Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS
Company Business
Highlights And Milestones
Aurora Project
EPC Contract - Update
Development Cost Update
Quarterly Development Activities
Outlook
Exploration Activities
Aranka Properties
Other Properties
Outlook
Technical Disclosure
Selected Annual Information
Summary of Quarterly Results
Trends
Liquidity, Capital Resources and Business Prospects
Off-Balance-Sheet Arrangements
Commitments
Proposed Transactions
Related Party Transactions
Change in Year End
Changes in Accounting Policies
Change in Accounting Policy on Exploration and Evaluation Expenditures
Future Accounting Pronouncements
Critical Accounting Estimates
Capital Management
Property and Financial Risk Factors
National Instrument 52-109 Disclosure
Outstanding Share Data
Risk Factors
Forward-Looking Statements and Additional Information
FINANCIAL STATEMENTS
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
DIRECTORY
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15
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74
GUYANA GOLDFIELDS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2014
Prepared by:
GUYANA GOLDFIELDS INC.
141 Adelaide Street West, Suite 1608
Toronto, Ontario M5H 3L5
GUYANA GOLDFIELDS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FINANCIAL YEAR ENDED December 31, 2014
(Amounts are expressed in thousands of US dollars, unless otherwise noted)
The following management’s discussion and analysis (“MD&A”) of the financial condition and results of operations
of Guyana Goldfields Inc. (“Guyana Goldfields” or the “Company”) constitutes management’s review of the factors
that affected the Company’s financial and operating performance for the two and fourteen months ended
December 31, 2014. References to “Guyana Goldfields” in this MD&A refer to the Company and its subsidiaries
taken as a whole.
On August 12, 2014 the Company announced that effective in 2014, its financial year-end has changed from
October 31st to December 31st. The Company is reporting a one-time, fourteen month transition year covering the
months of November 2013 to December 2014. Year-end financial statements for the fourteen month period
ended December 31, 2014 will be compared to the financial statements for the twelve months ended October 31,
2013. Subsequent to the transition year, the Company's first full financial year will cover the period January 1,
2015 to December 31, 2015. Unless stated otherwise, any reference in this document to the financial year ended
December 31, 2014 is for the fourteen month period ended December 31, 2014. See “Change in Year End”
below”.
Effective December 31, 2014, the Company adopted a voluntary change in accounting principle on exploration
and evaluation (“E&E”) expenditures whereby the Company’s new policy on accounting for E&E expenditures is
to expense these costs until such time as the work completed supports the future development of the property
through the issuance of a National Instrument 43-101 (“NI 43-101”) technical report or definitive bankable
feasibility study, and such development receives appropriate board approvals. All subsequent expenditures on
the property are then capitalized and classified as assets under construction, a component of property, plant and
equipment. This change in accounting policy has been applied retrospectively to all of the Company’s exploration
activities for all properties. See “Changes in Accounting Policies” below. The change in accounting policy does
not impact the importance, scope or nature of the Company’s ongoing exploration activities.
This MD&A has been prepared in compliance with the requirements of National Instrument 51-102 – Continuous
Disclosure Obligations. This discussion should be read in conjunction with the audited consolidated financial
statements and the related notes for the fourteen months ended December 31, 2014 (with comparatives for the
twelve months ended October 31, 2013), which have been prepared in accordance with International Financial
Reporting Standards (“IFRS”). Results are reported in thousands of United States dollars, unless otherwise
noted. In the opinion of management, all adjustments (which consist only of normal recurring adjustments)
considered necessary for a fair presentation have been included. Information contained herein is presented as at
February 19, 2015, unless otherwise indicated.
For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors, considers the
materiality of information. Information is considered material if: (i) such information results in, or would reasonably
be expected to result in, a significant change in the market price or value of the Company’s common shares
(“Common Shares”); or (ii) there is a substantial likelihood that a reasonable investor would consider it important
in making an investment decision; or (iii) it would significantly alter the total mix of information available to
investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all
relevant circumstances, including potential market sensitivity.
Further information about the Company and its operations is available on the Company’s website at
www.guygold.com or on SEDAR at www.sedar.com.
-2-
The Company is a reporting issuer under applicable securities legislation in each of the provinces of Canada and
its outstanding Common Shares are listed on the Toronto Stock Exchange under the symbol “GUY”.
COMPANY BUSINESS
The Company is a Canadian-based mineral development and exploration company primarily focused on the
acquisition, exploration and development of gold deposits in Guyana, South America. The Company has one
advanced development stage project, the Aurora project located in Guyana (the “Aurora Project” or the “Project”)
that the Company expects to commence with gold production in mid-2015. The Company owns a 100% interest
in the Aurora Project. See also the “Aurora Project”, “Exploration Activities”, “Liquidity, Capital Resources and
Business Prospects”, “Commitments” and “Risk Factors” sections below.
On November 18, 2011, the Company signed a Mineral Agreement with the Government of Guyana and received
the Mining Licence for the Aurora Project. The Mineral Agreement and Mining Licence detail all fiscal, property,
import-export procedures, taxation provisions and other related conditions for the continued exploration, mine
development and operation of the Aurora Project.
Significant terms include:
Net smelter return (“NSR”) royalty of 5% on gold sales at a price of gold of $1,000 per ounce or less;
NSR royalty of 8% on gold sales at a price of gold over $1,000 per ounce;
Corporate income tax rate of 30% and no withholding tax on interest payments to lenders; and
Duty and value added tax exemptions on all imports of equipment and materials for all continuing
operations at the Aurora Project, including the construction and operation of a planned port facility, road
and power improvements and the construction and operation of the mine.
The Mining Licence is the Company's permit to build and operate mining facilities at the Aurora Project and is
valid for an initial 20-year term with provisions for extension on application by the Company.
During January 2013, the Company filed on SEDAR its Aurora Project NI 43-101 Technical Report, Updated
Feasibility Study (the “Updated Feasibility Study”), which was an update to its NI 43-101 Technical Report,
Feasibility Study filed on April 9, 2012 (the “April 2012 Feasibility Study”). Based on the key findings of the
Updated Feasibility Study and board approval, the Company advanced with the development of the Aurora
Project. The Project economics were subsequently updated in December 2013 based on the current capital cost
estimates. With an average life of mine gold grade of 2.74 grams per tonne of ore milled, the improved mine plan
is expected to produce 3.29 million ounces of gold over a 17 year mine life at an operating cash cost of $423 per
ounce (excluding royalty). The Updated Feasibility Study estimated that average annual gold production over the
life of mine is 194,000 ounces, and averages 231,000 ounces per year over the first ten years. Under the
Updated Feasibility Study, as adjusted, at a gold price of $1,300 per ounce and a discount rate of 5%, the Aurora
Project is expected to generate a net present value of $735 million and an internal rate of return of 31% on an
after-tax basis, with a payback of approximately 4.4 years. Initial capital to achieve commercial production is
currently estimated at $249 million.
The Company also holds a contiguous 216,888 acre land package located in the Aranka district of Guyana
approximately thirty kilometres northeast of the Aurora Project, known as the “Aranka Properties” which consist of
a number of separate properties including Sulphur Rose.
-3-
HIGHLIGHTS AND MILESTONES
Aurora Project
On December 9, 2013, the Company announced an updated initial capital investment and revised time line to
commercial production for the Aurora Project. The Company executed a Heads of Agreement and Term
Sheet documenting the principal terms and conditions for the engineering, procurement and construction (the
“EPC Contract”) valued at $137 million with Sedgman Limited and Graña y Montero (the “GSJV”).
Contractor services began immediately under an Interim Services Agreement and Early Procurement of Long
Lead Equipment Agreement signed in early November 2013.
The Company also announced the projected $44 million increase in initial capital investment over the
Updated Feasibility Study’s initial development cost amount of $205 million. The increase was due to costs
associated with transitioning to an EPC development approach which assumes a lower project execution risk
for the Company, additional funds for operational readiness, and increased estimates.
In May 2014, the Company’s wholly owned subsidiary AGM Inc. (“AGM”) owner and operator of the Aurora
Project, formalized its existing contractual arrangements with the GSJV, and signed the EPC Contract for the
Aurora process plant and power plant. The fixed price contract value is for $134 million, with the novation of
responsibilities and payments made under the previous contractual arrangements. The date for mechanical
completion of the 5,000 tonnes per day processing plant and the diesel power plant was originally set for
May 31, 2015. The GSJV has reported certain delays in construction of the Project, which required further
investigation and review. AGM, through negotiations with the GSJV, has agreed to modify the original
milestone for mechanical completion which included the crushing circuit, as it was not critical to establishing
cash flow from gold production. Three milestones have now been established with the GSJV that result in
first gold production through a partial plant (gravity circuit), and the commissioning of the saprolite circuit by
mid-year 2015, and final mechanical completion of the full plant in the third calendar quarter of 2015. These
milestones allow AGM to gain beneficial use of the plant in stages that match the mine plan. Crushing
operations are subsequently expected when mining encounters fresh rock.
On signing the EPC Contract, the value of the fixed price contract was reduced from $137 million to $134
million as a result of scope transfer to AGM. Total initial development costs of $249 million remain
unchanged and include all facilities as well as mining equipment, owner’s costs, indirect costs, inventory, first
fills, contingency, etc. Approximately $172 million in development costs have been incurred to December 31,
2014 on an accrual basis (January 11, 2013 to December 31, 2014). The remaining initial capital required to
achieve commercial production is estimated to be $77 million. See “Aurora Project” for further details.
Total anticipated Aurora Project costs are $277 million that include development costs of $249 million,
finance costs of $20 million, working capital of $5 million, and pre-operating costs of $3 million. Total funding
sources amount to $335 million and are anticipated to exceed the expected total Aurora Project costs by $58
million. The Company does not expect that it will require using the $58 million in overfunding facilities. See
“Liquidity, Capital Resources and Business Prospects” for further details.
With the above staged mining approach, the scheduled September 30, 2015 interest and Senior Lenders’ fee
payment of approximately $4 million on the $185 million project loan facility (the “Project Loan Facility” or the
“Facility”), may now be incurred during the development phase of the Aurora Project, rather than the
operations phase (see “Financial” section below and “Liquidity, Capital Resources and Business Prospects”
for further details). It is anticipated that cash flows generated from early gold production from the gravity and
saprolite circuits in mid-year 2015 will be more than sufficient to cover these costs.
For the two and fourteen months ended December 31, 2014, the Company incurred development
expenditures on a cash basis for the Aurora Project of approximately $31 million and $131 million,
-4-
respectively, compared to approximately $5 million in the fourth quarter of fiscal 2013 and $11 million for the
twelve months ended October 31, 2013.
Management and Board Changes
In December 2013, the Company announced that Mr. Richard Williams and Mr. Robert Bondy resigned as
directors of the Company, and in their place, Mr. René Marion and Mr. Michael Richings were appointed as
independent board members. In addition, Patrick Sheridan, Executive Chairman of the Company resigned
as Corporate Secretary and Mr. Robert Bondy was appointed as his successor.
Exploration Properties
During the two and fourteen months ended December 31, 2014, the Company incurred exploration and
evaluation expenditures on all its exploration properties of $0.5 million and $2.5 million, respectively,
compared to $0.8 million and $7.8 million, in the three and twelve month period ended October 31, 2013,
respectively.
Financial
In November 2013, the Company signed a mandate letter with the International Finance Corporation to lead
a syndicate of banks, multi-lateral and development institutions to arrange a senior debt facility to support the
development and construction of the Aurora Project.
On June 9, 2014 the Company announced that a syndicate of lenders had received credit approvals to
provide the $185 million senior secured Project Loan Facility to fund the development and construction of the
Aurora Project. Under the Facility, the Company was obligated to fund an additional $33 million as a
condition of first disbursement. See “Liquidity, Capital Resources and Business Prospects” for further details
relating to financing activities.
On June 27, 2014 the Company raised the $33 million in equity required under the proposed Facility by
completing a non-brokered private placement (the “Placement”) pursuant to which it issued an aggregate of
24,000,000 Common Shares at a price of Cdn$1.85 per Common Share for aggregate gross proceeds of
approximately $42 million (or Cdn$44 million). See “Liquidity, Capital Resources and Business Prospects”
and “Related Party Transactions” for further details relating to financing activities.
On September 2, 2014, the Company and its wholly owned subsidiary AGM, announced the signing of a
common terms agreement (the “Common Terms Agreement”) with International Finance Corporation, Export
Development Canada, ING Capital LLC, Caterpillar Financial Services Corporation, and The Bank of Nova
Scotia (collectively the “Senior Lenders”) and other definitive documentation with respect to its previously
announced credit approval for the $185 million Project Loan Facility to fund the development and
construction of, and general matters relating to the Project. With the completion of the Facility, the
development of the Project is now fully financed, subject to the terms and conditions of the Facility. See
“Liquidity, Capital Resources and Business Prospects” for further details.
On October 17, 2014 the Company satisfied all condition to first disbursement under the Project Loan Facility
and received $42,573 in debt proceeds. As of December 31, 2014, the Company’s debt under the Facility
was $68,573.
Monthly funding under the Project Loan Facility is designed to match the Aurora Project’s amounts due and
payable or reasonably expected to be, before the next Facility draw date. Consequently, the amount of cash
on hand previously drawn under the Facility, and the Company’s working capital position will reduce over
time as Project cash payments are made and subsequent supplier accruals are incurred. In addition,
approximately $22,000 in Project current accounts payable and accrued liabilities are not yet funded under
-5-
the Facility. See “Liquidity, Capital Resources and Business Prospects” below. At December 31, 2014, the
Company on a consolidated basis had cash and cash equivalents of $17,211 (October 31, 2013 - $108,649)
to settle consolidated current liabilities of $38,501 (October 31, 2013 - $2,722). Included in the Company’s
consolidated cash position and current liabilities at December 31, 2014 is approximately $14,000 and
$37,000, respectively, attributable to the Aurora Project. The $37,000 in Project’s current liabilities includes
$4,340 in current portion of long-term debt. The $14,000 cash position represents cash drawn under the
Facility that the Company is contractually obligated to spend on the development of the Aurora Project.
The Company’s cash and cash equivalents position on February 19, 2015 was approximately $26 million.
AURORA PROJECT
EPC Contract – Update
In May 2014, the Company’s wholly owned subsidiary AGM formalized its existing contractual arrangements with
the GSJV, and signed the EPC Contract for the Aurora Project process plant and power plant. The fixed price
contract value is for $134 million, with the novation of responsibilities and payments made under the previous
contractual arrangements.
The date for mechanical completion of the 5,000 tonnes per day processing plant and the diesel power plant was
originally set for May 31, 2015. The GSJV had reported certain delays in construction of the Project which have
been reviewed. AGM, through negotiations with the GSJV, has agreed to modify the original milestone for
mechanical completion which included the crushing circuit, as it was not critical to establishing cash flow from
gold operations. Initial gold production is expected to be from saprolite, and mechanical completion (which
contemplates crushing operations), must be deferred until after the saprolite is mined, and fresh rock is
encountered to test the crusher.
Three milestones have now been established with the GSJV that result in first gold production through partial
plant (gravity circuit), and the commissioning of the saprolite circuit by mid-year 2015, and final mechanical
completion of the full plant in the third calendar quarter of 2015. These milestones allow AGM to gain beneficial
use of the plant in stages that match the mine plan.
Under the terms of the EPC Contract, AGM is required to make prescribed monthly installment payments to the
GSJV up to the end of September 2015. Initial payments by AGM were subject to 30% hold back, to a maximum
of $10 million that is repayable at the full mechanical completion date. Also under the terms of the EPC Contract,
AGM has made its required $13.4 million in advance contract deposits to the GSJV on an interest free basis.
These amounts will be repaid by the GSJV through payment deductions by July 31, 2015.
The fixed price EPC Contract value is subject to adjustments for:
fluctuation in foreign exchange rates on contract portions denominated in currencies other than the United
States dollar;
changes in laws of Guyana that affect the scope of work; and
extension of time to mechanical completion date for a variety of events and causes attributable to the
GSJV and AGM, alike.
Delay liquidated damages apply if the GSJV fails to reach mechanical completion on or before the fifteenth day
after full plant mechanical completion date, with prescribed daily penalties payable to AGM, up to a maximum
amount of 5% of the EPC Contract value. If the GSJV reaches mechanical completion within certain time
parameters around the dates of the established three milestones (gravity circuit, saprolite circuit and full plant
mechanical completion), bonuses are payable to the GSJV, in addition to the contract price, up to a maximum of
5% of the contract value.
-6-
Development Cost Update
Details of the actual and projected capital spend for the Aurora Project as of December 31, 2014:
Aurora Project Capital
Expenditures
(in Millions of US$)
Revised
Capital Costs
to
Commercial
Production
(Note A)
Less
Incurred:
January 11,
2013 to
October 31,
2013
F13
Less
Incurred:
November
1, 2013 to
January 31,
2014
Q1 F14
Less
Incurred:
February 1,
2014 to
April 30,
2014
Q2 F14
Less
Incurred:
May 1,
2014 to
July 31,
2014
Q3 F14
Less
Incurred:
August 1,
2014 to
October 31,
2014
Q4 F14
Less
Incurred:
November 1,
2014 to
December 31,
2014
Q5 F14
(Note B)
Expected
Remaining
Capital Costs
to
Commercial
Production
(Note C)
GSJV:
Fixed Price Process and Power
Plant EPC Contract
$134
Owner’s Cost – Balance of Scope
Plant Infrastructure Buildings
Plant Earthworks and Roads
Mine Infrastructure Buildings
Tailings Dam
Water Dams and Dykes
Site Services Water & Power
Logistics
sub-total
Owner’s Cost Infrastructure &
Other
Owner’s G&A (Note D)
Owner’s Costs - Operational
Readiness
2
6
1
6
4
9
8
36
46
25
8
0
-
-
-
(1)
-
-
-
(1)
(3)
(7)
-
Total Owner’s Cost
115
Grand Total Initial Development
Capital
$249
(11)
($11)
($5)
($13)
($37)
($30)
($17)
38
-
(1)
-
-
-
-
-
(1)
(4)
(3)
-
(8)
($13)
-
(1)
-
-
-
-
(2)
(3)
(3)
(4)
-
-
(1)
-
-
-
-
-
(1)
(7)
(5)
-
-
(1)
-
(1)
-
-
-
(2)
(7)
(7)
-
-
-
-
(1)
-
-
-
(1)
(5)
(6)
-
(10)
($23)
(13)
($50)
(16)
($46)
(12)
($29)
2
-
1
1
2
3
0
9
11
16
3
39
$77
Note A: These costs represent the initial development costs of $205 million as reflected in the Updated Feasibility Study, plus the
projected $44 million increase in initial capital investment as described in the Company’s MD&A for first quarter ended January
31, 2014. The $44 million estimated increase in development costs is due to costs associated with transitioning to an EPC
development approach which assumes a lower project execution risk for the Company, additional funds for operational
readiness, increased estimates and schedule delay. Under previous interim contractual arrangements with the GSJV, the
anticipated EPC contract value was set at $137 million. On signing the EPC Contact in May 2014, the value of the fixed price
contract was reduced to $134 million as a result of scope transfer to AGM. Owner’s costs G&A was correspondingly increased.
Note B: All quarterly costs incurred in capital expenditures are computed on an accrual basis. The fifth quarter fiscal 2014 development
cost spend is discussed below under the section “Quarterly Development Activities”. The fifth quarter represents a two month
period, reflecting the change in the Company’s year-end to December 31st. See “Change in Year End” below.
Note C: The total expected remaining capital costs to commercial production of $77 million remains in line with the initial $249 million
initial development budget.
Note D: Included in Owner’s G&A quarterly spend are equipment maintenance costs attributable to Balance of Scope projects. Owner’s
G&A is expected to be approximately $23 million above budget due to the shift in scope from external contractors to self-
performance by the Owner’s team. Increased scope responsibility has led to an expansion of the work force and indirect
supporting costs such as camp services, transportation costs and equipment maintenance beyond initial expectations.
The total development costs for all facilities as well as mining equipment, owner’s costs, indirect costs, inventory
and first fills, contingency, etc., is currently estimated to be $249 million, of which approximately $172 million are
incurred costs to December 31, 2014 on an accrual basis (January 11, 2013 to December 31, 2014). The
remaining initial capital required to achieve commercial production is estimated to be $77 million.
The remaining AGM estimated total owner’s costs of $39 million at December 31, 2014 largely includes
infrastructure and G&A comprising of completion of Phase II of the main camp, communications infrastructure,
access road upgrades, first fills and spares, mobile equipment and other items. Also included is the construction
and installation of facilities such as the mine dam, tailings management, river dyke, ancillary buildings, mine
-7-
development, and other infrastructure. Construction and development of these items are expected to be self-
performed or tendered for fixed price lump sum bids.
