natural Resources and the

Environment (MoNRE) have responsibilities for forestry, mining, environmental management, wildlife, protected areas, land use planning and coordination, and climate change.

Overview

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The mining sector has recorded a historically remarkable year as the price for gold

increased tremendously and more than 350,000 ounces of gold was the declaration for 2011. The sector is set to take off over the next few years as four mineral agreements were inked between international investors with access to international markets already in place for the country’s minerals.

Several companies have signed a partnership agreement for a large scale mining operation which has the potential of contributing approximately US$550M annually to Guyana’s Gross Domestic Product as an additional 250,000 to 300,000 ounces of gold are to be realized annually.

Various mining areas including the aurora mines located in the Cuyuni River, Region 7 will be developed at a cost of US$1B by foreign investment (in particular Canadian companies) as an accord to see the investment was inked during the year. The construction phase of this project will provide job opportunities for an estimated 900 Guyanese and the ongoing exploration component will see more than 1,000 men and women being employed.

Iron Ore Manganese Rare Earth Elements in the Southern and North Central part of Guyana

Prospects for Increase Investment

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Large Scale Prospecting Licences issued in 2011 were 191, an increase of 40.4 % from

2010. One hundred and eighty nine Prospecting Licences are budgeted for 2012 covering 1,958,040 acres (792,390.7 hectares). In 2011 there were 191 Mining Licences in existence, exceeding the budget by 1.6 percent. Twenty nine Mining Licences are budgeted for 2012, covering 118,813 acres (48,081.9 hectares).

There were 5 Reconnaissance permissions for Geological and Geophysical Surveys in existence in 2011, 62.5% of the budget. Fifteen Reconnaissance permissions are budgeted for 2012.

Mining Permits in 2011 totaled 1,161, exceeding 2010’s total by 56.5%. Mining Permits however fell short of 2011’s budgeted amount by 2.4%. Mining Permits projected for 2012 are 1,738 covering 1,553,772 acres (628,789.2 hectares).

Prospecting Permits (Medium Scale) in existence were 5,149, an increase of 5.5% from 2010 and fell short 2011’s budget by 12.4%. Projections for Prospecting Permits (medium scale) for 2012 are 7,053 covering 7,194,060 acres (2,911,332.7 hectares).

The total number of Claims (verified and unverified) for Small Scale mining operations (gold and diamond) in existence in 2011 was 15,032 of which 3,826 were River Location licences. For 2012, 16,500 are budgeted, of which 12,000 are Land Claims and 4,500 are River Locations.

Physical Performance and Projections for the Extractive

Industry

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2006 2007 2008 2009 Revised 2010 Budgeted 20110

2

4

6

8

10

12

14

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2.0 2.7 2.6 1.7 1.5 1.6

5.35.7 6.1

6.8 6.8 6.6

3.43.0 2.5 2.0

1.2 1.1

4.23.7

3.13.1

3.0 2.9

14.8 15.114.3

13.612.5 12.2

Bauxite Gold Other MineralsForestry Mining, Quarrying and Forestry

Natural Resources Contribution to Real

GDP

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Value of Mineral Production 1998 - 2011

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Gold Bauxite DiamondQuarry stone Sand Loam

$ millions

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363,083 metric ounces of gold were as declared

which represents a 39.6 % increase over 260, 000 metric ounces than what was projected for the year.

Bauxite production of 1,771, 284 metric tonnes was 4.04% above projection of 1,702,436 metric tonnes

Stone production of 488,030 metric tonnes was 22.01% above projection of 400,000 metric tonnes.

Diamond production was 52,273 metric carats Sand production was 354,828 metric tonnes Loam production was 12,133 metric tonnes

Guyana's Mining Output for 2011

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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

87,101 110,131 105,289

117,240

162,527

205,970

246,002

305,178

363,083

Troy

Oun

ces

Guyana’s Gold Declaration

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January February March April May June July August September October November December0

50,000

100,000

150,000

200,000

250,000

72,467 72,414

122,618

178,249

202,336

167,423 169,462161,235

126,493

164,569 169,418

211,716

Calcined (RASC) Chemical (CGB) Metal Grade (MAZ) Tailings Total Bauxite

Tonn

eTotal Bauxite Output

for 2011

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January February March April May June July August September October November December0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

4,511

3,237

4,6784,271

3,6963,227

3,871

7,730

5,128

4,337 4,335

3,252

M/C

arat

sDiamonds Declared in

2011

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January February March April May June July August September October NovemberDecember0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

60,536

8,700

52,001 53,332

9,500

43,615

10,200

55,638

11,100

29,550

12,567 14,650

22,105 32,305 37,197 10,479 73,724 39,953 27,527 58,500 28,532 65,801 33,387 71,033

Sand Crushed Stone

Tonn

e

Sand and Crushed Stone Declaration in

2011

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The Guyana gold industry has been operating at a very

favorable position over the last few years and this is primarily attributed to the high prices of the precious metal on the world markets and the level of increased investments from both local and foreign developers in the mining sector.

