Guyana, a small South American country, has a rich endowment of gold and other metals. Those riches have long been known to the mining industry, but for a number of reasons, that mineral wealth remained under cover. A dramatic improvement in the political climate a few years ago brought back the explorers. Some important discoveries quickly emerged to confirm the enormous mineral potential in the country. Investors are just waking up to that potential.
As the mining industry continues to make new discoveries – and with several gold deposits now advancing toward production – the investment community is beginning to pay attention to Guyana. Guyana is at a very interesting stage in its evolution to becoming a major gold producing nation: Enough work has been done in the past to confirm the enormous geological potential. Yet, small companies have been able to secure large tracts of highly prospective ground. Investors can buy stakes in those explorers at price levels that allow huge upside potential. It is inevitable that the work now underway in Guyana will turn up a number of large gold deposits.
I have included a brief summary of the geology, political situation, logistics and other issues regarding exploration in Guyana, based in part on my recent tour of the country. We believe that Guyana will soon be recognized as an emerging gold producer and that some of the companies operating in the country offer opportunities for investors.
Lots of Gold in the Ground
There is no doubt about the geological potential of Guyana. Gold was discovered in the region by Spanish conquistadors nearly 500 years ago. Literally thousands of small mining operations throughout the country are producing hundreds of thousands of ounces of gold a year by simply processing the surface gravels. The multitude of gold occurrences at surface points to a rich endowment of gold at depth.
One needs to look only a few tens of kilometers to the west to understand the geological nature and the discovery potential of Guyana. Exploration in Venezuela has turned up enormous mineral wealth. Importantly, the big gold discoveries in that country are clustered near the border with Guyana. In fact, the geological features that host the gold deposits in the neighboring country continue across Guyana. The favorable geology doesn’t end at the line on the map.
The only difference between the two countries is that more work has been done next door. For a number of reasons, including difficult access and an unfavorable political situation in the past, the mineral riches of Guyana remained largely untouched.
The political situation in the country has now swung solidly in favor of mining. Several international mining companies are now at work. Those companies that have secured property positions are in an exceptional position to benefit as Guyana evolves toward becoming an important part of the gold industry.
Guyana is still at an early stage with regard to an influx of mining exploration companies. The companies now exploring are building on a great deal of past work that provides an excellent starting point. Guyana was explored by several major mining companies in the 1970s. That first pass of modern exploration was primarily aimed at base metals. Those efforts identified numerous metal occurrences. Evolving from that early work, the country remains an important producer of bauxite (aluminum ore).
Supportive Government
The political situation has now improved dramatically in Guyana. A stable, democratically-elected government is putting considerable effort into attracting foreign investment in all sectors. The country has learned from years of “experience with various socialist models” and they are now totally committed to a free enterprise economic system.
The very capable government recognizes the enormous benefits that mining can bring to a developing nation. In that regard, they have instituted a regulatory system that is supportive of mineral exploration and development. Title to mineral claims, permitting, mining regulations, taxation and other government related matters are now on a par with the better mining nations.
First-hand View
In a recent tour of Guyana, I met with management and geological staff of several international exploration companies, I met government officials, including the Prime Minister, and also talked with local business people. I visited the exploration projects of four different companies, traveling by airplane, helicopter and road. I stayed in the capital city Georgetown and also a smaller mining center in the interior.
Guyana has one of the most modern and sophisticated geological databases of any country. The Guyana Geology and Mining Commission has gone so far as to seek ISO 9001 certification for their programs to ensure the international mining industry of the highest reliability of their data and services.
Meetings with senior officials of the GGMC made it clear that the government mandate is to build the mining industry as an important part of the national economy.
The U.S.-educated son of a leading Guyana businessman said that the family is totally committed to re-investing their profits in the country. That group, with considerable wealth, could easily diversify a portion of their holdings into some other country, yet remains fully focused on Guyana. The Prime Minister of Guyana, Sam Hinds, in a face-to-face meeting, emphasized the importance of mining to the development of his country. His government is dedicated to promoting the mining industry as a means of bringing greater wealth to the people of his nation. The Prime Minister's background is mining, so he is fully aware of the economic benefits of the industry. He clearly understands the importance of building and maintaining a favorable image of the country for investors.
In short, the political situation is now welcoming for the international mining industry. There is every indication that the situation will remain that way for years into the future.
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