Project Economics:
The following table provides updated project economics at variable gold price assumptions reflecting an initial
capital investment of $249 million:
Financials @ 5% Discount Rate
Units
Gold Price Per Ounce in US$
$8501
$1,0001
$1,150
$1,3002
Pre-Tax NPV
After-Tax NPV
IRR (After-Tax)
Payback (After-tax)
US$M
236
US$M
162
%
12
Years
6.8
2015 EBITDA (1st year of partial production)
US$M
2016 EBITDA (1st year of full production)
US$M
18
60
2021 EBITDA (Peak year)
Cumulative Cash Flow3
US$M
145
US$M
506
533
374
20
5.6
26
80
192
975
759
533
25
5.0
32
95
227
1,046
735
31
4.4
39
115
272
1,330
1,784
1. Royalty rate of 5% at a price of gold of US$1,000 per ounce or less
2. Base Case
3. Cumulative cash flow defined as revenue less operating costs less capital expenditures.
Under the September 2, 2014 Common Terms Agreement with its Senior Lenders, underground mine
development requires various terms and conditions being met, including the pre-funding of underground capital
costs/commitments from operating cash flows generated from the open pit mine or from other financing sources.
See “Liquidity, Capital Resources and Business Prospects” for further details.
Key Milestone Dates – Aurora Project:
Key Milestones (Note 1)
Contractor access to site
450 Man Camp Installation
SAG Mill Delivery
CIL Tank Installation
Power Generator Installation
First Gold Pour
Commercial Production
Start & End Dates (Note 1)
Early calendar Q1 2014
Early calendar Q2 2014
Late calendar Q4 2014
Calendar Q4 2014 – calendar
Q1 2015
Calendar Q2 2015
Mid calendar 2015
Calendar Q3 2015
Update as of February 19, 2015
Actual achieved – Jan 2014
Actual achieved – May 2014
Actual achieved – December 2014
No change – on schedule
No change – on schedule
No change – on schedule
No change – on schedule
Note 1: The key milestones and dates above reflect the Company’s current estimate, and are revisions to the key milestones and dates
contained in the Updated Feasibility Study. See “Forward Looking Statements and Additional Information” section below.
Quarterly Development Activities
During the shortened fifth quarter (comprising of two months) ended December 31, 2014, AGM incurred
development expenditures on an accrual basis for the Aurora Project of approximately $29 million. AGM
continued direct works with the GSJV under a fixed-price, lump-sum EPC Contract. Total development costs of
$17 million were incurred in the quarter relating to the EPC Contract. Specific construction achieved during this
shortened quarter was as follows:
Completion of 100% of the Owner’s balance of scope engineering work.
-8-
EPC procurement progress is 92% of plan. The most critical procurement, the SAG mill was shipped and
received on site in mid December 2014. Similarly, the power generators for the plant (eight units), switch
rooms, transformers and other key components for the power generation station were received into
Buckhall port before the end of December. In addition, the major steel structures, fabricated tanks and
large tank steel shells arrived at site during the period.
The bulk earthworks to develop the plant platforms were completed and the GSJV continued civil works,
including installation of concrete foundations for the SAG mill, CIL and leach tanks, installation of the
saprolite feeder/breaker station, the main hard-rock crusher, auxiliary tanks, plant power generation
station, fuel storage and gold room. The civil works for the SAG mill was completed in early November.
CIL and leach tank steel work commenced in late November. Initial tank strakes were fabricated for four
of the eight CIL tank complexes. The refeed bin and main crusher stations continued to progress with
rebar placements and concrete pouring. All of the conveyor support foundations were completed and
initial high conveyor bridge supports were erected.
AGM completed the main tailings dam, the south east tailings dam, the east tailings dam, two diversion
dams, and the fresh water dam in December. Earthworks were started on the mine water dam, which is
the final dam structure to be built prior to production start-up.
Trees were cleared from Alex Hill, Mad Kiss and Rory’s Knoll pits and grubbing (clearing of foliage)
commenced on these pits.
AGM continues to operate the aggregate quarry and crushing plant, providing additional rock, fill and
sand for the remaining balance of scope works being constructed by AGM.
Logistics operations increased significantly in November and December with the arrival of the SAG mill,
power generators, switch-rooms, transformers, steel structures and other major pieces of plant
equipment. Transport of the large, heavy and wide loads commenced in early December with the
overland transport of the SAG Mill shell from Buckhall to the Aurora Project site.
The river barge landing at Tapir was upgraded to allow wide and heavy loads to be safely loaded onto the
Tapir river barge. Road maintenance increased substantially in November and December to ensure the
critical and heavy loads passed efficiently and safely, and in preparation of the expected rainy season that
started in late December.
Completed 85% of the construction of Phase II camp with increased room and bed capacity to support up
to 850 personnel. The scope of Phase II includes additional dormitory facilities, work offices, recreation
hall, emergency clinic, increased kitchen capacity, additional sewage treatment plant, larger capacity
water treatment plant and general improvements to the camp facilities.
Continued construction of the plant workshop and heavy machinery equipment storage/service facility.
Completed the placement of tanks in the mine ready line fuel facility.
Started construction of the final facilities at the Buckhall port, including new dormitory accommodation for
64 beds, new shower and toilet facilities, installed an increased capacity water treatment plant, complete
the wash-bay for the light vehicle workshop and increased the overall port laydown pads.
Outlook
Planned activities at the Aurora Project for the next reporting period (January 1, 2015 to March 31, 2015) include
the following:
Achieve 85% of planned deliveries of materials and equipment to the Aurora Project plant site.
Complete all construction for Phase II of the main camp. Overall camp available capacity will exceed
1000 beds with the inclusion of the temporary dormitories installed last quarter.
Continue erection of the plant steel structures and SAG mill.
Commence installation of material feed bins and chutes.
Install all eight power plant generators (1.64 MW each) and the plant power station switch-room, and
transformer.
-9-
Start erection of the gold room, saprolite feeder breaker, saprolite feed conveyor and SAG mill feed
conveyor.
Start electrical installation throughout the plant.
Complete installation of two radio communications transmission towers - one at Aurora New Camp and
the other at Buckhall.
Complete construction of the mine water dam.
Start construction of the mine haul roads and the river dyke.
Develop a land fill for the long-term waste disposal.
Continue road maintenance.
The Company’s main asset is the Aurora Project. As such, the outlook for the Company is strongly tied to the
successful execution and development of the Aurora Project into an operating mine. See “Risk Factors” below.
EXPLORATION ACTIVITIES
During the two and fourteen months ended December 31, 2014, the Company incurred exploration and evaluation
expenditures on all its exploration properties of $0.5 million and $2.5 million, respectively, compared to $0.8
million and $7.8 million, in the three and twelve month period ended October 31, 2013, respectively.
Aranka Properties
The Company completed its current exploration program activities at Aranka. The properties are now under care
and maintenance. Exploration work will be continued at a later date to enable the Company to focus its
exploration program on its Other Properties (as defined below). The Company will continue to retain its licenses
in these areas.
The Company has a 100% interest in the Aranka Properties. At the option of the Company, the permit holders
remain entitled to NSR royalties that vary from 1.5% to 2% or a fixed payment amount in lieu thereof. As of
December 31, 2014, the Company held 102,220 acres under active exploration properties, with an additional
114,668 acres of property licences that have expired. Year to date, 34,893 acres of expired property licences
were approved for re-issuance by the Guyana Geology & Mines Commission (“GGMC”) and are awaiting final
processing. The Company has previously submitted licence renewal applications with the GGMC, and has
received in return a no objection letter from the GGMC, and has been advised that its applications are being
processed.
Other Properties
Within an area located northeast from the Aurora Project, baseline exploration work consisting of stream sediment
sampling, soil sampling, a more extensive systematic grid soil sampling, and a limited shallow saprolite drilling
program were the focus of the work program during the current quarter.
Work at the main grid and infill soil sampling were both completed. An extension of the grid soil sampling to the
northeast of the main grid is currently ongoing with about 50% completion. Available results from regolith
mapping and soil sampling has indicated a highly coherent northwest trending gold anomaly. The more
significant areas along the trend were followed up by closely spaced infill soil sampling and shallow saprolite
drilling utilizing a man portable drill rig. To December 31, 2014, a total of 29 silt samples, 8392 soil samples, 147
rock samples, and 777 drill core samples were collected from the area. Twenty saprolite drill holes (1103 meters)
have also been completed. Early results have indicated gold mineralization is hosted in altered intermediate
intrusives (quartz diorite and diorite).
-10-
Other Properties represent exploration expenditures at exploration targets near the vicinity of the Aurora Project.
The Company has a 100% interest in these Other Properties. At the option of the Company, the permit holder
remains entitled to a NSR royalty of 1.5% or a fixed payment amount in lieu thereof. As of December 31, 2014,
the Company held 18,589 acres under active exploration properties, in addition to 72,503 acres of property
licences that have expired. The Company has submitted licence renewal applications with the GGMC, and has
received in return a no objection letter from the GGMC, and has been advised that its applications are being
processed.
Outlook
The Company completed its exploration activities at its Aranka Properties and the Company will continue to retain
its licenses in these areas and return for future follow up exploration work. Exploration activities will continue to
focus within the boundaries of the Company’s Other Properties.
The outlook for all the Company’s exploration assets is dependent upon successful drilling results, financing and
development of these properties.
Based on correspondence and discussions with Guyana’s Minister of Natural Resources and the Environment
and with the Commissioner of the GGMC, management expects the above expired property licences for Aranka
and the Other Properties to be renewed in due course.
TECHNICAL DISCLOSURE
The scientific and technical data contained under the headings “Company Business” and “Aurora Project –
Development Cost Update” have been reviewed, approved and verified by Daniel Noone who is a “Qualified
Person” under NI 43-101 and is a member of the Australian Institute of Geoscientists.
Chief Geologist Augusto Flores IV, (P.Geo), a “Qualified Person” within the meaning of NI 43-101, has supervised
the preparation of the disclosure under the heading “Exploration Activities”.
SELECTED ANNUAL INFORMATION
The annual summary is set out in the following table, which has been prepared in accordance with IFRS.
(Expressed in thousands of United States dollars except per share amounts and where otherwise noted)
Ref.
December 31,
2014A
October 31,
2013B
November 1,
2012C
Operating loss
Other income (expense)
Net loss and comprehensive loss for the
period
Net loss per share (basic and fully diluted)
Cash and cash equivalents
Contract advances
Restricted cash
Development costs, property and equipment
Total assets
$
$
$
$
$
$
$
$
(i)
(i)
(ii)
(ii)
(ii)
(ii)
(10,572) $
(18,222) $
(2,235)
(759)
(12,807) $
(18,981) $
(40,835)
(1,702)
(42,537)
(0.09) $
(0.16) $
(0.47)
17,211 $
10,417 $
33,311 $
182,205 $
253,925 $
108,649 $
- $
328 $
19,471 $
129,219 $
37,390
-
336
7,108
45,683
-11-
Current liabilities
Long-term debt (net)
Accumulated deficit
Ref.
December 31,
2014A
October 31,
2013B
November 1,
2012C
(iii)
(iv)
(v)
$
$
$
38,501 $
58,077 $
2,722 $
- $
2,284
-
(254,325) $
(241,518) $
(222,537)
A
B
C
The year ended December 31, 2014 covers a fourteen month period, represented by five fiscal quarters.
The above figures have been re-stated to reflect the Company’s voluntary change in accounting principle on “E&E” expenditures.
See “Changes in Accounting Policies” below.
The above figures have also been re-stated to reflect the Company’s voluntary change in accounting principle on “E&E”
expenditures. See “Changes in Accounting Policies” below. Figures comprising net loss and comprehensive loss are for the
twelve months ended October 31, 2012, while components of the Company’s opening balance sheet have been presented as at
November 1, 2012.
(i) Overall, the Company’s loss for the financial year ended December 31, 2014 totalled $12,807 with basic and
diluted loss per share of $0.09. This compares with a loss for the year ended October 31, 2013 of $18,981
with basic and diluted loss per share of $0.16.
The Company’s operating loss for the financial year ended December 31, 2014 of $10,572 reflected a
decrease in loss of $7,650 from fiscal 2013. Despite the additional fiscal quarter operating loss of $1,478
included in current year-to-date figures, the year over year decrease in operating loss was substantially
attributable to:
Exploration and evaluation expenditure decrease of $5,361 from fiscal 2013. The majority of this
decrease was represented by exploration activity at the Aurora Project that occurred just prior to the date
of when development activities commenced under the Company’s new accounting policy on E&E
expenditures.
Stock based compensation decrease of $2,384 from fiscal 2013. The total fair value of stock-based
compensation during the fourteen months ended December 31, 2014 was $1,950 versus $4,112 last
year. Of this amount, in fiscal 2014, $1,264 was expensed and the balance $686 capitalized to assets
under development. In the twelve month period in fiscal 2013, $3,648 of the total fair value was expensed
and the balance $464 capitalized. The decrease in stock based compensation expense of $2,384 versus
last year was mainly due to a reduced number of options granted in the current fiscal year.
Other expense of $2,235 in fiscal 2014 was $1,476 higher than the prior fiscal year. Included in the current
fiscal year was the additional expense related to the extra two month fiscal quarter. The increase in expense
was substantially attributable to the following:
The year over year change in the foreign exchange account that reflected an increase in the foreign
exchange loss of $1,278. The current year to date net foreign exchange loss of $2,716 was primarily due
to realized foreign exchange losses of approximately $1,381 and foreign exchange losses of
approximately $1,335 that resulted from a weakening of the Canadian dollar applied primarily against the
Company’s Canadian dollar denominated cash and cash equivalents. The foreign exchange loss of
$1,438 in the twelve month period last year was due to a 4.2 cent weakening in the Canadian dollar year
end spot rate.
(ii) The decrease of $91,438 in the cash and cash equivalent balance from $108,649 at October 31, 2013 was
substantially due to:
Development expenditures on the Aurora Project of $131,186 (see “Aurora Project” for details), were
primarily funded by the Company in fiscal 2014, and also supported by proceeds made under the
Project Loan Facility (see “Liquidity, Capital Resources and Business Prospects” below),
-12-
Receipt of gross proceeds of $41,523 from the June 27, 2014 equity Placement, which allowed for
the disbursement of $33,000 into restricted bank accounts that was a pre-condition of the Facility
(see “Liquidity, Capital Resources and Business Prospects” below),
Disbursement of $13,618 in financing costs related to negotiating the Project Loan Facility and
advances of $10,417 to the GSJV pursuant to the EPC Contract, and
The current year’s operating loss and other expenses that total $12,807.
(iii) Current liabilities of $38,501 at December 31, 2014 reflect an increase of $35,779 over the October 31, 2013
balance. This increase reflects the significant expansion of development activities taking place at the
Company’s Aurora Project. Almost all of the consolidated current liabilities represent obligations for the Aurora
Project, substantially represented by accrued liabilities for work in progress under the EPC Contract, along
with the current portion of the Project Loan Facility.
(iv) Long term debt of $58,077 was composed of $68,573 in proceeds to date under the Project Loan Facility (see
“Liquidity, Capital Resources and Business Prospects” below), offset by the allocation of a proportional amount
of unamortized deferred financing costs in the amount of $6,156 attributable to negotiating the Facility, less the
current portion of Facility of $4,340 expected to be paid December 31, 2015.
(v) The accumulated deficits include the change in the Company’s accounting policy on E&E expenditures (see
“Changes in Accounting Policies” below). The cumulative impact of this change on accumulated deficit as of
October 31, 2012, October 31, 2013 and December 31, 2014, is $163,353, $172,520 and $175,193,
respectively. Of this cumulative change at December 31, 2014, $138,430 relates to exploration activities for
the Aurora Project incurred prior to development activities. The balance of the cumulative impact of the
change in accounting policy relates to the Company’s Aranka Properties and its Other Properties that are
currently in the exploration phase.
SUMMARY OF QUARTERLY RESULTS
Condensed Consolidated Financial Results
The following is a summary of the Company’s consolidated quarterly results for the eight quarters ended
December 31, 2014 following the basis of presentation utilized in its IFRS condensed consolidated interim
financial statements:
-13-
(Expressed in thousands of United States dollars except per share amounts and where otherwise noted)
(Quarterly results are unaudited)
Operating expenses
General and administrative
expenses
Exploration and evaluation
expenses
Stock-based compensation
Amortization
Operating loss
Other income (expense)
Realized and unrealized loss on
short-term investments
Foreign exchange gain (loss)
Capital and other taxes
Interest income
Net loss and comprehensive loss
for the period
Q5
Dec 31,
2014 A
Q4
Oct 31,
2014B
Q3
July 31,
2014B
Q2
Apr 30,
2014B
Q1
Jan 31,
2014B
Q4
Oct 31,
2013B
Q3
July 31
2013B
Q2
Apr 30,
2013B
$
779 $
1,608 $
1,290 $
1,666 $
1,331 $
1,851 $
1,473 $
1,523
448
231
20
510
88
34
412
178
37
525
309
39
567
458
42
797
1,179
754
1,016
43
69
925
785
40
(1,478)
(2,240)
(1,917)
(2,539)
(2,398)
(3,445)
(3,737)
(3,273)
-
-
(211)
(124)
-
3
-
55
(3)
435
-
91
(13)
752
-
173
(8)
(3,568)
-
183
(35)
(836)
60
228
(92)
(1,914)
(21)
316
(184)
1,279
(42)
279
$
(1,686) $
(2,309) $
(1,394) $
(1,627) $
(5,791) $
(4,028) $
(5,448) $
(1,941)
A The fifth quarter of the year ended December 31, 2014 covers a two month period.
B The above figures have been re-stated to reflect the Company’s voluntary change in accounting principle on “E&E” expenditures. See
“Changes in Accounting Policies” below.
Q5
Dec 31,
2014 A
Q4
Oct 31,
2014B
Q3
July 31,
2014B
Q2
Apr 30,
2014B
Q1
Jan 31,
2014B
Q4
Oct 31,
2013B
Q3
July 31
2013B
Q2
Apr 30,
2013B
Net loss per share
Basic and fully diluted
Weighted average number of share
outstanding
Basic and fully diluted
$
(0.01) $
(0.01) $
(0.01) $
(0.01) $
(0.05) $
(0.02) $
(0.04) $
(0.02)
150,331,399
150,306,399
135,404,293
126,187,986
126,147,337
126,126,983
126,125,149
118,118,706
Total assets
Total liabilities
$
$
253,925 $
232,609 $
189,933 $
135,550 $
127,201 $
129,219 $
131,386 $
135,733
96,578 $
74,262 $
29,388 $
15,256 $
5,842 $
2,722 $
1,756 $
1,822
A The fifth quarter of the year ended December 31, 2014 covers a two month period.
B The above figures have been re-stated to reflect the Company’s voluntary change in accounting principle on “E&E” expenditures. See
“Changes in Accounting Policies” below.
The Company is engaged in the acquisition, exploration, evaluation and development of gold resource properties
in Guyana, South America. At this time, any issues of seasonality or commodity market fluctuations have no
direct impact on the Company’s results or operations. The Company currently expenses exploration and
evaluation expenditures incurred, and capitalizes expenditures related to the development and construction of the
Aurora Project as part of assets under development, a component of development costs, property and equipment.
Results of Operations
Results for the two month period ended December 31, 2014
The Company reported a net loss for the two months ended December 31, 2014 (i.e. the fifth fiscal quarter) of
$1,686 ($0.01 loss per share), substantially composed of:
-14-
General and administrative expenses of $779, reflecting: salaries and related benefits of $426; office
travel, insurance and other expenses of $225; professional fees of $117; and shareholder relations and
filing fees of $11.
Exploration and evaluation expenses of $448, substantially reflecting expenditures at the Company’s
Other Properties (see “Exploration Activities – Other Properties” above).
Stock-based compensation expense of $231. The total fair value of stock-based compensation during
the two months ended December 31, 2014 was $492 of which $231 was expensed and the balance $261
capitalized to assets under development. During the quarter, the Company granted 3,537,500 options to
its employees and Directors with an exercise price of Cdn$2.64, five year term, vesting periods over three
years, and a fair value per unit of Cdn$1.42
Results for the fourteen month period ended December 31, 2014, compared to the twelve month period ended
October 31, 2013
The Company’s reported a net loss for the financial year ended December 31, 2014 of $12,807 (basic and diluted
loss per share of $0.09). This compares with a loss for the year ended October 31, 2013 of $18,981 (basic and
diluted loss per share of $0.16). Despite the additional fiscal quarter net loss of $1,686 in 2014, the $6,174
decrease in the year over year net loss was substantially attributable to:
Exploration and evaluation expenditure decrease of $5,361 from the prior year, with the majority of this
decrease represented by exploration activity at the Aurora Project that occurred just prior to the date of
when development activities commenced under the Company’s new accounting policy on E&E
expenditures. The balance of the reduction in E&E expenditures reflected a shift in focus in the
Company’s exploration program whereby its Aranka Property was placed on care and maintenance with
exploration activities to resume at a future date, while the Company’s current exploration program
focused on its Other Properties.