Guyana is seeking to develop a gold refinery. This undertaking must be collaborated with the Guyana

Gold Board and the Ministry of Natural Resources and the Environment.

This will follow the path of our commitment to support value-added activities and to ensure that the industry delivers maximum benefits to the people of Guyana.

Development of a Gold Refinery

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Monitoring of Apoteri K2 drill hole which was completed in June 2011. Investigation of Shallow Gas Occurrences on the E.B.D, West Demerara,

Essequibo Islands and Pomeroon. Commencement of an exercise to determine the resistivity characterization of

Shallow Gas Bearing sand intervals. Petroleum skills development opportunities provided i.e. seismic interpretation

methods; and Managing Offshore resources. Exploration drilling of Apoteri K2 by Takutu Oil and Gas Inc/Canacol. On-going work for Jaguar 1 Exploration Well by Repsol et. al. On-going work for Eagle 1 Exploration Well by CGX Resources Inc. Acquisition of infill 2D Seismic data over the Esso/Shell Stabroek block. Nabi Oil and Gas Inc. Petroleum Prospecting Licence under consideration. Continuing negotiations for Petroleum Prospecting Licence and agreement in

respect of Anadarko Petroleum Corporation. A variety of interests in speculative exploratory activities from significant

international and major companies.

Petroleum Development

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1. Promote growth in the bauxite industry, including by facilitating a major

investment in developing new bauxite deposits, facilitating investment by the bauxite companies in increased production capacity including the construction of new kilns, encouraging the export of new products such as mullite and proppants, and working with the bauxite companies on establishing the feasibility of alumina production

2. Facilitate growth in the gold industry, both by supporting the artisanal mining sector and by facilitating investment in a number of large scale projects that in maturity will more than double Guyana’s gold production within the next five years and that will introduce new technology including underground mining

3. Promote the establishment of other minerals as an export sector, including manganese.

4. Promote the growth of the quarry stone industry both for domestic purposes and to meet the needs of the nearby export market such as in the Caribbean

5. Encourage more value-added forestry by working closely with all stakeholders on addressing constraints while continuing to support the development of our timber and non-timber resources in a sustainable way consistent with the LCDS

6. Guyana has the potential to develop an oil and gas sector. The mere continuation of the on-going exploration activities will see hundreds of technical and administrative jobs created. If the exploration activities yield favourable results, thousands could be employed once production commences.

For the areas of Mining, Bauxite and Quarry

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Several economic minerals are exploited in the Guiana Shield. The main minerals mined or those with potential are gold, diamonds and bauxite.

Gold: gold extraction and exploration has been reported in the Guiana Shield since the colonial expansion of the 16th century. Gold is mainly found in areas of greenstone belts. Placer – placer deposits are observed on most of the main rivers draining the greenstone terrain, which hosts most of the primary gold.

The Barama-Mazaruni Greenstone belt has low relief, deep weathering, which accompanied by the tropical climate and a lack of a post-Proterozoic cover, are right conditions for mobilization of gold. Lode – this is frequently found in Precambrian terrains (notably the greenstone belts of the Barama-Mazaruni Group).

In many cases, the gold is hosted in quartz veins, which dip at high angle to sub-vertical. In the Guiana Shield, gold occurs as macroscopic, irregular gold grains occurring in fractures within quartz veins, disseminated in country rocks and silicified shear zones, as inclusions in disseminated/vein-hosted pyrite, chalcopyrite and pyrrhotite, or intergrowths with sulphides.

Mining Opportunities in Guyana

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Diamonds: these are only found in placer deposits in many of the main rivers of

northwest Guyana. The alluvial diamonds seen in northern Guyana are thought to derive from the Pakaraima Mountains, though the main source is unclear.

Bauxite: bauxite extraction is a major industry and the country is a main global producer. Linden, in the north, is the main centre for this mining. The mining area is defined by a coastal strip 30km wide from the Essequibo River south-southeast passing through Linden to the Suriname border, including the Kwakwani mining district.

On the coastal plains lie two types of bauxite present: residual and alluvial. Residual bauxite derives from in-situ weathering of beadrock formed during the upper Oligocene unconformity. Orebodies are usually 8-10m thick. Alluvial bauxite comes from transported bauxite material. It is often interbedded with sub-bauxite clays up to 10m thick and also exists in intermediate elevations as in-situ bauxite, 5m thick, capping hills. Average deposits have 50% aluminium and 4% silica. In plateaux, bauxite forms from weathering of various rocks in situ, and orebodies can be up to 8m thick.

