The Government of Guyana believes that Omai Gold Mines Limited (OMGL) operating in Region Seven (Cuyuni-Mazaruni) has been in the development stage for an extended period and needs to move onto production.
“Omai Gold Mine has been in the development stage for a very, very long time and we would like to see people moving from proving reserves to actually producing gold,” Vice President Dr Bharrat Jagdeo said during his weekly press conference on Thursday.
Omai is a past-producing gold mine that opened in 1992 and produced approximately 3.7 million ounces of gold, making it the largest gold mine in South America at the time. The project closed in 2006 due to financial constraints and low price for gold. The operator returned in 2020 when the price for gold was over US$1,900 per ounce.
In April 2024, the company announced the completion of a Preliminary Economic Assessment (PEA). The PEA supports an initial open pit mining scenario for production of 1.84 million ounces, averaging 142,000 ounces of gold per year over a 13-year mine life, with peak year production of 184,000 ounces.
The Vice President explained that only after a company begins production does the Government begin collecting royalties and taxes.
“Some people actually sit on companies forever and they raise funds to prove reserves and they keep announcing how many ounces of gold are in reserve there without getting into the real production and it is only in the production stage that the Government get its share of royalty and taxes because the large-scale mines got to pay both the royalty and taxes,” he explained.
Asked whether the company was given a timeframe to commence production, he responded in the negative noting that “there is no timeframe for the development of the mines.”
In February 2024, the company announced an updated Mineral Resource Estimate of 2 million ounces of gold.
“Our new discoveries are along strike, on the flanks and beneath the past producing gold deposits, with the mineralisation open in all directions for further possible expansion. This substantial new Resource, combined with the many benefits of a brownfields project, is proving that Omai has the potential to rival its historical status as a large-scale mine,” the company declares on its website.
For 2024, the Omai team said it is prioritising drilling to demonstrate the further expansion potential of the new Wenot deposit, drilling on key near-surface high-grade exploration targets, and continuing baseline and engineering studies to determine a path forward towards a development plan for the project.
Currently, mineral agreements entered before the grant of mining licences or commencement of operations offers zero rating on all customs duties, VAT and excise taxes on the purchase and importation of all equipment supplies, consumables, and spares to be used directly in mining operations.
It also offers exemption from all excise tax on fuel used in mining operations, 10% rating on consumption tax for aviation fuel, consignment of the incentives to contractors of the company, zero rating on VAT for payments to certain contractors such as drilling or mining contractors, offset of the cost of certain infrastructural works of general benefit to Guyana against the mineral royalty, and exemption from withholding taxes on dividends and interest payments to the parent company or other offshore entities, among other benefits.