Stock based compensation decrease of $2,384 from fiscal 2013. The total fair value of stock-based
compensation during the fourteen months ended December 31, 2014 was $1,950 versus $4,112 last
year. Of this amount, in fiscal 2014, $1,264 was expensed and the balance $686 capitalized to assets
under development. In the twelve month period in fiscal 2013, $3,648 of the total fair value was expensed
and the balance $464 capitalized. The decrease in stock based compensation expense of $2,384 versus
last year was mainly due to a reduced number of options granted in the current fiscal year.
The year over year change in the foreign exchange account that reflected an increase in the foreign
exchange loss of $1,278. The current year to date net foreign exchange loss of $2,716 was primarily due
to realized foreign exchange losses of approximately $1,381 and foreign exchange losses of
approximately $1,335 that resulted from a weakening of the Canadian dollar applied primarily against the
Company’s Canadian dollar denominated cash and cash equivalents. The foreign exchange loss of
$1,438 in the twelve month period last year was due to a 4.2 cent weakening in the Canadian dollar year
end spot rate.
TRENDS
The Company is a Canadian-based mineral exploration and development company primarily focused on the
acquisition, exploration and development of gold deposits in Guyana, South America. The Company attempts to
acquire properties in Guyana, should such acquisitions be consistent with the objectives and acquisition criteria of
the Company. The Company’s future financial success will be dependent upon management’s successful
execution of its Aurora Project development and operating plans, and satisfying all conditions necessary for
continued draws of Project Loan Facility funds during development, and adherence while in production to the
Facility’s requirements. In addition, both the price of, and the market for, gold is volatile, difficult to predict and
-15-
subject to changes in domestic and international political, social and economic environments. Currently, access
to capital to fund exploration and development companies is very challenging.
The Company is aware that governments around the world are looking to the resource sector as a possible
source of additional revenue, be it taxes or royalties. The Company has negotiated a long-term agreement with
the Government of Guyana it considers to be fair which should benefit all stakeholders.
Apart from these and the risk factors noted under the heading “Risk Factors”, management is not aware of any
other trends, commitments, events or uncertainties that would have a material effect on the Company’s business,
financial condition or results of operations.
LIQUIDITY, CAPITAL RESOURCES AND BUSINESS PROSPECTS
Working Capital
The Company does not currently generate cash from mining operations, as its primary focus is on the
development of its Aurora Project. The Company now considers the Project to be fully financed with monthly
draws taking place under the Facility to fund ongoing development and construction activities.
Monthly funding under the Project Loan Facility is designed to match the Aurora Project’s amounts due and
payable or reasonably expected to be, before the next Facility draw date. Consequently, the amount of cash on
hand previously drawn under the Facility, and the Company’s working capital position will reduce over time as
Project cash payments are made and subsequent supplier accruals are incurred. In addition, approximately
$22,000 in Project current accounts payable and accrued liabilities are not yet funded under the Facility. See
“Liquidity, Capital Resources and Business Prospects” below. At December 31, 2014, the Company on a
consolidated basis had cash and cash equivalents of $17,211 (October 31, 2013 - $108,649) to settle
consolidated current liabilities of $38,501 (October 31, 2013 - $2,722). Included in the Company’s consolidated
cash position and current liabilities at December 31, 2014 is approximately $14,000 and $37,000, respectively,
attributable to the Aurora Project. The $37,000 in Project’s current liabilities includes $4,340 in current portion of
long-term debt. The $14,000 cash position represents cash drawn under the Facility that the Company is
contractually obligated to spend on the development of the Aurora Project.
As of December 31, 2014 the Company had $10,417 outstanding in contract advances made to the GSJV.
Contract advances are expected to be fully repaid by mid-2015.
The Company’s current liabilities at December 31, 2014 and October 31, 2013 were $38,501 and $2,722,
respectively. The increase reflects the growth of development activities taking place at the Aurora Project.
Included in the December 31, 2014 current liabilities is $10,000 in holdbacks owed to the GSJV which are due on
full plant mechanical completion date. In addition, current liabilities at December 31, 2014 include $4,340 in
current portion of long term debt that is expected to be paid on December 31, 2015.
At December 31, 2014 the Company available cash to support its corporate general and administrative expenses
and its exploration program was approximately $3,000. The Company expects to manage its corporate cash
resources to support these ongoing activities for calendar 2015.
Financing Activities & Liquidity
On September 2, 2014 the Company and its wholly owned subsidiary AGM, announced the signing of the
Common Terms Agreement with its Senior Lenders and other definitive documentation with respect to the $185
million Project Loan Facility to fund the development and construction of, and general matters relating to, the
-16-
100%-owned Aurora Project. With the completion of the Facility, the development of the Project is now fully
financed, subject to the terms and conditions of the Facility.
The Project Loan Facility consists of two tranches; a Tranche 1 facility of $160,000 and a Tranche 2 cost overrun
facility of $25,000. The maximum term of the Facility is eight years and advances under the Facility bear a
weighted average interest rate of 3-month LIBOR plus 5.11% for the Tranche 1 facility, and advances under the
Tranche 2 facility would bear interest at the same average rate plus 0.5% (if drawn). There is no required gold
hedging or other required similar provisions associated with the Facility. The use of proceeds drawn under the
Facility is limited to development and construction of the open pit mine and related process plant facilities.
As a condition of first disbursement under the Facility, the Company was obligated to fund into restricted reserve
accounts a total of $33,000, which on June 27, 2014 the Company raised in equity by completing the Placement
pursuant to which it issued an aggregate of 24,000,000 Common Shares at a price of Cdn$1.85 per Common
Share for aggregate gross proceeds of approximately $41,523 (or Cdn$44,400). Share issue expenses of $287
were incurred on the Placement.
The Company satisfied all conditions to first disbursement under the Facility to enable initial drawdown on
October 17, 2014 in the amount of $42,573. As of December 31, 2014, the Company’s debt under the Facility
was $68,573. Subsequent advances are expected to be received on a monthly basis, as determined by Project
funding requirements. The Company was in compliance will all key covenants under the Common Terms
Agreement as of February 19, 2015.
The Company has undertaken to provide additional funds, if required, for the Aurora Project to achieve project
completion, and to supplement any shortfall of funds needed to meet the Aurora Project’s financial obligations.
At and subsequent to completion of project development, AGM will be required to maintain specified financial and
non-financial covenants/conditions and reporting requirements, including adherence to environmental and social
standards, and funding of a debt service reserve account and mine closure reserve account. The restricted funds
within the Owner’s cost overrun equity and project completion accounts that total $33 million will be released at
project completion (to the extent they are not drawn), and if required, applied against debt service reserve and
mine closure reserve accounts, as required under the Project Loan Facility. The Facility also provides for a partial
cash sweep mechanism for the benefit of the Senior Lenders and the acceleration of principal repayment in the
event of a change in control.
Under the terms of the Facility, commencement of underground mine development requires various terms and
conditions being met, including the pre-funding of underground capital costs/commitments from operating cash
flows generated from the open pit mine or from other financing sources.
Principal repayments are expected to commence December 31, 2015 and continue quarterly thereafter over the
tenor of the Facility.
-17-
The sources and uses of funds to construct the Aurora Project are anticipated as follows:
(in millions of United States dollars)
SOURCES
Amount
USES
Amount
Owners’ equity contribution
Tranche 1 Facility
$
117
160
Initial development costs(A)
$
Working capital
Capitalized operating costs
Financing costs (including
pre-production interest)
Total Base Case Sources
$
277
Total Uses
$
249
5
3
20
277
Owner’s overrun equity restricted account
Tranche 2 Facility
Owner’s completion restricted account
Total Aurora Project Potential
Overfunding
23
25
10
58
Total Sources
$
335
(A) Includes contingency of approximately $5 million.
Under the Common Terms Agreement, to the extent necessary, the following sequence is required to enable
disbursement of the full Project Loan Facility funds:
First:
Second:
Third:
Fourth:
Tranche 1 Facility $160 million,
Owner’s overrun equity restricted account $23 million
Tranche 2 Facility – cost overrun $25 million
Owner’s project completion restricted account $10 million
Total anticipated Aurora Project costs are $277 million that include development costs of $249 million, finance
costs of $20 million, working capital of $5 million, and pre-operating costs of $3 million. Total funding sources
amount to $335 million and are anticipated to exceed the expected total Aurora Project costs by $58 million. The
Company does not expect that it will require using the $58 million in overfunding facilities.
Development costs from project inception, on an accrual basis, of approximately $172 million reflect additions
incurred in both fiscal 2013 and in fiscal 2014. The total expected remaining development costs to commercial
production, on an accrual basis, are expected to be $77 million which includes $38 million for the fixed price EPC
Contract, and $39 million in initial development costs attributable to the Company’s self-performance (see “Aurora
Project – Development Cost Update”). The Company has sufficient funding for an additional $58 million in Aurora
Project cost overruns (if incurred), above and beyond the expected remaining costs to complete attributable to the
Company’s self-performance, and for any variations/change orders in the fixed price EPC Contract.
Accordingly, to complete the mine development and construction plan for the Aurora Project, ongoing draws and
compliance with the Project Loan Facility will be required. See also “Risk Factors” below.
As of December 31, 2014, approximately $15,376 in costs on Lender’s due diligence activities were incurred
since project inception, in support of the bankable feasibility study and the Project Loan Facility, and includes
Senior Lenders’ and other advisory fees, legal costs, as well as required technical engineering and social and
environmental assessment costs that were pre-requisites to entering into Facility negotiations. These costs have
been capitalized on the balance sheet as deferred financing costs and considered borrowing transaction costs. A
proportional amount of these transaction costs as of December 31, 2014, that is $6,590, has been netted against
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ongoing advances made under the Facility, of which $434 has been accreted using the effective interest method
and capitalized to the Project’s development costs over the loan repayment period.
With the staged mining approach (see “Aurora Project EPC Contract – Update” above), the scheduled September
30, 2015 interest and Senior Lenders’ fee payment of approximately $4,000 on the Project Loan Facility, may now
be incurred during the development phase of the Aurora Project, rather than the operations phase (see “Financial”
section below and “Liquidity, Capital Resources and Business Prospects” for further details). It is anticipated that
cash flows generated from early gold production from the gravity and saprolite circuits in mid-year 2015 will be
more than sufficient to cover these costs.
There can be no assurance that the Company will meet all ongoing conditions necessary for continued draws and
compliance under the Facility. In these circumstances, this could result in a default under the Facility and require
repayment of all advances. If debt and or equity capital markets are not available, or the cost of capital is
excessive, the Company may have to delay the construction and development activities at the Aurora Project.
See “Risk Factors” below.
As of December 31, 2014, the Company held approximately $14,000 of its cash in United States denominated
currency, with the remaining predominantly in Canadian funds. The Company maintains substantially all of its
cash and cash equivalents in interest bearing bank accounts at select Canadian chartered banks.
The Company’s cash and cash equivalents position on February 19, 2015 was approximately $26 million.
Investing Activities
The Company’s most significant expenditure is on its development of the Aurora Project.
For the two and fourteen months ended December 31, 2014, the Company incurred development expenditures on
a cash basis for the Aurora Project of approximately $31 million and $131 million, respectively, compared to
approximately $5 million in the fourth quarter and $11 million for the twelve months ended October 31, 2013. See
“Aurora Gold Project” above which describes the nature and composition of development costs on an accrual
basis.
During the two and fourteen months ended December 31, 2014, the Company incurred exploration and evaluation
expenditures on all its exploration properties of $0.5 million and $2.5 million, respectively, compared to $0.8
million and $7.8 million, in the three and twelve month period ended October 31, 2013, respectively.
In accordance with the Project Loan Facility, in October 2014 the Company placed a total of $33 million into
restricted bank accounts prior to first draw under the Facility. These restricted funds are available for project
costs overruns on the Aurora Project, and are subject to security and debenture agreements whereby AGM has
granted and created a lien for the benefit of the Senior Lenders. These balances will be released at project
completion, to the extent they are not drawn, and if required, applied against debt service reserve and mine
closure reserve accounts, as required under the Project Loan Facility. These restricted cash accounts are
denominated in United States dollars and held at a select Canadian chartered bank. See “Financing Activities
and Liquidity” section above.
During the financial year ended December 31, 2014, the Company made $13.4 million in contract advances to the
GSJV pursuant to the EPC Contract. As of December 31, 2014, approximately $10.4 remained outstanding and
is scheduled for repayment by the GSJV in equal monthly instalment by mid-2015.
-19-
OFF-BALANCE-SHEET ARRANGEMENTS
As of the date of this filing, the Company does not have any off-balance-sheet arrangements that have, or are
reasonably likely to have, a current or future effect on the results of operations or financial condition of the
Company, including, and without limitation, such considerations as liquidity and capital resources.
COMMITMENTS
The Mineral Agreement and Mining Licence for the Aurora Project require the Company to undertake various
obligations and commitments over the twenty-year life of the agreements. The Company is progressing with
infrastructure development and is in compliance in all material respects with all terms and conditions of the Mining
Licence and Mineral Agreement for the Aurora Project. The government of Guyana has the right to terminate the
agreements in the event of default by written notice to the Company, subject to a dispute resolution process
involving arbitration.
As of February 19, 2015 the Company is committed to $68,479 for obligations under the EPC Contract, other
Aurora Project contractual commitments, purchases of equipment goods and services, and operating leases.
(In thousands of United States dollars)
Total
2015
2016
2017
2018
2019
There-after
EPC Contract
$
56,939 $
56,939 $
- $
- $
- $
- $
Other contractual commitments
Purchase Obligations
Operating leases
Total Contractual Obligations
At February 19, 2015A
7,368
3,946
226
5,628
3,946
79
290
290
290
290
-
3
-
3
-
3
-
3
$
68,479 $
66,592 $
293 $
293 $
293 $
293 $
-
580
-
135
715
A With the Company’s announcement on August 12, 2014 of the change in its fiscal year end (see “Change in Year End” section below),
references to annual amounts reflect years ending December 31st.
In May 2014, the Company’s wholly owned subsidiary AGM formalized its existing contractual arrangements with
the GSJV, and signed the EPC Contract for the Aurora Project process plant and power plant. Under the terms of
the EPC Contract valued at $134 million, the Company is required to make prescribed monthly installment
payments to the GSJV up to the end of September 2015. Initial payments by AGM were subject to a 30% hold
back, to a maximum of $10 million that is repayable at full plant mechanical completion date. The holdback is
included in accounts payable and accrued liabilities at December 31, 2014.
The Company’s mineral exploration rights to the Aurora Property were acquired from Alfro Alphonso and are
subject to an annual fee of $100, payable on January 2nd each year, up to a maximum of $1,500. Such payments
are due and payable for such period that the Company maintains an interest in the property. As at December 31,
2014 total payments of $1,100 have been made (October 31, 2013 - $900). This remaining commitment has not
been included in the above contractual commitment table.
If the GSJV reaches mechanical completion within certain time parameters around the dates of the established
three milestones (gravity circuit, saprolite circuit and full plant mechanical completion), bonuses are payable to the
GSJV, in addition to the contract price, up to a maximum of 5% of the contract value. These contingent payments
have not been included in the above figures and have not been accrued, as the likelihood of these events taking
place is not determinable at this time.
Provisions to terminate the EPC Contract are available to AGM under certain conditions, along with a related
termination payment. A termination payment by AGM would also apply in the case of a change in control of the
-20-
Company. Delay liquidated damages are payable by the GSJV to AGM, up to a maximum of 5% of the contract
price, if the GSJV fails to reach the date of full plant mechanical completion.
The Company is also party to certain management and consulting contracts. These contracts contain clauses
requiring additional payments to be made upon the occurrence of certain events such as contract termination or
change of control by the Company. As the likelihood of these events taking place is not determinable, the
contingent payments have not been reflected in the consolidated financial statements.
PROPOSED TRANSACTIONS
The Company evaluates various opportunities and transactions as they arise. There are no material transactions
pending at the date of this MD&A.
RELATED PARTY TRANSACTIONS
(a) Compensation to directors for director’s fees and salaries and benefits for key management personnel were as
follows:
(In thousands of United States dollars)
Fourteen months
Twelve months
ended December 31,
ended October 31,
2014
2013
Directors:
Alan Ferry
Robert Bondy
Richard Williams
Jean-Pierre Chauvin
Scott Caldwell
David Beatty
Rene Marion
Michael Richings
Key Management:
J. Patrick Sheridan, Executive Chairman of the Board
Scott Caldwell, President, CEO and Director (i)
Lello Galassi, President and Chief Operating Officer
Marcel (“Mac”) DeGuire, former President and COO
Paul J. Murphy, Executive Vice-President, Finance and Chief Financial
Officer
Daniel Noone, Vice-President of Exploration, and Director
Reed Huppman, Vice President Sustainability, Health and Safety
(i) Scott Caldwell was appointed President and CEO mid-calendar 2013
$
$
$
$
79
$
6
8
66
-
48
64
52
323
$
473
$
586
425
-
496
274
307
35
31
31
31
15
24
-
-
167
564
203
154
326
345
321
-
2,561
$
1,913
Directors fees are higher in fiscal 2014 than in fiscal 2013, substantially due to compensation adjustments in
the current year, along with compensation related to the additional fifth fiscal quarter in 2014. Key
management compensation in the current year was also higher than in fiscal 2013, due to the additional
reporting quarter, one newly created senior management position (the VP Sustainability, Health and Safety),
along with the newly created Executive Chairman of the Board position that commenced mid-last year and
-21-
adjustments to remunerations, that was partially offset by the payment of bonuses last year that related to the
successful issuance of the Updated Feasibility Study.
(b) Included in accounts payable are the following amounts due to related parties:
(In thousands of United States dollars)
December 31, 2014
October 31, 2013
Directors:
Alan Ferry
Robert Bondy
Richard Williams
Jean-Pierre Chauvin
David Beatty
(In thousands of United States dollars)
Key Management:
J. Patrick Sheridan, Executive Chairman of the Board
Scott Caldwell, President, CEO and Director
$
$
$
$
-
-
-
-
-
-
$
$
9
9
9
8
8
43
December 31, 2014
October 31, 2013
7
-
7
$
$
30
1
31
The balances above are non-interest bearing and are payable on demand.
(c) Directors and insiders of the Company purchased a total of 114,000 Common Shares having a value of
Cdn$210,900 under the June 2014 Placement. See “Liquidity, Capital Resources and Business Prospects –
Financing Activities and Liquidity” for further details on the Placement.
All the above related party transactions are in the normal course of operations and are measured at the exchange
amount, which is the amount of consideration established and agreed to by the related parties.
CHANGE IN YEAR END
On August 12, 2014, the Company announced that, effective in 2014, its financial year-end has changed from
October 31st to December 31st to align its financial reporting calendar with other public mining companies and to
facilitate the investment community's ability to compare its financial performance. The Company has reported a
one-time, fourteen month transition year covering the period from November 1, 2013 to December 31, 2014.
Subsequent to this transition year, the Company's first full financial year will cover the period January 1, 2015 to
December 31, 2015.
During its 2015 financial year, the Company will file interim financial statements (comparative period end dates
presented in brackets) covering the three months ending March 31, 2015 (April 30, 2014), the three and six-
month periods ending June 30, 2015 (July 31, 2014), and the three and nine-month periods ending September
30, 2015 (October 31, 2014). Annual statements will be filed for the new financial year ending December 31,
2015 with comparative statements from the previous fourteen month financial year ending December 31, 2014.
As prescribed in National Instrument 51-102 Continuous Disclosure Obligations, the filing deadline for the annual
financial statements will be on or before the 90th day after the end of the most recently completed financial year
and the filing deadline for the interim financial statements will be on or before the 45th day after the end of the
interim period.
-22-
CHANGES IN ACCOUNTING POLICIES
Change in Accounting Policy on Exploration and Evaluation Expenditures
Under IFRS 6 – “Exploration and Evaluation of Mineral Resources” (“IFRS 6”), the Company’s had historically
capitalized its expenditures on E&E activities. Effective December 31, 2014, the Company adopted a voluntary
change in accounting principle on E&E expenditures that is also generally accepted under IFRS 6. The
Company’s new policy on accounting for exploration and evaluation expenditures is to expense these costs until
such time as the work completed supports the future development of the property through the issuance of a NI
43-101 technical report or definitive bankable feasibility study, and such development receives appropriate board
approvals. All subsequent expenditures on the property are then capitalized and classified as assets under
construction, a component of property, plant and equipment.