Mining Opportunities in Guyana

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Aggregates and Gravel: aggregate quarries in Guyana are mainly

within the Bartica Assemblage, in which biotite gneiss, granite gneiss, hornblende-biotite gneiss, medium-grained gabbro and black biotite schist are extracted and crushed. Aggregates are used for road and building foundations as well as sea defence construction. Gravel, extracted from alluvial deposits, is used in the construction industry as aggregate for concrete manufacture and road construction.

Silica Sand: abundant in Guyana, this is found as the Pliocene-Pleistocene ‘white sand’ deposits covering many regions, notably the coastal area. Apart from areas stained by ferruginous ground water, the white sand is very homogeneous with few impurities (heavy mineral concentration rarely exceeds 0.1%) and an absence of clay. Silica sand can be used industrially, including: glass, ceramics, abrasives, silicon carbide, silica tetrachloride, activated silica, silica flour and filtration.

Mining Opportunities in Guyana

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Policy: Mineral and Petroleum Policies and

Fiscal Regimes set out by the Minister in January 1997 and amended from time to time.

Principal Legislation: Guyana Geology and Mines Commission Act 1979, which is read as part of the Mining Ac 1989; Mining Act 1989 and Regulations; Geological Surveys Acct; Occupational Safety and Health Act, Environmental Protection Act and Industries Aid and Encouragement Act

Applicable Policies and Laws

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The Natural Resources and Environmental Governance sub-programme focuses on strengthening national, regional and local environmental governance to address agreed environmental priorities. The sub-programme has seven key goals:1. Sound science for decision-making: 2. National and international cooperation3. Poverty alleviation4. National development planning5. National and international policy setting and technical

assistance6. Sustainable national and regional development7. Strengthen and harmonization of national laws and

institutions

Effective Environmental Governance

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The resource efficiency sub-programme focuses on reducing the adverse environmental impacts of producing, processing and using goods and services, while also meeting human needs and improving well-being. The sub-programme has four key goals:1. Building capacity for policy action2. Seizing investment opportunities3. Stimulating demand for resource efficient goods and

services4. Assessing critical trends: To strengthen the knowledge

base on Resource Efficiency, the MoNRE will assesses and reports on trends in how resources are extracted, processed, consumed, and

Resources Efficiency

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Mining on a Large ScaleGold and Precious Metals, Diamonds and Precious Stones Royalty: 5% of production or of gross revenues Income Tax: 35% Depreciation: 20% Zero rates of duty on equipment, process minerals and spares to be used during and in the course surveys,

prospecting and mining No free equity to State, but the State shall have the right to nominate a member of the Board Withholding tax set at 6.25% of dividends Stability clause - for each mine developed, all conditions maintained for the duration of 15 years from the

start of commercial production or the life of the deposit, whichever is shorter, then general rules for duties, income tax and withholding tax apply

Foreign Companies Whenever the price of Gold is above US$1000 per ounce, they will pay the usual 5% of the net price plus an

additional 3% of the net price. In total, royalty will be 8% for foreign companies. This additional 3% is known as a windfall royalty payment.

Bauxite and other Minerals (except sand and stone) Royalty: 1.5% of product or of gross revenues or of production costs leaving plant, whichever is greater All other conditions are the same as for gold

Medium Scale and Small Scale Royalty: 5% of gross revenue for gold; 3% of gross revenue for diamonds Income tax: 2% of gross revenue, in lieu of Income Tax. If the permit holder is a corporation, corporation tax

is payable at the rate of 35% of taxable income. Duty and value added tax (VAT) exemptions on a range items

Fiscal Incentives for the Extraction of

Minerals

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Economic growth and social development cannot be sustained with our

current consumption and production patterns. Globally, we are extracting more resources to produce goods and services than our planet can replenish, while a large share of an increasingly urban world population is still struggling to meet basic needs.

Therefore, Guyana will become resource efficient in order to allow for the critical opportunity to address this unsustainable path and build a green economy in which economic growth is decoupled from environmental harm. By enabling the design and production of low-impact products and services, resource efficiency can help us meet human needs while respecting the ecological carrying capacity of our nations and the earth, as a whole.

From the Government of Guyana to the research community to business and consumer groups, we will use expertise, experience and convening power to create tools and build partnerships that accelerate the transition to the Green Economy and resource efficient societies.

Sustainable Development

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Thank You for your Attention

Guyana: The Natural Resources Frontier of

the Caribbean and South America