The Company’s primary focus is on the development of its Aurora Project, with initial production expected mid-
year of fiscal 2015. As such, exploration expenditures incurred prior to the issuance of the Aurora Project’s
Updated Feasibility Study do not form part of the current Project’s development budget and supporting financing
Facility. In addition, this change in accounting policy is consistent with the accounting conceptual framework for
the recognition of assets, and is an accepted accounting practice in the mining industry. As such, management
has determined that such a voluntary change in accounting policy results in financial statements providing more
reliable and more relevant information. This change in accounting policy has been applied to all of the
Company’s exploration activities for all properties.
In accordance with IFRS 8 - “Accounting Policies, Changes in Accounting Estimates and Errors”, the change in
accounting policy has been made retrospectively and the comparatives have been restated accordingly to all
periods presented, as if the policy had always been applied. The following table summarizes the impact of the
above voluntary change in accounting principle on affected line items within the Company’s financial position,
operations and comprehensive loss, and cash flows:
Selected Balance Sheet Items:
November 1, 2012
October 31, 2013
(In thousands of United States dollars)
Exploration and evaluation assets:
Aurora Project
Aranka Property
Other Properties
As
previously
reported
Cumulative
Change
As restated
As
previously
reported
Cumulative
Change1
As restated
$
133,954 $ (133,954) $
- $
- $
- $
26,161
(26,161)
3,238
(3,238)
163,353
(163,353)
-
-
-
30,197
(30,197)
3,893
(3,893)
34,090
(34,090)
-
-
-
-
Development costs, property and equipment
7,108
-
7,108
157,901
(138,430)
19,471
Accumulated deficit
$
$
170,461 $
(163,353) $
7,108 $
191,991 $ (172,520) $
19,471
(59,184) $ (163,353) $ (222,537) $
(68,998) $ (172,520) $ (241,518)
1 During fiscal 2013, costs of $138,430 were reclassified from exploration and evaluation assets to development costs under the
previous accounting policy. The cumulative change to development costs of $138,430 above, represents these same exploration
costs that were incurred on the Aurora Project from inception to January 11, 2013 (the date of issuance of the Updated Feasibility
Study and board approval to commence with development on the Project towards commercial production).
-23-
Selected Items from Statement of Operations
and Comprehensive Loss:
(In thousands of United States dollars)
Stock based compensation
Amortization
Exploration and evaluation expenditures
Net loss and comprehensive loss for the year
Net loss per share - Basic and fully diluted
Selected Items from Statement of Cash Flows:
(In thousands of United States dollars)
Net Loss
Items not involving cash:
Stock based compensation
Amortization
Change in non-cash operating working capital:
Accounts payable and accrued liabilities
Investing
$
$
$
$
Twelve months ended
October 31, 2013
As previously
reported
Change
As
restated
2,844 $
804 $
3,648
34
-
540
574
7,823
7,823
2,878 $
9,167 $
12,045
(9,814) $
(9,167) $
(18,981)
(0.08) $
(0.08) $
(0.16)
Twelve months ended
October 31, 2013
As
previously
reported
Change
As restated
$
(9,814) $
(9,167) $
(18,981)
2,844
34
804
540
3,648
574
776
(1,365)
(589)
Expenditures on exploration and evaluation assets
(9,188)
9,188
-
Total Cash Flows, or the like
$
(15,348) $
- $
(15,348)
Future accounting pronouncements
The Company has not yet adopted the following new accounting pronouncements which are effective for fiscal
periods of the Company beginning on or after January 1, 2015:
(i)
International Financial Reporting Standard 9, Financial Instruments (“IFRS 9”) was issued in October 2010
by the IASB to replace IAS 39, Financial Instruments – Recognition and Measurement. The replacement
standard has the following significant components: it establishes two primary measurement categories for
financial assets – amortized cost and fair value; it establishes criteria for the classification of financial assets
within the measurement category based on business model and cash flow characteristics; and it eliminates
existing held to maturity, available-for-sale, loans and receivable categories.
In November 2013, the IASB issued an amendment to IFRS 9 which includes a new hedge model that aligns
accounting more closely with risk management and enhances disclosure about hedge accounting and risk
management. Additionally, as the impairment guidance and certain limited amendments to the classification
and measurement requirements of IFRS 9 are not yet complete, the previously mandated effective date of
IFRS 9 of January 1, 2015 has been removed. Entities may apply IFRS 9 before the IASB completes the
amendments but are not required to do so. The final version of IFRS 9 was issued in July 2014 and includes
(i) a third measurement category for financial assets – fair value through other comprehensive income; (ii) a
single, forward-looking ‘expected loss’ impairment model, and (iii) a mandatory effective date for IFRS 9 of
annual periods beginning on or after January 1, 2018. The Company has not evaluated the impact of
adopting this standard.
-24-
(ii)
International Accounting Standard 36, Impairment of Assets (“IAS 36”) was amended in May 2013 to make
small changes to the disclosures required by IAS 36 when an impairment loss is recognized or reversed. The
amendments require the disclosure of the recoverable amount of an asset or cash generating unit (“CGU”) at
the time an impairment loss has been recognized or reversed and detailed disclosure of how the associated
fair value less costs of disposal has been determined. The amendments are effective for accounting periods
beginning on or after January 1, 2014 with earlier adoption permitted. The Company is currently evaluating
the impact of adoption of the amended disclosure requirements of IAS 36.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of expenses and other income during the
year.
Judgments, estimates and assumptions are periodically evaluated and are based on management's experience
and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. However, actual outcomes can differ from these estimates. Areas of judgment, estimate and
assumptions that have the most significant effect on the amounts recognized in the financial statements are as
follows:
Impairment of assets:
The Company assesses its cash-generating units annually to determine whether any indication of impairment
exists. Where an indicator of impairment exists, an estimate of the recoverable amount is made, which is the
higher of the fair value less costs to sell and value in use. The determination of the recoverable amount requires
the use of estimates and assumptions such as long-term commodity prices, discount rates, future capital
requirements, exploration potential and future operating performance. Fair value is determined as the amount that
would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing
parties. Recoverable amount is generally determined as the present value of estimated future cash flows arising
from the continued use of the asset, which includes estimates such as the cost of future expansion plans and
eventual disposal, using assumptions that an independent market participant may take into account. Cash flows
are discounted by an appropriate discount rate to determine the net present value. Changes in any of the
assumptions or estimates used in determining the fair value could impact the impairment analysis.
The estimation of mineral resources as proven or probable ore reserves is complex and requires significant
subjective assumptions, which are valid at the time of estimation. These assumptions may change significantly
over time when new information becomes available and may cause the mineral resources and reserves estimates
to change. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may
have a significant impact on the economic assessment of the mineral resources and reserves and may result in
their restatement, affecting the recoverability of mineral property interests capitalized.
Fair value of share-based payments:
Determining the fair value of certain share-based payments involves estimates of interest rates, expected life of
options, expected forfeiture rate, share price volatility and the application of the Black-Scholes option pricing
model. The Black-Scholes option pricing model requires the input of highly subjective assumptions that can
materially affect the fair value estimate. Stock options granted vest in accordance with the stock option plan. The
valuation of stock-based compensation is subjective and can impact profit and loss significantly.
The Company has applied a forfeiture rate in arriving at the fair value of stock based compensation to be
recognized, reflecting historical experience. Historical experience may not be representative of actual forfeiture
-25-
rates incurred. Several other variables are used when determining the value of stock options using the Black-
Scholes valuation model:
Volatility: the Company uses historical information on the market price of its common shares to determine
the degree of volatility at the date the stock options were granted. Therefore, depending on when the
stock options were granted and the period of historical information examined, the degree of volatility can
be different when calculating the value of different stock options.
Risk-free interest rate: the Company used the interest rate available for government securities of an
equivalent expected term as at the date of the grant of the stock options. The risk-free interest rate will
vary depending on the date of the grant of the stock options and their expected term.
Dividend yield: the Company has not paid dividends in the past because it is in the exploration and
development stage and has not yet earned any significant income. Also, the Company does not expect
to pay dividends in the foreseeable future. Therefore, a dividend rate of 0% was used for the purposes of
the valuation of the stock options.
CAPITAL MANAGEMENT
The Company manages its capital with the following objectives:
to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of
future growth opportunities, and pursuit of accretive acquisitions; and
to maximize shareholder return through enhancing share value.
The Company monitors its capital structure and makes adjustments according to market conditions in an effort to
meet its objectives given the current outlook of the business and industry in general. The Company may manage
its capital structure by issuing new shares, repurchasing outstanding shares, taking on debt, adjusting capital
spending, or disposing of assets. The capital structure is reviewed by management and the Board of Directors on
an ongoing basis.
The properties in which the Company currently has an interest are in the exploration and development stage. As
such the Company is dependent on external financing to fund its activities. In order to carry out its planned
exploration and development programs and pay for administrative costs, the Company will attempt to spend its
existing working capital and raise additional amounts as needed.
In light of the above, the Company will continue to assess new properties and seek to acquire an interest in
additional properties if it believes there is sufficient potential and if it has adequate financial resources to do so.
The Company considers its capital to be (1) equity, comprising share capital, stock options, contributed surplus
and accumulated deficit, which at December 31, 2014 totalled $157,347 (October 31, 2013 - $126,497), and (2)
long-term debt, which at December 31, 2014 was $58,077 net of unamortized debt issuance costs (October 31,
2013 – nil). The Company manages capital through its financial and operational forecasting processes. The
Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and
other investing and financing activities. The forecast is regularly updated based on exploration and development
activities. Selected information is frequently provided to the Board of Directors of the Company. The Board of
Directors does not establish quantitative return on capital criteria for management but rather relies on the
expertise of the Company's management team to sustain the future development of the business. The Company’s
capital management objectives, policies and processes have remained unchanged during the fourteen months
ended December 31, 2014.
Under the Project Loan Facility, the Company’s long-term debt is expected to increase to $160 million by the time
the Aurora Project reaches commercial production, anticipated in the third calendar quarter of 2015.
-26-
PROPERTY AND FINANCIAL RISK FACTORS
The Company’s activities expose it to a variety of financial risks: liquidity risk, market risk (including interest rate,
currency rate and price risk) and credit risk.
Risk management is carried out by the Company's management team with guidance from the Board of Directors.
The Board of Directors also provides regular guidance for overall risk management.
(a) Liquidity risk:
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations
as they come due. The timeline to build the Aurora Project into a producing mine is dependent on continuing to
satisfy all required financial and non-financial covenants under the Project Loan Facility and successful
construction and development of the Project. There can be no assurances that future draws under the Facility will
occur or take place in a timely fashion, or that other supplemental financing activities will be successful, if
required, or that execution of the construction of the mine at the Project will proceed as planned.
The Company’s liquidity and operating results may be adversely affected if its access to the capital market is
hindered, whether as a result of a downturn in stock market conditions generally or as a result of conditions
specific to the Company. The Company generates cash flow primarily from its financing activities and interest
income earned on its cash and cash equivalents. At December 31, 2014, the Company on a consolidated basis
had cash and cash equivalents of $17,211 (October 31, 2013 - $108,649) to settle consolidated current liabilities
of $38,501 (October 31, 2013 - $2,722).
Monthly funding under the Project Loan Facility is designed to match the Aurora Project’s amounts due and
payable or reasonably expected to be, before the next Facility draw date. Consequently, the amount of cash on
hand previously drawn under the Facility, and the Company’s working capital position will reduce over time as
Project cash payments are made and subsequent supplier accruals are incurred. In addition, approximately $22
million in Project current accounts payable and accrued liabilities are not yet funded under the Facility. See
“Liquidity, Capital Resources and Business Prospects” above. At December 31, 2014, the Company on a
consolidated basis had cash and cash equivalents of $17,211 (October 31, 2013 - $108,649) to settle
consolidated current liabilities of $38,501 (October 31, 2013 - $2,722). Included in the Company’s consolidated
cash position and current liabilities at December 31, 2014 is approximately $14 million and $37 million,
respectively, attributable to the Aurora Project. The $37 million in Project’s current liabilities includes $4.3 million
in current portion of long-term debt. The $14 million cash position represents cash drawn under the Facility that
the Company is contractually obligated to spend on the development of the Aurora Project.
The Company regularly evaluates its overall cash position and forecasted cash flows to ensure preservation and
security of capital as well as maintenance of liquidity. All of the Company's financial liabilities are subject to
normal trade terms.
(b) Market risk:
Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will
significantly fluctuate due to changes in market prices. The value of the financial instruments can be affected by
changes in foreign exchange rates, interest rates, and equity prices.
Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will
fluctuate because of changes in foreign exchange rates. The Company's functional currency is the United States
dollar and major purchases are transacted in United States dollars.
The Company is subject to gains and losses due to fluctuations in the Canadian and Guyanese dollar against the
United States dollar. Sensitivity to a plus or minus 10% change in all foreign currencies (Guyanese and Canadian
-27-
dollars) against the United States dollar with all other variables held constant as at December 31, 2014, would
affect the statement of operations and comprehensive loss by approximately $58 (October 31, 2013 - $5,667).
The Aurora Project is funded by the Project Loan Facility that is denominated in United States currency, and for
disbursement purposes is supported by maintaining bank accounts denominated in United States, Canadian, and
Guyanese dollars. The Project’s exposure to fluctuations in the Canadian and Guyanese dollar against the
United States dollar is not significant as substantially most development costs are incurred in United States
dollars, and the exchange rate between the Guyanese and United States dollar has remained relatively constant.
The Company funds its exploration activities in Guyana on a cash call basis using United States dollars converted
from its Canadian dollar bank accounts held in Canada. The Company maintains Canadian and United States
dollar bank accounts in Canada, and Guyanese and United States dollar bank accounts in Guyana. Similarly, the
Company foreign exchange exposure is not significant as its annual exploration expenditures are relatively small.
Interest rate risk is the impact that changes in interest rates could have on the Company’s earnings and assets.
In the normal course of business, the Company is exposed to interest rate fluctuations as a result its long-term
debt, and its cash and cash equivalents being invested in interest-bearing instruments. The Project Loan Facility
bears interest at a variable rate (3-month LIBOR plus 5.11% for the Tranche 1 facility).
Excluding cash balances and long-term debt attributable to the Aurora Project, sensitivity to a plus or minus 1%
interest rate change with all other variables held constant as at December 31, 2014, would affect the statement of
operations and comprehensive loss by approximately $32 (October 31, 2013 - $1,086). Prior to commercial
production of the Project, related interest earned on cash balances and interest incurred on long-term debt will be
credited to/charged to Aurora Project assets under development. Sensitivity to a plus or minus 1% interest rate
change on the Project’s cash balances and long-term debt with all other variables held constant as at December
31, 2014, would affect assets under development by approximately $216 (October 31, 2013 – N/A). The
Company is evaluating opportunities to hedge its interest rate exposure on its long-term debt.
Fluctuation in the price for gold may adversely affect the Company’s ability to obtain additional financing,
influence the course of action taken in developing the Project, and affect the Company’s ability to meet the
Facility’s financial and non-financial covenants. As at December 31, 2014, although the Company was not a gold
producer, gold price risk may also affect the Company’s liquidity and its ability to meet ongoing obligations.
(c) Credit risk:
Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The
Company's credit risk is primarily attributable to cash and cash equivalents, restricted cash, accounts receivable
and contract advances from the GSJV. The maximum credit exposure at December 31, 2014 is approximately
$11,156 (October 31, 2013 - approximately $294). The Company has a significant concentration of credit risk
arising from its advances to the GSJV. The Company maintains substantially all of its cash and cash equivalents
in interest bearing bank accounts at select Canadian chartered banks.
NATIONAL INSTRUMENT 52-109 DISCLOSURE
The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) are responsible for the
design and effectiveness of disclosure controls and procedures (“DC&P”) and the design of Internal Controls over
Financial Reporting (“ICFR”) to provide reasonable assurance that material information related to the Company,
including its consolidated subsidiaries, is made known to the Company’s certifying officers. The Company’s
controls are based on the COSO framework. The Company’s CEO and the CFO have evaluated the design and
effectiveness of the Company’s DC&P as of December 31, 2014, and have concluded that these controls and
procedures are effective in providing reasonable assurance that material information relating to the Company is
made known to them by others within the Company. The CEO and CFO have also evaluated the design and
-28-
effectiveness of the Company’s ICFR as of December 31, 2014, and concluded that these controls and
procedures are effective in providing reasonable assurance that financial information is recorded, processed,
summarized and reported in a timely manner.
It should be noted that while the Company’s CEO and CFO believe that the Company’s disclosure controls and
processes will provide a reasonable level of assurance and that they are effective, they do not expect that the
disclosure controls and processes will prevent all errors and frauds. A control system, no matter how well
conceived or operated, can provide only reasonable, not absolute, assurance that its objectives are met.
During the current period there have been no changes in the Company’s DC&P or ICFR that materially affected,
or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
OUTSTANDING SHARE DATA
At the date of this MD&A, the issued and outstanding Common Shares totalled 150,575,149. Options outstanding
amounted to 11,370,000 at the date of this MD&A, each of which is exercisable to acquire one Common Share in
accordance with the terms thereof.
RISK FACTORS
The following discussion summarizes the existing and future material risks to the business of the Company. The
risks described below are not listed in any particular order and are not exhaustive. Additional risks and
uncertainties not currently known to the Company, or those that it currently deems to be immaterial, may become
material and adversely affect the Company’s business. The realization of any of these risks may materially and
adversely affect the Company’s business, financial condition, results of operations and/or the market price of the
Company’s securities.
Exploration, Development and Operating Risks
Mining operations generally involve a high degree of risk. Guyana Goldfields’ operations are subject to all the
hazards and risks normally encountered in the exploration, development and production of gold, including unusual
and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved
in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other
producing facilities, damage to life or property, environmental damage and possible legal liability. Although
adequate precautions to minimize risk will be taken, milling operations are subject to hazards such as equipment
failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and
consequent liability.
The exploration for and development of mineral deposits involves significant risks which even a combination of
careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in
substantial rewards, few properties which are explored are ultimately developed into producing mines. Major
expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to
construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration or
development programs planned by Guyana Goldfields will result in a profitable commercial mining operation.
Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the
particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices which are
highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure,
land use, importing and exporting of minerals and environmental protection. The exact effect of these factors
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cannot be accurately predicted, but the combination of these factors may result in Guyana Goldfields not
receiving an adequate return on invested capital.
There is no certainty that the expenditures made by Guyana Goldfields towards the search and evaluation of
mineral deposits will result in discoveries of commercial quantities of ore.
Licencing Matters
Guyana Goldfields’ operations are subject to receiving and maintaining permits and licences from appropriate
governmental authorities. Although Guyana Goldfields currently has all required permits and licenses for its
operations as currently conducted, there is no assurance that delays will not occur in connection with obtaining all
necessary renewals of such permits and licenses for the existing operations or additional permits or licenses for
all future operations. There can be no assurance that Guyana Goldfields will continue to hold all permits and
licenses necessary to develop or continue operating at any particular property, or that any such licenses or
permits awarded will not be cancelled pursuant to applicable legislation. At December 31, 2014, the Company
had certain expired exploration licences for both the Aranka Property and Other Properties. The Company has
submitted licence renewal applications with the GGMC, and has received in return a no objection letter from the
GGMC, and the Company has been advised that the applications are being processed. Although the Company
expects renewal of its expired exploration licences, there could no assurance that these licences will be renewed.
The interest of Guyana Goldfields in the Aurora Project is held through a mineral agreement and mining licence
that sets out a tax regime and development and production framework. All other properties are held through
property licences.
The Mineral Agreement and Mining Licence for the Aurora Project require the Company to undertake various
obligations and commitments over the twenty year life of the agreements. The government of Guyana has the
right to terminate the agreements in the event of default by written notice to the Company, subject to a dispute
resolution process involving arbitration. There can be no assurance that the Company will continue to be in
compliance with all terms and conditions of the Mineral Agreement and Mining Licence or assurance that any
dispute resolution process will decide in the Company’s favour.
Insurance and Uninsured Risks
Guyana Goldfields’ business is subject to a number of risks and hazards generally, including adverse
environmental conditions, industrial accidents, labour disputes, unusual or unexpected geological conditions,
ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as
inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to mineral
properties or production facilities, personal injury or death, environmental damage to Guyana Goldfields’
properties or the properties of others, delays in mining, monetary losses and possible legal liability.
The Company currently maintains director’s and officer’s liability, general liability, construction, marine cargo and
other required insurances in such amounts as it considers to be reasonable. Accordingly, the insurance of the
Company may not cover all the potential risks associated with a mining company’s operations. The Company may
also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage
may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance
against risks such as environmental pollution or other hazards as a result of exploration, development or
production is not generally available to Guyana Goldfields or to other companies in the mining industry on
acceptable terms. Guyana Goldfields might also become subject to liability for pollution or other hazards which
may not be insured against or which Guyana Goldfields may elect not to insure against because of premium costs
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or other reasons. Losses from these events may cause Guyana Goldfields to incur significant costs that could
have a material adverse effect upon its financial performance and results of operations.
Environmental Risks and Hazards
All phases of Guyana Goldfields’ operations are subject to environmental regulation in the various jurisdictions in
which it operates. These regulations mandate, among other things, the maintenance of air and water quality
standards and land reclamation. They also set forth limitations on the generation, transportation, storage and
disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter
standards and enforcement, increased fines and penalties for noncompliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for companies and their officers,
directors and employees. There is no assurance that future changes in environmental regulation, if any, will not
adversely affect Guyana Goldfields’ operations. Environmental hazards may exist on the properties on which
Guyana Goldfields holds interests which are unknown to Guyana Goldfields at present and which have been
caused by previous or existing owners or operators of the properties. Government approvals and permits are
currently, and may in the future be required in connection with Guyana Goldfields’ operations. To the extent such
approvals are required and not obtained, Guyana Goldfields may be curtailed or prohibited from proceeding with
planned exploration or development of mineral properties.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions
thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be
curtailed, and may include corrective measures requiring capital expenditures, installation of additional
equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of
mineral properties may be required to compensate those suffering loss or damage by reason of the mining
activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.
Amendments to current laws, regulations and permits governing operations and activities of mining and
exploration companies, or more stringent implementation thereof, could have a material adverse impact on
Guyana Goldfields and cause increases in exploration expenses, development costs, capital expenditures,
operating costs or require abandonment or delays in development of new and existing mining properties.
Potential production at certain of Guyana Goldfields’ mines may involve the use of sodium cyanide which is a
poison. Should sodium cyanide leak or otherwise be discharged from the containment system then Guyana
Goldfields may become subject to liability for cleanup work that may not be insured. While all steps will be taken
to prevent discharges of pollutants into the ground water and the environment, Guyana Goldfields may become
subject to liability for hazards that may not be insured against.
Infrastructure
Mining, processing, development and exploration activities depend, to one degree or another, on adequate
infrastructure. Reliable roads, bridges, power sources and water supply are important determinants, which affect
capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other
interference in the maintenance or provision of such infrastructure could adversely affect Guyana Goldfields’
operations, financial condition and results of operations.
Uncertainty Relating to Mineral Resources
Mineral resources that are not mineral reserves do not have demonstrated economic viability. Due to the
uncertainty which may attach to mineral resources, there is no assurance that mineral resources will be upgraded
to mineral reserves as a result of continued exploration.
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Reliability of Resource Estimates
There is no certainty that any of the mineral resources or reserves on any of Guyana Goldfields’ properties will be
realized. Until a deposit is actually mined and processed the quantity of mineral resources or reserves and grades
must be considered as estimates only. In addition, the quantity of mineral resources or reserves may vary
depending on, among other things, metal prices. Any material change in quantity of mineral resources or
reserves, grade or stripping ratio may affect the economic viability of any project undertaken by Guyana
Goldfields. In addition, there can be no assurance that gold recoveries or other metal recoveries in small scale
laboratory tests will be duplicated in a larger scale test under on-site conditions or during production.
Fluctuations in gold and other base or precious metals prices, results of drilling, metallurgical testing and
production and the evaluation of studies, reports and plans subsequent to the date of any estimate may require
revision of such estimate. Any material reductions in estimates of mineral resources or reserves could have a
material adverse effect on Guyana Goldfields’ results of operations and financial condition, and on its ability to
comply with the Project Loan Facility requirements.
Uncertainty of Feasibility Study Results & Revisions to Estimates
Feasibility studies are used to determine the economic viability of a deposit, as are pre-feasibility studies and
preliminary assessments. Feasibility studies are the most detailed and reflect a higher level of confidence in the
reported capital and operating costs. Generally accepted levels of confidence are plus or minus 15% for feasibility
studies, plus or minus 25-30% for pre-feasibility studies and plus or minus 3540% for preliminary assessments.
These levels reflect the levels of confidence that exist at the time the study is completed. Accordingly, while the
Updated Feasibility Study for the Aurora Project and the revised initial development costs estimate to commercial
production are based on the best information available to the Company, the Company cannot be certain that
actual costs will not significantly exceed the estimated costs. While the Company incorporates what it believes is
an appropriate contingency factor in cost estimates to account for this uncertainty, there can be no assurance that
the contingency factor is adequate, or that available funding will be sufficient.
No History of Mineral Production
Guyana Goldfields has never had any interest in mineral producing properties. There is no assurance that
commercial quantities of minerals will be discovered at any of the properties of Guyana Goldfields or any future
properties, nor is there any assurance that the exploration programs of Guyana Goldfields thereon will yield any
positive results. Even if commercial quantities of minerals are discovered, there can be no assurance that any
property of Guyana Goldfields will ever be brought to a stage where mineral resources can profitably be produced
thereon. Factors which may limit the ability of Guyana Goldfields to produce mineral resources from its properties
include, but are not limited to, the price of the mineral resources which are currently being explored for, availability
of capital and financing and the nature of any mineral deposits.
Land Title
Although the title to the properties in which Guyana Goldfields holds an interest were reviewed by or on behalf of
Guyana Goldfields, no formal title opinions were delivered to Guyana Goldfields and, consequently, no
assurances can be given that there are no title defects affecting such properties. Title insurance generally is not
available, and Guyana Goldfields’ ability to ensure that it has obtained secure claim to individual mineral
properties or mining concessions may be severely constrained. Guyana Goldfields has not conducted surveys of
the claims in which it holds direct or indirect interests and, therefore, the precise area and location of such claims
may be in doubt. Accordingly, Guyana Goldfields’ mineral properties may be subject to prior unregistered liens,
agreements, transfers or claims, and title may be affected by, among other things, undetected defects.
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In addition, Guyana Goldfields may be unable to operate its properties as permitted or to enforce its rights with
respect to its properties.
Global Financial Conditions
In recent years financial conditions have been characterized by volatility. Access to financing has been negatively
impacted by many factors as a result of the recent global financial crisis. This may impact the Company’s ability to
obtain equity or debt financing in the future on terms acceptable or favourable to the Company. A period of
renewed uncertainty in the world capital markets could make any project debt component of the financing more
expensive than anticipated or, in certain cases, unavailable. It is not uncommon for financial institutions to require
some form of cost overrun facility, a price guarantee (hedging) program and/or a completion guarantee in
association with the provision of project debt finance. Additionally, global economic conditions may cause
decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. If
such volatility and market turmoil continue, the Company’s business and financial condition could be adversely
impacted.
Competition May Hinder Corporate Growth
The mining industry is competitive in all of its phases. Guyana Goldfields faces strong competition from other
mining companies in connection with the acquisition of properties producing, or capable of producing, precious
and base metals. Many of these companies have greater financial resources, operational experience and
technical capabilities than Guyana Goldfields. As a result of this competition, Guyana Goldfields may be unable
to maintain or acquire attractive mining properties or skilled resources on terms it considers acceptable or at all.
Consequently, Guyana Goldfields’ revenues, operations and financial condition could be materially adversely
affected.
Additional Capital
The development and exploration of Guyana Goldfields’ properties will require substantial additional financing.
Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration, development
or production on any or all of Guyana Goldfields’ properties or even a loss of property interest. There can be no
assurance that additional capital or other types of financing will be available if needed or that, if available, the
terms of such financing will be favourable to Guyana Goldfields.
Although the Company has $58 million in additional funding available under the Project Loan Facility above its
$277 million Project estimate (see “Liquidity, Capital Resources and Business Prospects” above”), there can be
no assurance that this additional funding will be sufficient for any unexpected development, financing or other
costs for the Aurora Project.
The amount and timing of raising additional capital, which may involve debt or equity, or a combination of both,
may be materially impacted by the economic climate in the capital markets. As a result, the cost and availability
of any debt and or equity financing may be restricted. Accordingly, there can be no assurance that the Company
will be able to raise sufficient funds to satisfy its contractual obligations or to develop a mining operation at the
Aurora Project upon terms acceptable to the Company, or at all. See also “Global Financial Conditions” above
and “Dilution” below.
Dilution
The Company may require additional monies to fund development, construction, operational and exploration
programs. The Company cannot predict the size of future issuances of Common Shares or the issuance of debt
instruments or other securities convertible into shares or the effect, if any, that future issuances and sales of the
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Company’s securities will have on the market price of the Common Shares. If the Company raises additional
funding by issuing additional equity securities, such financing may substantially dilute the interests of existing
shareholders. The cost and availability of equity may also be restricted. Sales of substantial amounts of the
Company’s Common Shares, or the availability of such Common Shares for sale, could adversely affect the
prevailing market prices for the Company’s securities.
Commodity Prices
The price of the Common Shares, Guyana Goldfields’ financial results and exploration, development and mining
activities may in the future be significantly adversely affected by declines in the price of gold. Gold prices
fluctuate widely and are affected by numerous factors beyond Guyana Goldfields’ control such as the sale or
purchase of gold by various central banks and financial institutions, interest rates, exchange rates, inflation or
deflation, fluctuation in the value of the United States, Canadian and Guyanese dollar currencies, global and
regional supply and demand, and the political and economic conditions of major gold-producing countries
throughout the world. The price of gold has fluctuated widely in recent years, and future serious price declines
could cause development and or operations of Guyana Goldfields’ properties to be impracticable. Future
production from Guyana Goldfields’ properties is dependent on gold prices that are adequate to make these
properties economic.
In addition to adversely affecting Guyana Goldfields’ reserve and/or resource estimates and its financial condition,
declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular
project. Such a reassessment may be the result of a management decision or may be required under financing
arrangements related to a particular project. Even if the project is ultimately determined to be economically viable,
the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the
reassessment can be completed.
Exchange Rate Fluctuations
Exchange rate fluctuations may affect the costs that Guyana Goldfields incurs in its operations. The appreciation
of non-US dollar currencies against the US dollar can increase the cost of gold production in US dollar terms.
Most of the Company’s expenditures that occur in Guyana are paid in U.S. currency. Accordingly, a strengthened
Canadian and Guyanese dollar relative to the U.S. dollar would negatively impact the Company.
Government Regulation
The mining, processing, development and mineral exploration activities of Guyana Goldfields are subject to
various laws governing prospecting, development, production, taxes, labour standards and occupational health,
mine safety, toxic substances, land use, water use, land claims of local people and other matters.
Exploration may also be affected in varying degrees by government regulations with respect to, but not limited to,
restrictions on future exploration and production, price controls, export controls, currency availability, foreign
exchange controls, income taxes, delays in obtaining or the inability to obtain necessary permits, opposition to
mining from environmental and other non-governmental organizations, limitations on foreign ownership,
expropriation of property, ownership of assets, environmental legislation, labour relations, limitations on
repatriation of income and return of capital, limitations on mineral exports, high rates of inflation, increased
financing costs, and site safety. This may affect both Guyana Goldfields’ ability to undertake exploration and
development activities in respect of present and future properties in the manner contemplated, as well as its
ability to continue to explore, develop and operate those properties in which it has an interest or in respect of
which it has obtained exploration and/or development rights to date.
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Although Guyana Goldfields believes that its exploration and development activities are currently carried out in
accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations
will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail
development or future potential production. Amendments to current laws and regulations governing operations
and activities of mining and milling or more stringent implementation thereof could have a substantial adverse
impact on Guyana Goldfields.
Political Risks
All of Guyana Goldfields’ current operations are presently conducted in Guyana, South America and as such,
Guyana Goldfields’ operations are exposed to various levels of political, economic and other risks and
uncertainties. These risks and uncertainties include, but are not limited to, currency exchange rates; high rates of
inflation; labour unrest; renegotiation or nullification of existing concessions, licenses, permits and contracts;
changes in taxation policies; restrictions on foreign exchange; and changing political conditions; currency controls
and governmental regulations that favour or require the awarding of contracts to local contractors or require
foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction.
Future political actions cannot be predicted and may adversely affect Guyana Goldfields. Changes, if any, in
mining or investment policies or shifts in political attitude in the country of Guyana may adversely affect the
Company’s business, results of operations and financial condition. Future operations may be affected in varying
degrees by government regulations with respect to, but not limited to, restrictions on production, price controls,
export controls, currency remittance, income taxes, foreign investment, maintenance of claims, environmental
legislation, land use, land claims of local people, water use and mine safety. The possibility that future
governments may adopt substantially different policies, which may extend to the expropriation of assets, cannot
be ruled out.
Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications
and tenure, could result in loss, reduction or expropriation of entitlements. The occurrence of these various factors
and uncertainties cannot be accurately predicted and could have an adverse effect on the Company’s
consolidated business, results of operations and financial condition.
The Company has established a community and social relations office in Guyana which is in part, responsible for
management and monitoring of government relations. The Company’s senior management meets with
government officials on a regular basis to support the continued development of the Aurora Project.
Labour and Employment Matters
While Guyana Goldfields has good relations with its employees, these relations may be impacted by changes in
the scheme of labour relations which may be introduced by the relevant governmental authorities in whose
jurisdictions Guyana Goldfields carries on business. Adverse changes in such legislation, or the unionization of
the Aurora Project’s work force, may have a material adverse effect on Guyana Goldfields’ business, results of
operations and financial condition.
Subsidiaries
The Company conducts certain of its operations through its subsidiaries, and holds certain of its assets through its
subsidiaries. Accordingly, any limitation on the transfer of cash or other assets between the Company and its
subsidiaries could restrict the Company’s ability to fund its operations efficiently. Any such limitations, or the
perception that such limitations may exist now or in the future, could have an adverse impact on the Company’s
valuation and stock price.
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Market Price of Common Shares
Securities of micro and small-cap companies have experienced substantial volatility in the past, often based on
factors unrelated to the financial performance or prospects of the companies involved. These factors include
macroeconomic developments in North America and globally and market perceptions of the attractiveness of
particular industries. The Company’s share price is also likely to be significantly affected by short-term changes
in gold prices or in its financial condition or results of operations as reflected in its quarterly earnings reports.
Other factors unrelated to Guyana Goldfields’ performance that may have an effect on the price of the Common
Shares include the following: the extent of analytical coverage available to investors concerning Guyana
Goldfields’ business may be limited if investment banks with research capabilities do not continue to follow the
Company; lessening in trading volume and general market interest in the Company’s securities may affect an
investor’s ability to trade significant numbers of Common Shares; the size of the Company’s public float may limit
the ability of some institutions to invest in the Company’s securities; and a substantial decline in the price of the
Common Shares that persists for a significant period of time could cause the Company’s securities to be delisted
from the exchange on which they trade, further reducing market liquidity.
As a result of any of these factors, the market price of the Common Shares at any given point in time may not
accurately reflect Guyana Goldfields’ long-term value. Securities class action litigation often has been brought
against companies following periods of volatility in the market price of their securities. The Company may in the
future be the target of similar litigation. Securities litigation could result in substantial costs and damages and
divert management’s attention and resources.
Future Sales of Common Shares by Existing Shareholders
Sales of a large number of Common Shares in the public markets, or the potential for such sales, could decrease
the trading price of the Common Shares and could impair the Company’s ability to raise capital through future
sales of Common Shares. Guyana Goldfields has previously completed private placements at prices per share
which are from time to time lower than the market price of the Common Shares. Accordingly, a significant number
of shareholders of the Company have an investment profit in the Common Shares that they may seek to liquidate.
Dependence on Management and Key Personnel
Guyana Goldfields is dependent on the services of key executives, including the Executive Chairman of the
Board, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer of the Company, and a small
number of highly skilled and experienced executives and personnel, which is sufficient for the Company’s present
stage of development. The Company has also commenced the hiring of its production phase management team,
and is also dependent upon the services of these individuals. Guyana Goldfield’s development to date has
largely depended, and in the future will continue to depend, on the efforts of key management and other key
personnel to develop and operate the Project. Loss of any of these people, particularly to competitors, could have
a material adverse effect on the Company’s business. Further, with respect to the development and operation of
the Company’s projects, it may become necessary to attract both international and local personnel. The
marketplace for skilled personnel is becoming more competitive, which means the cost of hiring, training and
retaining such personnel may increase. Factors outside the Company’s control, including competition for human
capital and the high-level of technical expertise and experience required to execute the development and
operation of the Company’s projects, will affect the Company’s ability to employ the specific personnel required.
The failure to retain or attract a sufficient number of skilled personnel could have a material adverse effect on the
Company’s business, results of operations and financial condition. The Company has not taken out and does not
intend to take out key man insurance in respect of any directors, officers or other employees.
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Competition
The international mining industry is highly competitive. Guyana Goldfields may encounter competition from other
mining companies in its efforts to hire experienced mining professionals. Competition for services and equipment
could cause Project and operating costs to increase materially, resulting in delays if services or equipment cannot
be obtained in a timely manner due to inadequate availability, and increase potential scheduling difficulties and
cost increases due to the need to coordinate the availability of services or equipment, any of which could
materially increase project development, operations, exploration or construction costs, result in project delays or
both.
Conflicts of Interest
Certain of the directors and officers of the Company also serve as directors and/or officers of other companies
involved in natural resource exploration, development and/or operation, and consequently there exists the
possibility for such directors and officers to be in a position of conflict. Any decision made by any of such
directors and officers involving the Company will be made in accordance with their duties and obligations to deal
fairly and in good faith with a view to the best interests of the Company and its shareholders. In addition, each of
the directors is required to declare and refrain from voting on any matter in which such directors may have a
conflict of interest in accordance with the procedures set forth in the Canada Business Corporations Act and other
applicable laws.
Cyber Security Threats
Information systems and other technologies, including those related to the Company’s financial and operational
management, are an integral part of the Company’s business activities. Network and information systems-related
events, such as computer hackings, cyber-attacks, computer viruses, worms or other destructive or disruptive
software, process breakdowns, denial of service attacks, malicious social engineering or other malicious activities,
or any combination of the foregoing, or power outages, natural disasters, terrorist attacks or other similar events,
could result in damage to the Company’s property, equipment and data. These events also could result in
significant expenditures to repair or replace the damaged property or information systems and/or to protect them
from similar events in the future. Further, any security breaches, such as misappropriation, misuse, leakage,
falsification or accidental release or loss of information maintained in the Company’s information technology
systems, including personnel and other data, could damage its reputation and require the Company to expend
significant capital and other resources to remedy any such security breach. Insurance maintained by the
Company against losses resulting from any such events or security breaches may not be sufficient to cover any
consequent losses or otherwise adequately compensate the Company for any disruptions to its business that may
result, and the occurrence of any such events or security breaches could have a material adverse effect on the
business of the Company. There can be no assurance that these events and security breaches will not occur in
the future or not have an adverse effect on the business of the Company.
Compliance with Anti-Corruption Laws
Guyana Goldfields is subject to various anti-corruption laws and regulations including but not limited to the
Canadian Corruption of Foreign Public Officials Act 1999. In general, these laws prohibit a company and its
employees and intermediaries from bribing or making other prohibited payments to foreign officials or other
persons to obtain or retain business or gain some other business advantage. The Company’s primary operations
are located in Guyana and, according to Transparency International, the country of Guyana is perceived as
having fairly high levels of corruption relative to the selected sample of countries around the world. Guyana
Goldfields cannot predict the nature, scope or effect of future regulatory requirements to which its operations
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might be subject or the manner in which existing laws might be administered or interpreted. Failure to comply with
the applicable legislation and other similar foreign laws could expose the Company and its senior management to
civil and/or criminal penalties, other sanctions and remedial measures, legal expenses and reputational damage,
all of which could materially and adversely affect the Company’s business, financial condition and results of
operations. Likewise, any investigation of any potential violations of the applicable anti-corruption legislation by
Canadian or foreign authorities could also have an adverse impact on the Company’s business, financial
condition and results of operations, as well as on the market price of the Common Shares. As a consequence of
these legal and regulatory requirements, the Company has instituted policies with regard to the code of business
conduct and ethics. There can be no assurance or guarantee that such efforts have been and will be completely
effective in ensuring Guyana Goldfield’s compliance, and the compliance of its employees, consultants,
contractors and other agents, with all applicable anti-corruption laws.
No History of Earnings or Dividends
The Company has no history of earnings and as such the Company has not paid dividends on its Common
Shares since incorporation. It currently intends to retain future earnings, if any, to fund the development and
growth of its business, and, therefore, investors cannot expect to receive a dividend on their common shares for
the foreseeable future. The payment of future dividends, if any, will be reviewed periodically by the Company’s
Board of Directors and will depend upon, among other things, conditions then existing including earnings,
financial condition and capital requirements, restrictions in financing agreements, business opportunities and
conditions and such other factors deemed by the Board of Directors to be relevant at the time.
Accounting Policies and Internal Control
With effect from November 1, 2011 the Company prepares its financial reports in accordance with IFRS. In
preparation of financial reports, management may need to rely upon assumptions, make estimates or use their
best judgment in determining the financial condition of the Company. Significant accounting policies are
described in more detail in the Company’s audited financial statements. In order to have a reasonable level of
assurance that financial transactions are properly authorized, assets are safeguarded against unauthorized or
improper use, and transactions are properly recorded and reported, the Company has implemented and
continues to analyze its internal control systems for financial reporting. Although the Company believes its
financial reporting and financial statements are prepared with reasonable safeguards to ensure reliability, the
Company cannot provide absolute assurance.
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION
Except for statements of historical fact relating to Guyana Goldfields, certain information contained in this MD&A
constitutes “forward-looking information” under Canadian securities legislation. Forward-looking information
includes, but is not limited to, statements with respect to the potential of the Company’s properties; ability to
continue to satisfy all conditions and covenants under the Project Loan Facility; successful and timely future
disbursements under the Project Loan Facility; the future price of gold; expected capital costs and project
milestones to achieve commercial production for the Aurora Project; success of exploration and development
activities; cost and timing of future exploration and development; the estimation of mineral resources; conclusions
of economic evaluations; successful startup and operations of the Aurora Project; requirements for additional
capital and other statements relating to the financial and business prospects of Guyana Goldfields. Generally,
forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects”
or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions,
events or results “may”, “could”, ”would”, “likely”, “might” or “will be taken”, “occur” or “be achieved”. Forward-
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looking information is inherently subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or achievements of Guyana Goldfields to be materially
different from those expressed or implied by such forward-looking information, including but not limited to risks
related to:
the Company’s ability to successfully satisfy all conditions under the Project Loan Facility to enable
continued draws for future disbursements;
the Company’s failure to adhere to representations, warranties, affirmative and negative covenants under
the Project Loan Facility, which could give rise to an event of default under the Facility;
Guyana Goldfields’ ability to meet the anticipated total capital costs to commercial production for the
Aurora Project, including amounts of capital expenditures under the EPC Contract and owner’s costs
expenditures;
going concern status of the GSJV and its partners;
the timing of achieving expected milestones to develop the Aurora Project into a producing mine;
the timing and amounts of expected cash outflows relating to contractual commitments to the GSJV for
the EPC Contract for the processing and power plant;
the timing and amounts of expected cash outflows relating to anticipated commitments for Owner’s costs
for the construction of the Aurora Project into a producing mine;
unionization of its work force in Guyana;
fluctuation in the price for gold may adversely affect the Company’s ability to obtain additional financing,
influence the course of action taken in developing the Project, and affect the Company’s ability to meet
the Facility’s financial and non-financial covenants;
the Company’s goal of creating shareholder value by concentrating on the acquisition and development of
properties that have the potential to contain economic gold deposits;
ability to source new, additional or replacement financing through other share or debt issuances in
support of the Aurora Project, corporate general and administrative expenses, and exploration activities;
the successful execution of the construction of the Aurora Project into a producing mine;
future plans for the Aurora Project and other property interests held by the Company or which may be
acquired on a going forward basis, if at all;
management’s expectations that expired exploration licenses will be renewed;
management’s outlook regarding future trends, outlook and activities;
the Company’s ability to meet its working capital needs to finance the future development of the Aurora
Project and its exploration and corporate activities; and
governmental regulation and environmental liability.
Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of
management made in light of its experience and its perception of trends, current conditions and expected
developments, as well as other factors that management believes to be relevant and reasonable in the
circumstances at the date that such statements are made, and are inherently subject to known and unknown
risks, uncertainties and other factors that may cause the actual results, level of activity, performance or
achievements of Guyana Goldfields to be materially different from those expressed or implied by such forward-
looking information, including but not limited to risks related to: unexpected events and delays during permitting;
the possibility that future exploration, development and operating results will not be consistent with Guyana
Goldfields’ expectations; timing and availability of external financing on acceptable terms and in light of the
current decline in global liquidity and credit availability; failure by the Company and/or AGM to adhere to the
Mineral Agreement and Mineral Licence; uncertainty of mineral resources; failure to adhere to representations,
warranties, affirmative and negative covenants under the Project Loan Facility; future prices of gold; currency
exchange rates; government regulation of mining operations; failure of equipment or processes to operate as
anticipated; risks inherent in gold exploration, development and operations including environmental hazards,
-39-
industrial accidents, unusual or unexpected geological formations; and uncertain political and economic
environments. Although management of the Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in forward-looking information, there may be other
factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking
information. The Company does not undertake to update any forward-looking information, except in accordance
with applicable securities laws.
ADDITIONAL INFORMATION
Additional information relating to the Company, including its Annual Information Form for the most recently
completed fiscal year, is available on SEDAR at www.sedar.com.
-40-
GUYANA GOLDFIELDS INC.
Consolidated Financial Statements
(Expressed in United States Dollars)
For the Fourteen Months Ended December 31, 2014
and
the Twelve Months Ended October 31, 2013
February 19, 2015
Independent auditor’s report
To the Shareholders of
Guyana Goldfields Inc.
We have audited the accompanying consolidated financial statements of Guyana Goldfields Inc. and its
subsidiaries, which comprise the consolidated balance sheets as at December 31, 2014 and October 31, 2013
and November 1, 2012 and the consolidated statement of operations and comprehensive loss, statement of
changes in equity and statement of cash flows for the 14-month and 12-month periods ended
December 31, 2014 and October 31, 2013, and the related notes, which comprise a summary of significant
accounting policies and other explanatory information.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a
basis for our audit opinion.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215, www.pwc.com/ca
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Guyana Goldfields and its subsidiaries as at December 31, 2014 and October 31, 2013 and
November 1, 2012 and their financial performance and their cash flows for the periods ended
December 31, 2014 and October 31, 2013 in accordance with International Financial Reporting Standards.
(Signed) “PricewaterhouseCoopers LLP”
Chartered Professional Accountants, Licensed Public Accountants
Guyana Goldfields Inc.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated financial statements of Guyana Goldfields Inc. (the “Company”) were
prepared by management in accordance with International Financial Reporting Standards as issued by
the International Accounting Standards Board. Management acknowledges responsibility for the
preparation and presentation of the consolidated financial statements, including responsibility for
significant accounting judgments and estimates and the choice of accounting principles and methods
that are appropriate to the Company’s circumstances. The significant accounting policies of the
Company are summarized in Note 3 to the consolidated financial statements.
Management has established systems of internal control over the financial reporting process that are
designed to provide reasonable assurance that relevant and reliable financial information is produced.
The Board of Directors is responsible for reviewing and approving the consolidated financial statements
together with other financial information of the Company and for ensuring that management fulfills its
financial reporting responsibilities. The Audit Committee assists the Board of Directors in fulfilling this
responsibility. The Audit Committee meets with management as well as with the independent auditors
to review the internal controls over the financial reporting process, the consolidated financial
statements together with other financial information of the Company. The Audit Committee reports its
findings to the Board of Directors for its consideration in approving the consolidated financial
statements together with other financial information of the Company for issuance to the shareholders.
Management recognizes its responsibility for conducting the Company’s affairs in compliance with
established financial standards, and applicable laws and regulations, and for maintaining proper
standards of conduct for its activities.
/s/ Scott Caldwell
Chief Executive Officer
Toronto, Canada
February 19, 2015
/s/ Paul J. Murphy
Chief Financial Officer
-44-
Guyana Goldfields Inc.
Consolidated Balance Sheets
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)
ASSETS
Current assets
Cash and cash equivalents (Note 4)
Accounts receivable, prepaid expenses and other
assets (Note 5)
Contract advances (Note 6)
Non-current assets
Restricted cash (Note 7)
Deferred financing costs (net) (Note 8)
Development costs, property and equipment (Note 9)
Total assets
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities (note 10)
Current portion of long-term debt (Note 11)
Total current liabilities
Non-current liabilities
Long-term debt (net) (Note 11)
Total liabilities
Equity
Share capital (Note 12)
Stock options (Note 13)
Contributed surplus
Accumulated deficit (Note 3(a))
Total equity
October 31,
2013
(as re-stated
Note 3)
November 1,
2012
(as re-stated
Note 3)
December 31,
2014
$
17,211
$
108,649 $
37,390
1,995
10,417
29,623
33,311
8,786
182,205
253,925
34,161
4,340
38,501
58,077
96,578
377,668
7,670
26,334
(254,325)
157,347
$
$
$
$
771
-
109,420
328
-
19,471
129,219 $
2,722 $
-
2,722
-
2,722 $
849
-
38,239
336
-
7,108
45,683
2,284
-
2,284
-
2,284
335,785 $
11,962
20,268
(241,518)
126,497
237,808
16,715
11,413
(222,537)
43,399
$
$
$
Total liabilities and equity
$
253,925
$
129,219 $
45,683
The notes on pages 49 to 73 are an integral part of these consolidated financial statements.
Contingencies (Note 18)
Commitments (Note 19)
Subsequent Event (Note 24)
APPROVED ON BEHALF OF THE BOARD:
“J. Patrick Sheridan”
“Alan Ferry”
Director
Director
-45-
Guyana Goldfields Inc.
Consolidated Statements of Operations and
Comprehensive Loss
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT PER SHARE AMOUNTS)
Fourteen
months ended
December 31,
2014
Twelve
months ended
October 31,
2013
(as re-stated
Note 3)
6,177
7,823
3,648
574
(18,222)
(175)
(1,438)
(3)
857
(Note 2)
6,674 $
2,462
1,264
172
(10,572)
(24)
(2,716)
-
505
(12,807) $
(18,981)
(0.09) $
(0.16)
136,861,701
116,346,213
Operating expenses
General and administrative expenses (Note 15)
Exploration and evaluation expenses (Note 3 and Note 16)
Stock-based compensation (Note 13)
Amortization
Operating loss
Other income (expense)
Realized and unrealized loss on short-term investments
Foreign exchange loss
Capital and other taxes
Interest income
Net loss and comprehensive loss for the period
Net loss per share
Basic and fully diluted
Weighted average number of shares outstanding
Basic and fully diluted
$
$
$
The notes on pages 49 to 73 are an integral part of these consolidated financial statements.
-46-
Guyana Goldfields Inc.
Consolidated Statements of Changes in
Equity
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)
Share
Capital
Stock
Options
Contributed
Surplus
Total Equity
Deficit
AT NOVEMBER 1, 2012
Cumulative effect of exploration and evaluation
costs policy change (Note 3(a))
$ 237,808 $
16,715 $
11,413 $
(59,184) $
206,752
-
-
-
(163,353)
(163,353)
Balance at November 1, 2012, as adjusted
237,808
16,715
11,413
(222,537)
43,399
Shares issued on exercise of options
Value of options exercised
Issued by short-form prospectus
Issued by subscription agreement
Share issue expenses
Stock-based compensation – issued this period
Stock–based compensation – issued prior period
Expired options
Forfeited options
Cancelled options
Net loss for the year
AT OCTOBER 31, 2013
28
10
97,987
5,412
(5,460)
-
-
-
-
-
-
-
(10)
-
-
-
1,464
2,648
(4,145)
(502)
(4,208)
-
-
-
-
-
-
-
-
4,145
502
4,208
-
-
-
-
-
-
-
-
-
-
28
-
97,987
5,412
(5,460)
1,464
2,648
-
-
-
-
(18,981)
(18,981)
$ 335,785 $
11,962 $
20,268 $
(241,518) $
126,497
Share
Capital
Stock Contributed
Surplus
Options
Deficit
Total
Equity
AT OCTOBER 31, 2013
Cumulative effect of exploration and evaluation
costs policy change (Note 3(a))
$ 335,785 $
11,962 $
20,268 $
(68,998) $
299,017
-
-
-
(172,520)
(172,520)
Balance at October 31, 2013, as adjusted
335,785
11,962
20,268
(241,518)
126,497
Shares issued on exercise of options
Fair value of options exercised
Issued by private placement (Note 12)
Share issue expense
Stock-based compensation – issued this period
Stock-based compensation – issued prior period
Expired options
Forfeited options
Cancelled options
Net loss for the period
AT DECEMBER 31, 2014
471
176
41,523
(287)
-
-
-
-
-
-
-
(176)
-
-
887
1,063
(4,026)
(357)
(1,683)
-
-
-
-
-
-
-
4,026
357
1,683
-
-
-
-
-
-
-
-
-
471
-
41,523
(287)
887
1,063
-
-
-
-
(12,807)
(12,807)
$ 377,668 $
7,670 $
26,334 $
(254,325) $
157,347
The notes on pages 49 to 73 are an integral part of these consolidated financial statements.
-47-
Guyana Goldfields Inc.
Consolidated Statements of Cash Flows
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)
Cash provided by (used in)
Operations
Net loss
Items not involving cash:
Unrealized loss on short-term investments
Stock-based compensation
Unrealized foreign exchange loss
Amortization
Change in non-cash operating working capital:
Accounts receivable, prepaid expenses and other assets
Accounts payable and accrued liabilities
Financing
Proceeds from long-term debt
Proceeds from private placement
Proceeds from short-form prospectus
Proceeds from subscription agreement
Share issue expenses
Deferred financing costs
Proceeds from exercise of stock options
Investing
Expenditures on assets under development
Restricted cash
Contract advances
Purchase of property and equipment
Net change in cash and cash equivalents
Effect of exchange rate on cash held in foreign currency
Cash and cash equivalents, beginning of year
Fourteen
months ended
December 31,
2014
(Note 2)
Twelve
months ended
October 31,
2013
(as re-stated
Note 3)
$
(12,807) $
(18,981)
24
1,264
349
172
(1,294)
182
(12,110)
68,573
41,523
-
-
(287)
(13,618)
471
96,662
(131,186)
(33,000)
(10,417)
(688)
(175,291)
(90,739)
(699)
108,649
175
3,648
2,465
574
(122)
(589)
(12,830)
-
-
97,987
5,412
(5,460)
-
28
97,967
(11,000)
-
-
(385)
(11,385)
73,752
(2,493)
37,390
Cash and cash equivalents, end of year (Note 4)
$
17,211 $
108,649
The notes on pages 49 to 73 are an integral part of these consolidated financial statements.
-48-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
1. NATURE OF OPERATIONS
Guyana Goldfields Inc. (the "Company" or "GGI") is engaged in the acquisition, exploration, evaluation and
development of principally gold resource properties in Guyana, South America. The Company’s primary focus is
the development of the Aurora Gold Project (the “Project”) and ongoing exploration for gold at its exploration
properties. The Company is incorporated and domiciled in Canada and its shares are publicly traded on the
Toronto Stock Exchange. The address of its registered office is 141 Adelaide Street West, Suite 1608, Toronto,
Ontario, Canada.
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as set out in the Chartered Professional Accountants of Canada (“CPA Canada”) Handbook applicable
to a going concern, which assumes continuity of operations and realization of assets and settlement of liabilities in
the normal course of business for the foreseeable future. Different bases of measurement may be appropriate
when a company is not expected to continue operations for the foreseeable future. For the fourteen months
ended December 31, 2014, the Company reported a loss of $12,807 and an accumulated deficit of $254,325 as
at that date.
The Company’s predominant source of funding has been the issuance of equity securities for cash, and most
recently the signing on September 2, 2014 (by its wholly owned subsidiary AGM Inc.), the $185 million Project
Loan Facility (the “Project Loan facility” or the “Facility”) for the development and construction of the 100%-owned
Aurora Gold Project with the International Finance Corporation, Export Development Canada, ING Capital LLC,
Caterpillar Financial Services Corporation, and The Bank of Nova Scotia (collectively the “Senior Lenders”). With
the completion of the Facility, the development of the Project is now fully financed, subject to the terms and
conditions of the Facility. First draw under the Facility occurred on October 17, 2014 (see Note 11). The
Company has no other sources of operating cash flows. There can be no assurance that the Company will meet
all ongoing conditions necessary for continued draws and compliance under the Facility. In these circumstances,
if debt and or equity capital markets are not available, or the cost of capital is excessive, the Company may have
to delay the construction and development activities at the Aurora Gold Project.
The recovery of amounts capitalized for assets under development at December 31, 2014 in the consolidated
balance sheet is dependent upon the ongoing ability of the Company to draw down on its Facility to complete the
Aurora Gold Project development, and upon future profitable production or proceeds from its disposition.
Recovery of amounts capitalized for the Project is also dependent upon compliance with financial and non-
financial covenants under the Project Loan Facility.
Over the next twelve months, the Company expects to 1) continue to draw on its Project Loan Facility to fund the
Aurora Project development activities, including the purchase of long-lead Project equipment; 2) manage its
corporate cash resources to continue exploration at its exploration properties, and incur general corporate and
operating expenses. On an ongoing basis, the Company examines various financing alternatives to address
future funding requirements. Although the Company has been successful in these activities in the past, the
Company has no assurance on the success or sufficiency of these initiatives in the foreseeable future.
These consolidated financial statements do not reflect the adjustments to the carrying values of assets and
liabilities and the reported expenses and balance sheet classifications that would be necessary should the going
concern assumption be inappropriate, and those adjustments could be material.
-49-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
2. BASIS OF PRESENTATION
(a) Change in year end
On August 12, 2014 the Company announced that effective in 2014, its financial year-end has changed from
October 31st to December 31st. The Company is reporting a one-time, fourteen month transition year covering the
months of November 2013 to December 2014. Year-end financial statements for the fourteen month period
ended December 31, 2014 will be compared to the financial statements for the twelve months ended October 31,
2013. Subsequent to the transition year, the Company's first full financial year will cover the period January 1,
2015 to December 31, 2015.
(b) Statement of compliance
These consolidated financial statements have been prepared in accordance with the International Financial
Reporting Standards (“IFRS”)
International Accounting Standards Board (“IASB”) and
Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).
issued by
the
The preparation of consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities and expenses. See
note 3 (p) for significant judgements, estimates and assumptions.
The Board of Directors approved the consolidated financial statements on February 19, 2015.
(c) Basis of measurement
These consolidated financial statements have been prepared on the historical cost basis except for financial
instruments such as short-term investments that are held-for-trading and are measured at fair value through profit
and loss.
(d) Currency of presentation
All amounts are expressed in United States dollars. All financial information presented in United States dollars
has been rounded to the nearest thousand.
3. ACCOUNTING POLICIES
(a) Change in accounting policy
Under IFRS 6 – “Exploration and Evaluation of Mineral Resources” (“IFRS 6”), the Company’s had historically
capitalized its expenditures on exploration and evaluation (“E&E”) activities. Effective December 31, 2014, the
Company adopted a voluntary change in accounting principle on E&E expenditures that is also generally
accepted under IFRS 6. The Company’s new policy on accounting for exploration and evaluation expenditures is
to expense these costs until such time as the work completed supports the future development of the property
through the issuance of a NI 43-101 technical report or definitive bankable feasibility study, and such
development receives appropriate Board approvals. All subsequent expenditures on the property are then
capitalized and classified as assets under construction, a component of property, plant and equipment.
-50-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
The Company’s primary focus is on the development of its Aurora Gold Project, with initial production expected
mid-year of fiscal 2015. As such, exploration expenditures incurred prior to the issuance of the Aurora Project’s
NI 43-101 feasibility study do not form part of the current Project’s development budget and supporting Financing
Facility. In addition, this change in accounting policy is consistent with the accounting conceptual framework for
the recognition of assets, and is an accepted accounting practice in the mining industry. As such, management
has determined that such a voluntary change in accounting policy results in financial statements providing more
reliable and more relevant information. This change in accounting policy has been applied to all of the
Company’s exploration activities for all properties.
In accordance with IFRS 8 - “Accounting Policies, Changes in Accounting Estimates and Errors”, the change in
accounting policy has been made retrospectively and the comparatives have been restated accordingly to all
periods presented, as if the policy had always been applied. The following table summarizes the impact of the
above voluntary change in accounting principle on affected line items within the Company’s financial position,
operations and comprehensive loss, and cash flows:
Selected Balance Sheet Items
November 1, 2012
October 31, 2013
Exploration and evaluation assets:
Aurora Gold Project
Aranka Gold Property
Other Properties
As
previously
reported
Cumulative
Change
As restated
As
previously
reported
Cumulative
Change1
As restated
$
133,954 $ (133,954) $
- $
- $
-
$
26,161
(26,161)
3,238
(3,238)
163,353
(163,353)
-
-
-
30,197
(30,197)
3,893
(3,893)
34,090
(34,090)
-
-
-
-
Development costs, property and equipment
7,108
-
7,108
157,901
(138,430)
19,471
Accumulated deficit
$
$
170,461 $ (163,353) $
7,108 $
191,991 $ (172,520)
$
19,471
(59,184) $ (163,353) $ (222,537) $
(68,998) $ (172,520)
$ (241,518)
1 During fiscal 2013, costs of $138,430 were reclassified from exploration and evaluation assets to development costs under the previous
accounting policy. The cumulative change to development costs of $138,430 above, represents these same exploration costs that were
incurred on the Aurora Project from inception to January 11, 2013 (the date of issuance of the NI 43-101 feasibility study and Board
approval to commence with development on the Project towards commercial production).
Selected Items from Statement of Operations and
Comprehensive Loss
Stock based compensation
Amortization
Exploration and evaluation expenditures
Net loss and comprehensive loss for the year
Net loss per share - Basic and fully diluted
Twelve months ended
October 31, 2013
As previously
reported
Change
As restated
2,844 $
804
$
34
-
540
7,823
3,648
574
7,823
2,878 $
9,167
$
12,045
(9,814) $
(9,167)
(0.08) $
(0.08)
$
$
(18,981)
(0.16)
$
$
$
$
-51-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
Selected Items from Statement of Cash Flows
Net Loss
Items not involving cash:
Stock based compensation
Amortization
Change in non-cash operating working capital:
Accounts payable and accrued liabilities
Investing
Twelve months ended
October 31, 2013
As previously
reported
Change
As restated
$
(9,814)
$
(9,167) $
(18,981)
2,844
34
804
540
3,648
574
776
(1,365)
(589)
Expenditures on exploration and evaluation assets
(9,188)
9,188
-
Total Cash Flows, or the like
$
(15,348)
$
- $
(15,348)
(b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Company. Control is achieved where the Company has the power to govern the financial and operating
policies of an invested entity so as to obtain benefits from its activities. All intra-group transactions, balances,
income and expenses are eliminated on consolidation. The consolidated financial statements include the
accounts of the Company and the following subsidiaries:
Entity name
Aranka Gold Inc.
AGM Inc.
Guy Gold Inc.
Aranka Gold Inc. (Guyana)
Guygold Barbados Inc.
Aranka Gold (Barbados) Inc.
Aurora USA Ltd
Guyana Goldfields Inc. UK Limited
Place of
Incorporation
Canada
Guyana
Guyana
Guyana
Barbados
Barbados
United States
United Kingdom
Ownership
100%
100%
100%
100%
100%
100%
100%
100%
(c) Functional and presentation currency
The functional and presentation currency of the company and its subsidiaries is the Unites States dollar.
Transactions and balances denominated in foreign currencies are translated into the United States dollar as
follows:
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange at
the balance sheet date;
Non-monetary assets and liabilities, expenses and other income arising from foreign currency transactions
are translated at the exchange rate in effect at the date of the transaction;
Revenue, expenses and capitalized exploration and evaluation assets are translated using the rate in
effect at the date of the transaction, and
Exchange gains and losses arising from translation are included in the determination of net loss and
comprehensive loss.
-52-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
(d) Cash and cash equivalents
Cash and cash equivalents comprise cash at banks, cash on hand and other highly liquid short-term instruments
with maturity dates less than ninety days.
(e) Restricted cash
Cash subject to restrictions that prevent its use for current purposes is presented as restricted cash.
(f) Short-term investments
Short-term investments are designated as financial assets at fair value through profit and loss and are recorded at
fair value using the last bid price. They represent the Company’s investment portfolio in junior mining exploration
companies. The purchase and sale of short-term investments is recognized and derecognized as applicable,
using settlement date accounting.
(g) Property and equipment
Property and equipment is carried at cost, less accumulated depreciation and accumulated impairment losses.
The cost of an item of equipment consists of the purchase price, any costs directly attributable to bringing the
asset to the location and condition necessary for its intended use and an initial estimate of the costs of
dismantling and removing the item and restoring the site on which it is located. Subsequent costs are included in
the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Company and the cost can be measured reliably.
Depreciation is recognized based on the cost of an item of equipment, less its estimated residual value, over its
estimated useful life at the following rates:
Detail
Percentage
Method
Earth moving equipment
Construction equipment
Field equipment
Computer equipment
Office furniture
Leasehold improvements
30%
30%
30%
30%
20%
Declining balance
Declining balance
Declining balance
Declining balance
Declining balance
Straight-line basis over the term of the lease
Amortization of earth moving equipment, construction equipment and field equipment used for development
activities is included in Aurora Gold Project assets under development, while amortization of equipment used in
exploration and evaluation activities is expensed.
An asset's residual value, useful life and depreciation method are reviewed, and adjusted if appropriate, on an
annual basis.
Where parts (components) of an item of property and equipment have different useful lives or for which different
depreciation rates would be appropriate, they are accounted for as separate items of property and equipment.
-53-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
(h) Exploration and evaluation costs
Exploration and evaluation costs incurred on the exploration and evaluation of potential mineral reserves and
resources and includes costs such as:
exploratory drilling, trenching and sampling;
accumulating exploration data through topographical and geological studies;
determining the volume and grade of resources;
test work on geology, metallurgy, mining, geotechnical and environmental; and
conducting engineering, marketing and feasibility studies.
Exploration and evaluation costs are expensed as incurred. Purchased exploration and evaluation assets are
recognized as assets at their cost of acquisition or at fair value if purchased as part of a business combination.
(i) Development Costs
Expenditures are considered as development costs when the work completed supports the future development of
the property through the issuance of a NI 43-101 technical report or definitive bankable feasibility study, and such
development receives appropriate Board approvals. Subsequent to this point, development expenditures are
then capitalized and classified as assets under construction.
Development expenditures represent costs incurred to obtain access to proven and probable reserves and to
provide facilities for extracting, treating, gathering, transporting and storing of minerals. Development
expenditures are capitalized to the extent that they are necessary to bring the property to commercial production.
Costs which meet this criteria include:
•
•
•
•
•
•
•
the purchase price for development assets, including any duties and any non-refundable taxes;
costs directly related to bringing the asset to the location and condition for intended use such as drilling
costs and removal of overburden to establish access to the ore reserve;
direct and indirect costs incurred if they can be directly attributable to the area of interest;
pre-production expenditures incurred prior to the mine being substantially complete and ready for its
intended use;
the present value of the initial estimate of the future costs of dismantling and removing the item and
restoring the site on which it is located;
costs incurred to expand operating capacity;
borrowing costs incurred while construction and development activities are in progress, when they directly
relate to financing the construction of the project, and when general borrowings would have been avoided
if the expenditure on the qualifying assets had not been made.
Projects are assessed to determine the point of commencement of production of the mine. Various relevant
criteria are considered to assess when the mine is substantially complete and ready for its intended use and
moved into the production stage. Some of the criteria considered include, but are not limited to, the completion of
a reasonable period of testing of mine plant and equipment; the ability to produce minerals in saleable form; and
the ability to sustain ongoing production of minerals. When a project commences production, the capitalization of
certain mine construction costs ceases, and costs are either capitalized to inventory or expensed, except for
capitalized costs related to property, plant and equipment additions or improvements, open pit stripping activities
that provide a future benefit or underground mine development.
-54-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
When a property is placed into production, those capitalized costs are included in the calculation of the
amortization of mine development costs. Property acquisition and mine development costs are amortized by the
units-of-production method based on estimated proven and probable recoverable mineral reserves. Estimates of
residual values, useful lives and methods of amortization are reviewed at each reporting period, and adjusted
prospectively if appropriate.
(j)
Impairment of non-financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets with
finite lives to determine whether there is any indication that those assets have suffered an impairment loss.
Where such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss. The recoverable amount is the higher of an asset’s fair value less cost to sell or its value in
use, which is the present value of the future cash flows expected to be derived from an asset. Estimated future
cash flows are calculated using estimated future commodity prices, mineral resources, operating and capital
costs, using appropriate discount rates.
Impairment is determined for an individual asset unless the asset does not generate cash inflows that are
independent of those generated from other assets or groups of assets, in which case, the individual assets are
grouped together into cash generating units for impairment purposes.
An impairment loss is reversed if there is indication that there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of amortization, if no
impairment loss had been recognized.
(k) Share based payments
Equity settled share-based payments to employees and non-employees are measured at the fair value of the
equity instrument at the grant date. An individual is classified as an employee when the individual is an employee
for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee,
including directors of the Company.
The fair value is determined using the Black-Scholes option pricing model, taking into account the terms and
conditions upon which the options were granted, and recognized over the period during which the options vest.
The vesting periods are generally over a prescribed schedule of up to two to five years from date of grant
issuance. The fair value is expensed or capitalized to assets under development with a corresponding increase in
equity, reflecting a graded vesting method based on the company’s estimate of equity instruments that will
eventually vest. Management estimates the number of options likely to vest at the time of a grant and at each
reporting date up to the vesting date. Annually, the estimated forfeiture rate is adjusted for actual forfeitures in the
period. Upon the exercise of stock options, the consideration received is recorded as share capital and the
related stock option equity amount is transferred to share capital.
(l) Provisions
Provisions for environmental remediation, restructuring costs and legal claims are recognized when the Company
has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources
will be required to settle the obligation and the amount can be reliably estimated. These provisions are measured
-55-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
at the present value of the expenditures expected to be required to settle the obligation using a pre-tax risk free
rate.
The net present value of environmental reclamation and remediation costs are capitalised to the carrying amount
of the asset, as soon as the obligation to incur such costs arise. These costs are charged against profit or loss
over the economic life of the related asset, through amortization using the unit-of-production method. The related
liability is adjusted for each period for the unwinding of the discount rate and for changes to the current
market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation. The
increase in the provision due to passage of time is recognized as interest expense.
The Company has no material reclamation, remediation and environmental costs as at December 31, 2014 and
October 31, 2013 as the disturbances to date are minimal.
(m) Long-term debt
Debt is classified as current when the Company expects to settle the liability in its normal operating cycle or the
liability is due to be settled within twelve months after the date of the consolidated balance sheet.
(n) Income taxes
Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is
recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case
it is recognized in equity.
Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the
initial recognition of assets or liabilities that affect neither accounting or taxable profit; and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount
of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet reporting date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilized.
Deferred tax assets and liabilities are presented as non-current.
(o) Loss per share
Loss per share is calculated based on the weighted average number of common shares issued and outstanding
during the year. Diluted per share amounts are calculated using the treasury stock method whereby proceeds
deemed to be received on the exercise of options and warrants in the per share calculation are assumed to be
used to acquire common shares. The effect of potential issuances of shares under options and warrants would
be anti-dilutive, and have not been considered.
-56-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
(p) Significant judgments, estimates and assumptions
The preparation of consolidated financial statements in conformity with IFRS requires management to make
estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amount of expenses and other
income for the year.
Judgments, estimates and assumptions are periodically evaluated and are based on management's experience
and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. However, actual outcomes can differ from these estimates. Areas of judgment, estimate and
assumptions that have the most significant effect on the amounts recognized in the consolidated financial
statements are as follows:
Impairment of assets:
The Company assesses its cash-generating units annually to determine whether any indication of impairment
exists. Where an indicator of impairment exists, an estimate of the recoverable amount is made, which is the
higher of the fair value less costs to sell and value in use. The determination of the recoverable amount requires
the use of estimates and assumptions such as long-term commodity prices, discount rates, future capital
requirements, exploration potential and future operating performance. Fair value is determined as the amount
that would be obtained from the sale of the asset in an arm's-length transaction between knowledgeable and
willing parties. Recoverable amount is generally determined as the present value of estimated future cash flows
arising from the continued use of the asset, which includes estimates such as the cost of future expansion plans
and eventual disposal, using assumptions that an independent market participant may take into account. Cash
flows are discounted by an appropriate discount rate to determine the net present value. Changes in any of the
assumptions or estimates used in determining the fair value could impact the impairment analysis.
Fair value of share-based payments:
Determining the fair value of certain share based payments involves estimates of interest rates, expected life of
options, expected forfeiture rate, share price volatility and the application of the Black-Scholes option pricing
model. The Black-Scholes option pricing model requires the input of highly subjective assumptions that can
materially affect the fair value estimate. Stock options granted vest in accordance with the stock option plan. The
valuation of stock-based compensation is subjective and can impact profit and loss significantly.
The Company has applied a forfeiture rate in arriving at the fair value of stock based compensation to be
recognized, reflecting historical experience. Historical experience may not be representative of actual forfeiture
rates incurred. Several other variables are used when determining the value of stock options using the Black-
Scholes valuation model:
Volatility: the Company uses historical information on the market price of its common shares to determine
the degree of volatility at the date the stock options were granted. Therefore, depending on when the
stock options were granted and the period of historical information examined, the degree of volatility can
be different when calculating the value of different stock options.
Risk-free interest rate: the Company used the interest rate available for government securities of an
equivalent expected term as at the date of the grant of the stock options. The risk-free interest rate will
vary depending on the date of the grant of the stock options and their expected term.
Dividend yield: the Company has not paid dividends in the past because it is in the exploration and
development stage and has not yet earned any significant income. Also, the Company does not expect
-57-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
to pay dividends in the foreseeable future. Therefore, a dividend rate of 0% was used for the purposes of
the valuation of the stock options.
Depreciation:
Earth moving, construction and field equipment used in exploration and development activities is depreciated, net
of residual value, on a declining basis, over the useful life of the equipment. Significant judgment is involved in
the determination of useful life and residual values for the computation of depreciation, and no assurance can be
given that actual useful lives and residual values will not differ significantly from current assumptions.
(q) Financial instruments
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions
of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have
expired or have been transferred and the Company has transferred substantially all risks and reward of
ownership. Financial liabilities are derecognized when the obligation specified in the contract is discharged,
cancelled or expires.
All financial instruments are classified into one of the following five categories: held-for-trading, held-to-maturity,
loans and receivables, available-for-sale financial assets and other financial liabilities. Initial and subsequent
measurement and recognition of changes in the value of financial instruments depends on their initial
classification:
Held-to-maturity investments and other financial liabilities are initially measured at fair value and
subsequently measured at amortized cost. Amortization of premiums or discounts and losses due to
impairment are included in current profit and loss.
Loans and receivables are initially measured at the amount receivable less adjustment for the time value
of money.
Held-for-trading financial instruments are measured at fair value. All gains and losses are included in
profit and loss for the period in which they arise.
The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash (classified as
loans and receivables), short-term investments (classified as held-for-trading), accounts receivable (classified as
loans and receivables), and accounts payable and accrued liabilities and long-term debt (classified as other
financial liabilities).
The Company categorizes each of its fair value measurements in accordance with a fair value hierarchy. The fair
value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are
quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs
other than quoted prices that are observable for the asset or inputs that are derived principally from or
corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by little or
no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to
Level 3 inputs.
-58-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
(r) Future accounting pronouncements
The Company has not yet adopted the following new accounting pronouncements which are effective for fiscal
periods of the Company beginning on or after January 1, 2015:
(i)
International Financial Reporting Standard 9, Financial Instruments (“IFRS 9”) was issued in October 2010
by the IASB to replace IAS 39, Financial Instruments – Recognition and Measurement. The replacement
standard has the following significant components: it establishes two primary measurement categories for
financial assets – amortized cost and fair value; it establishes criteria for the classification of financial assets
within the measurement category based on business model and cash flow characteristics; and it eliminates
existing held to maturity, available-for-sale, loans and receivable categories.
In November 2013, the IASB issued an amendment to IFRS 9 which includes a new hedge model that aligns
accounting more closely with risk management and enhances disclosure about hedge accounting and risk
management. Additionally, as the impairment guidance and certain limited amendments to the classification
and measurement requirements of IFRS 9 are not yet complete, the previously mandated effective date of
IFRS 9 of January 1, 2015 has been removed. Entities may apply IFRS 9 before the IASB completes the
amendments but are not required to do so. The final version of IFRS 9 was issued in July 2014 and includes
(i) a third measurement category for financial assets – fair value through other comprehensive income; (ii) a
single, forward-looking ‘expected loss’ impairment model, and (iii) a mandatory effective date for IFRS 9 of
annual periods beginning on or after January 1, 2018. The Company has not evaluated the impact of
adopting this standard.
(ii)
International Accounting Standard 36, Impairment of Assets (“IAS 36”) was amended in May 2013 to make
small changes to the disclosures required by IAS 36 when an impairment loss is recognized or reversed. The
amendments require the disclosure of the recoverable amount of an asset or cash generating unit (“CGU”) at
the time an impairment loss has been recognized or reversed and detailed disclosure of how the associated
fair value less costs of disposal has been determined. The amendments are effective for accounting periods
beginning on or after January 1, 2014 with earlier adoption permitted. The Company is currently evaluating
the impact of adoption of the amended disclosure requirements of IAS 36.
4. CASH AND CASH EQUIVALENTS
Cash
Cash equivalents
December 31, 2014
October 31, 2013
$
$
17,211
-
17,211
$
$
104,740
3,909
108,649
Included in the Company’s consolidated cash position at December 31, 2014 is approximately $14 million in cash
draw under the Project Loan Facility, that the Company is contractually obligated to spend on the development of
the Aurora Project. As of December 31, 2014, the Company held approximately $14 million of its cash in United
States denominated currency, with the remaining predominantly in Canadian funds. The Company maintains
substantially all of its cash and cash equivalents in interest bearing bank accounts at select Canadian chartered
banks.
-59-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
5. ACCOUNTS RECEIVABLE, PREPAID EXPENSES AND OTHER ASSETS
Accounts receivable
Sales tax receivable
Interest & income tax receivables
Employee advances
Prepaid expenses & other assets
Short-term investments
6. CONTRACT ADVANCES
December 31, 2014
October 31, 2013
$
$
606
$
136
-
109
1,110
34
1,995
$
-
130
120
61
400
60
771
Under the terms of the EPC Contract for the Aurora Gold Project process plant and power plant with the GSJV
(see Note 19), the Company advanced to the GSJV approximately $13.4 million which is repayable by the GSJV in
nine equal installments. As of December 31, 2014, $10.4 million was outstanding.
7. RESTRICTED CASH
AGM Inc. overrun equity account (i)
AGM Inc. completion account (i)
Other restricted balances (ii)
December 31, 2014
October 31, 2013
$
$
$
23,000
10,000
311
33,311
$
-
-
328
328
(i)
In accordance with the Project Loan Facility, in October 2014 the Company placed a total of $33 million into
restricted bank accounts prior to first draw under the Facility. These restricted funds are available for project
costs overruns on the Aurora Project, and are subject to security and debenture agreements whereby AGM
has granted and created a lien for the benefit of the Senior Lenders. These balances will be released at
project completion, to the extent they are not drawn, and if required, applied against debt service reserve and
mine closure reserve accounts, as required under the Project Loan Facility. These restricted cash accounts
are denominated in United States dollars and held at a select Canadian chartered bank.
(ii) The Company has an outstanding letter of guarantee in the amount of $160 (October 31, 2013 - $160) that is
required under the regulations prescribed by the Guyana Geology and Mines Commission ("GGMC") for
prospecting licenses issued to the company and its subsidiaries. The Company also has several company
credit cards with a major financial institution with an aggregate credit limit of $151 (October 31, 2013 - $168).
The financial institution holds a $151 deposit as collateral on the credit amount as long as the credit cards
are active. The restricted cash amounts would change if there were any changes in the credit limits on the
cards.
-60-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
8. DEFERRED FINANCING COSTS
Deferred financing costs represent expenses incurred in negotiating the Project Loan Facility, and include Senior
Lenders’ and other advisory fees, legal costs, as well as required technical engineering and social and
environmental assessment costs that were pre-requisites to entering into Facility negotiations. These costs have
been capitalized on the balance sheet as deferred financing costs and considered as borrowing transaction costs.
A total of $15,376 in deferred financing costs has been incurred as of December 31, 2014. A proportional amount
of these borrowing costs, that is $6,590, has been netted against ongoing advances made under the Facility (see
Note 11), and accreted to the Aurora Gold Project’s development costs over the loan repayment period (see Note
9).
9. DEVELOPMENT COSTS, PROPERTY AND EQUIPMENT
COST
At November 1, 2012
Additions during the period
Stock-based compensation
Amortization
At October 31, 2013 –
as re-stated
Additions during the period
Interest expense and commitment fees
Transfers
Transferred to deferred financing costs
Stock-based compensation (Note 13)
Amortization - deferred financing costs
Amortization - property and equipment
Aurora Gold Project
Assets under
development
Earth moving
equipment
Construction
and field
equipment
Office
equipment
and other
$
-
$
9,183
$
2,747
$
219
$
12,088
464
1,342
13,894
160,404
2,065
(6,035)
(1,371)
686
434
2,109
-
-
-
9,183
98
-
1,922
-
-
-
-
367
-
-
3,114
539
-
4,113
-
-
-
18
-
-
237
51
-
-
-
-
-
Total
12,149
12,473
464
1,342
26,428
161,092
2,065
-
(1,371)
686
434
2,109
At December 31, 2014
$
172,186
$
11,203
$
7,766
288
$
191,443
Aurora Gold
Project
Assets under
development
Earth moving
equipment
Construction
and field
equipment
Office
equipment
and other
ACCUMULATED AMORTIZATION
At October 31, 2012
Amortization for the period
At October 31, 2013
Amortization for the period
At December 31, 2014
$
$
-
-
-
-
-
$
$
-61-
4,424
$
521
$
1,284
5,708
1,193
6,901
598
1,119
1,041
$
96
34
130
47
2,160
$
177
$
Total
5,041
1,916
6,957
2,281
9,238
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
Aurora Gold
Project
Assets under
development
Earth moving
equipment
Construction
and field
equipment
Office
equipment
and other
Total
$
$
13,894
172,186
$
$
3,475
4,302
$
$
1,995
5,606
$
$
107
111
$
$
19,471
182,205
NET BOOK VALUE
October 31, 2013 – as re-stated
December 31, 2014
Aurora Gold Project
On November 18, 2011, the Company signed a Mineral Agreement ("MA") with the Government of Guyana and
received the Mining Licence (“ML”) for the Aurora Gold Project. The MA and ML details all fiscal, property, import-
export procedures, taxation provisions and other related conditions for the continued exploration, mine
development and operation of the Aurora Gold Project. Significant terms include:
• Net smelter return royalty of 5% on gold sales at a price of gold of $1,000/oz or less;
• Net smelter return royalty of 8% on gold sales at a price of gold over $1,000/oz;
• Corporate income tax rate of 30% and no withholding tax on interest payments to lenders; and
• Duty and value added tax exemptions on all imports of equipment and materials for all continuing
operations at the Aurora Gold Project, including the construction and operation of a planned port facility,
road and power improvements and the construction and operation of the mine.
The Mining Licence is the Company's permit to build and operate the Aurora Gold Project. The document was
valid immediately, commencing November 18, 2011 for an initial 20-year term with provisions for extension on
application by the Company.
On January 11, 2013 the Company announced the key findings of its Aurora Gold Project’s NI 43-101 Technical
Report Updated Feasibility Study and received Board approval to further develop and bring the Aurora Gold
Project to commercial production. This point commenced the recognition expenditures for the Aurora Gold
Project as assets under development.
10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Trade payables and accrued liabilities
Severance accrual
Employee related accrued liabilities
11. LONG-TERM DEBT
December 31, 2014
October 31, 2013
31,855
$
34
2,272
34,161
$
1,838
-
884
2,722
$
$
On September 2, 2014 Guyana Goldfields Inc. and its wholly owned subsidiary, AGM Inc., announced the signing
of a common terms agreement (the “Common Terms Agreement”) with its Senior Lenders, and other definitive
-62-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
documentation with respect to the $185 million Project Loan Facility to fund the development and construction of,
and general matters relating to, the 100%-owned Aurora Gold Project.
The Project Loan Facility consists of two tranches; a Tranche 1 facility of $160 million and a Tranche 2 cost
overrun facility of $25 million. The maximum term of the Facility is eight years and advances under the Facility
bear a weighted average interest rate of 3-month LIBOR plus 5.11% for the Tranche 1 facility, and advances
under the Tranche 2 facility bear interest at the same average rate plus 0.5% (if drawn). There is no required gold
hedging or other required similar provisions associated with the Facility. The use of proceeds drawn under the
Facility is limited to development and construction of the open pit mine and related process plant facilities.
Long-term debt outstanding consists of the following as at:
Secured Tranche 1 Facility advances
Unamortized deferred financing costs (Note 8)
Current portion
December 31, 2014
October 31, 2013
$
$
68,573
$
(6,156)
62,417
(4,340)
58,077
$
-
-
-
-
-
First drawdown of the Facility occurred in October 2014. Advances are expected to be received on a monthly
basis, as determined by project funding requirements. The Company was in compliance will all key covenants
under the Common Terms Agreement as of December 31, 2014.
Under the terms of the Common Terms Agreement, the Company has entered into security and debenture
agreements pursuant to which AGM has granted and created a lien over all its assets and property of any kind to
the benefits of the Senior Lenders. Similarly, Guyana Goldfields Inc. and certain of its wholly owned subsidiaries,
namely Aurora Gold (Barbados) Inc., Guygold (Barbados) Inc., and Guy Gold Inc., (collectively the “Related
Entities”) have entered into security agreements to grant and create liens over all their related rights, titles, and
interests that are necessary for the Aurora Gold Project, for the benefits of the Senior Lenders. In addition,
certain of the Related Entities have entered into subordination agreements whereby any intercompany debt owed
by these companies has been subordinated to the Project Loan Facility. The Company has undertaken to provide
additional funds, if required, for the Project to achieve project completion, and to supplement any shortfall of funds
needed to meet the Aurora Gold Project’s financial obligations.
Scheduled principal repayments, reflecting amounts drawn as of December 31, 2014 are as follows:
Total long-term debt as of December
31, 2014
Total
2015
2016
2017
2018
2019
There-after
$
68,573 $
4,340 $
28,010
$
36,223 $
- $
- $
-
Principal repayments are expected to commence December 31, 2015 and continue quarterly thereafter over the
tenor of the Facilities. The Company expects to fully draw on its Tranche 1 $160 million Facility.
At and subsequent to completion of project development, AGM will be required to maintain specified financial and
non-financial covenants/conditions and reporting requirements, including adherence to environmental and social
standards, and funding of a debt service reserve account and mine closure reserve account. The Facility also
-63-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
provides for a partial cash sweep mechanism for the benefit of the Senior Lenders and the acceleration of
principal repayment in the event of a change in control.
12. SHARE CAPITAL
The Company is authorized to issue an unlimited number of common shares. The issued and outstanding
common shares consist of the following:
At October 31, 2012
Issued on exercise of options
Fair value of options exercised
Issued by short-form prospectus (i)
Issued by subscription agreement (ii)
Share issue expenses (iii)
At October 31, 2013
Issued on exercise of options
Fair value of options exercised
Issued by private placement (iv)
Share issue expenses (iv)
At December 31, 2014
Number of Shares
95,071,814
$
18,750
-
29,420,000
1,633,335
-
Amount
237,808
28
10
97,987
5,412
(5,460)
126,143,899
$
335,785
300,000
-
24,000,000
-
150,443,899
$
471
176
41,523
(287)
377,668
(i) On February 22, 2013 the Company completed a bought deal offering (the “Offering”) pursuant to which the
Company issued 29,420,000 common shares (the “Common Shares”), at a price of Cdn$3.40 per Common
Share for gross proceeds of $97,987 (or approximately Cdn$100,028). The Common Shares were sold
pursuant to an underwriting agreement with a syndicate of underwriters.
(ii) On March 12, 2013 the Company completed an agreement with the IFC (the “IFC Agreement”) pursuant to
which the Company issued 1,633,335 Common Shares of the Company at a price of Cdn$3.40 per
Common Share for gross proceeds of $5,412 (or approximately Cdn$5,553).
(iii) Share issue expenses represent underwriters’ commission relating to the Offering, and legal and regulatory
costs associated with both the Offering and the IFC Agreement.
(iv) On June 27, 2014 the Company completed a non-brokered private placement (the “Placement”) to which it
issued an aggregate of 24,000,000 Common Shares at a price of Cdn$1.85 per Common Share for
aggregate gross proceeds of $41,523 (Cdn$44,400). Share issue expenses of $287 were incurred on the
Placement.
13. STOCK OPTIONS
The April 25, 2012 stock option plan (the “2012 Plan”) was approved by the shareholders of the Company, for the
purpose of attracting, retaining and motivating officers, directors, employees and service providers by providing
them an opportunity, through share options, to acquire a proprietary interest in the Company and benefit from its
growth. The number of stock options that may be granted under the 2012 Plan is limited to not more than 9% of
the issued common shares of the Company at the time of the stock option grant. The 2012 Plan also restricts the
number of stock options which may be granted to each non-executive director within any one year period to such
number of options as entails a maximum aggregate grant date value of Cdn$100 calculated based upon the
Black-Scholes Option pricing model. The exercise price of stock options granted in accordance with the plan will
-64-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
be not less than the closing price of the common shares on the trading day immediately prior to the effective date
of grant.
The following table shows the continuity of stock options during the periods presented:
Number of Options
Amortized Value
Average Exercise Price (Cdn$)
At October 31, 2012
8,475,058
$
16,715
$
Stock-based compensation – issued this period
Stock–based compensation – issued prior period
Exercised
Expired
Forfeited
Cancelled
3,970,000
-
(18,750)
(1,367,558)
(627,500)
(800,000)
1,464
2,648
(10)
(4,145)
(502)
(4,208)
At October 31, 2013
9,631,250
$
11,962
$
Stock-based compensation – issued this period
Stock–based compensation – issued prior period
Exercised
Expired
Forfeited
Cancelled
4,262,500
-
(300,000)
(1,636,250)
(6,250)
(450,000)
887
1,063
(176)
(4,026)
(357)
(1,683)
At December 31, 2014
11,501,250
$
7,670
$
4.80
1.69
-
1.48
5.85
3.29
9.97
3.04
2.52
-
1.57
5.19
3.22
6.89
2.43
Stock-based compensation expense is comprised of:
Stock-based compensation:
– issued this period
– issued prior period
Less value of stock-based compensation expense:
Capitalized to assets under development (Note 9)
Fourteen months ended
December 31, 2014
Twelve months ended
October 31, 2013
$
$
887
1,063
$
(686)
1,264
$
1,464
2,648
(464)
3,648
The Company determined the fair value of the stock options granted under the Company’s stock option plan using
the Black-Scholes option model with the following assumptions on a weighted average basis:
Options granted to officers, directors and employees:
Fair value exercise price (Cdn$)
Risk-free interest rate
Dividend yield
Expected volatility
Expected option life
Expected forfeiture rate
Fourteen Months Ended
December 31, 2014
Twelve Months Ended
October 31, 2013
2.58
1.35%
-
68.57%
4.2 years
6%
1.87
1.19%
-
68.17%
2.3 years
7%
-65-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
The weighted average fair value on the grant date, of options granted to officers, directors and employees during
the fourteen months ended December 31, 2014 was Cdn$1.36
The following are the stock options outstanding and stock options exercisable as at December 31, 2014:
Stock Options Outstanding
Stock Options Exercisable
Range of exercise
prices (Cdn$)
Number of options
Weighted
average
exercise price
(Cdn$)
Weighted average
remaining
contractual life
(years)
Weighted
average
exercise price
(Cdn$)
Weighted average
remaining
contractual life
(years)
Number of options
$1.48 to $3.50
11,201,250
$3.51 to $7.00
300,000
11,501,250
2.39
3.95
2.43
2.65
0.74
2.60
7,442,917
300,000
7,742,917
2.28
3.95
2.34
1.57
0.74
1.54
The intrinsic value of options outstanding at December 31, 2014 is $4,899. As of December 31, 2014, the
remaining fair value of outstanding unvested options is $3,705.
14. INCOME TAXES
The Company’s effective income tax rate differs from the amount that would be computed by applying the federal
and provincial statutory rate of 26.50% (2013 – 26.50%) to the net loss. The reasons for the differences are a
result of the following:
Net loss before income taxes
EXPECTED TAX RECOVERY AT STATUTORY RATES
Tax effects of:
Change in unrecognized deductible temporary differences
Stock-based compensation
Other
Fourteen months ended
December 31, 2014
Twelve months ended
October 31, 2013
12,807
$
18,891
3,394
(3,006)
(315)
(73)
- $
5,030
(4,562)
(754)
286
-
$
$
Deductible temporary differences have not been recognized in respect of:
Non-capital losses
Net capital losses
Property and equipment
Exploration and evaluation
Share issue costs
Short-term investments
December 31, 2014
October 31, 2013
$
52,390
$
2,059
9,066
168,087
3,580
886
40,267
4,289
1,881
170,619
4,466
859
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GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
Deferred tax assets have not been recognized in respect of these items because it is not probable that future
taxable profit will be available against which the Company can utilize the benefits.
Deferred income tax liabilities have not been recognized for withholding tax and other taxes that would be payable
on the unremitted earnings of subsidiaries because the parent is able to control the timing of the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Unremitted earnings totaled $1,750 (2013: $1,755).
The Company has non-capital losses that will expire, if not utilized, as follows:
Canada
2034 and beyond
$
10,800
$
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2021
11,031
19,588
3,914
1,242
3,193
45
101
960
17
523
-
Other
261
646
56
$
-
-
-
-
-
-
-
-
13
Total
11,061
11,677
19,644
3,914
1,242
3,193
45
101
960
17
523
13
$
51,414
$
976
$
52,390
15. GENERAL AND ADMINISTRATIVE EXPENSES
Salaries and related benefits
Office, travel, insurance and other expenses
Professional fees
Shareholder relations and filing fees
16. EXPLORATION AND EVALUATION EXPENSES
Fourteen months ended
December 31, 2014
Twelve Months Ended
October 31, 2013
3,897
$
1,450
1,084
243
6,674
$
3,013
1,291
1,432
441
6,177
$
$
Other Properties
Aranka Gold Property
Aurora Gold Project
Fourteen months ended
December 31, 2014
1,640
$
Twelve months ended
October 31, 2013
616
722
100
2,462
$
3,330
3,877
7,823
$
$
-67-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
Aranka Gold Property
During fiscal 2013, the Company completed making annual acreage payments to holders of property licences,
and has no further obligations to permit holders. The Company now has a 100% interest in these properties. At
the option of the Company, the permit holders remain entitled to net smelter return royalties that vary from 1.5%
to 2% or a fixed payment amount in lieu thereof.
Other Properties
Other properties represent exploration expenditures at exploration targets near the vicinity of the Aurora Project.
During fiscal 2013, the Company completed making annual acreage payments to a holder of property licences,
and has no further obligations to the permit holder. The Company now has a 100% interest in these other
properties. At the option of the Company, the permit holder remains entitled to a net smelter return royalty of
1.5% or a fixed payment amount in lieu thereof.
The Company has incurred exploration costs associated with certain expired exploration licences for both the
Aranka Gold Property and Other Properties. The Company has submitted licence renewal applications with the
Guyana Geology & Mines Commission (the “GGMC), and has received in return a no objection letter from the
GGMC, and the Company has been advised that the applications are being processed. During the second
quarter of fiscal 2014, certain expired exploration licences were approved for re-issuance by the GGMC and are
waiting final processing.
17. RELATED PARTY TRANSACTIONS
(a) Remuneration of key management personnel of the Company was as follows:
Compensation – salaries and related benefits (i)
Directors fees
Share-based compensation
Fourteen months ended
December 31, 2014
Twelve months ended
October 31, 2013
$
$
2,561
$
323
1,083
3,967
$
1,913
167
2,434
4,514
Key management personnel are defined as the senior management team and members of the Board of
Directors.
(i) For the fourteen months ended December 31, 2014 $831 of salaries and related benefits was capitalized
as assets under development (twelve months ended October 31, 2013 - $211).
(b) Included in accounts payable are the following amounts due to related parties:
To officers of the Company
To directors of the Company
December 31, 2014
October 31, 2013
$
$
7
-
7
$
$
31
43
74
The balances are non-interest bearing and are payable on demand.
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GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
(c) Directors and insiders of the Company purchased under the June 2014 Placement a total of 114,000
Common Shares having a value of Cdn$210,900 or Cdn$1.85 per Common Share (see Note 12).
All the above related party transactions are in the normal course of operations and are measured at the exchange
amount, which is the amount of consideration established and agreed to by the related parties.
18. CONTINGENCIES
The Company's mining development and exploration activities are subject to various government laws and
regulations relating to the protection of the environment. As at December 31, 2014, the Company does not
believe that there are any significant environmental obligations requiring material outlays and anticipates that
such obligations will only arise when open pit and underground mine development commences.
19. COMMITMENTS
The Company is committed to $70,009 for obligations under the EPC Contract, other Aurora Gold Project
contractual commitments, purchases of equipment goods and services, and operating leases.
(IN THOUSANDS OF US$)
Total
2015
2016
2017
2018
2019
There-after
EPC Contract
$
61,021 $
61,021 $
-
$
Other contractual commitments
Purchase Obligations
Operating leases
Total Contractual Obligations
At December 31, 2014
5,830
2,885
273
4,090
2,885
126
290
-
3
- $
290
-
3
- $
290
-
3
- $
290
-
3
$
70,009 $
68,122 $
293
$
293 $
293 $
293 $
-
580
-
135
715
In May 2014, Guyana Goldfields’ wholly owned subsidiary AGM Inc. formalized its existing contractual
arrangements with Sedgman Limited and Graña y Montero, (the “GSJV”), and signed the contract for the
engineering, procurement and construction (the “EPC Contract”) for the Aurora process plant and power plant.
Under the terms of the EPC Contract valued at $134 million, the Company is required to make prescribed monthly
installment payments to the GSJV up to the end of August 2015. Initial payments by AGM are subject to a 30%
hold back, to a maximum of $10 million that is repayable at mechanical completion date.
The Company’s mineral exploration rights to the Aurora Gold Property were acquired from Alfro Alphonso and are
subject to an annual fee of $100, payable on January 2nd each year, up to a maximum of $1,500. Such payments
are due and payable for such period that the Company maintains an interest in the property. As at December 31,
2014 total payments of $1,100 have been made (October 31, 2013 - $900). This remaining commitment has not
been included in the above contractual commitment table.
20. SEGMENTED INFORMATION
The company’s operations comprise a single reporting operating segment engaged in mineral exploration and
development in Guyana. As the operations comprise a single reporting segment, amounts disclosed in the
consolidated financial statements also represent segment amounts.
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GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
Geographical Information
The following geographical information is provided as supplemental information to users of the financial
statements to further describe the Company’s operations:
As at and for the fourteen months ended
December 31, 2014
Canada
Barbados
Guyana
United
Kingdom
Development costs, property and equipment
$
67 $
- $
182,138 $
Total assets
Total liabilities
Net loss
Additions to development costs, property and
equipment
49,781
1,376
9,463
12
-
-
20
-
204,144
95,202
3,083
131,862
As at and for the twelve months ended
October 31, 2013 – as re-stated
Canada
Barbados
Guyana
Development costs, property and equipment
$
91 $
- $
19,380 $
Total assets
Total liabilities
Net loss
Additions to development costs, property and equipment
21. CAPITAL MANAGEMENT
108,818
2,076
9,032
15
69
-
136
-
20,332
646
9,271
11,370
- $
-
-
241
-
United
States &
United
Kingdom
- $
-
-
542
-
Total
182,205
253,925
96,578
12,807
131,874
Total
19,471
129,219
2,722
18,981
11,385
The Company manages its capital with the following objectives:
to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of
future growth opportunities, and pursuit of accretive acquisitions; and
to maximize shareholder return through enhancing the share value.
The Company monitors its capital structure and makes adjustments according to market conditions in an effort to
meet its objectives given the current outlook of the business and industry in general. The Company may manage
its capital structure by issuing new shares, repurchasing outstanding shares, taking on debt, adjusting capital
spending, or disposing of assets. The capital structure is reviewed by management and the Board of Directors on
an ongoing basis.
The properties in which the Company currently has an interest are in the exploration and development stage. As
such the Company is dependent on external financing to fund its activities. In order to carry out its planned
exploration and development programs and pay for administrative costs, the Company will attempt to spend its
existing working capital and raise additional amounts as needed.
In light of the above, the Company will continue to assess new properties and seek to acquire an interest in
additional properties if it believes there is sufficient potential and if it has adequate financial resources to do so.
The Company considers its capital to be (1) equity, comprising share capital, stock options, contributed surplus
and accumulated deficit, which at December 31, 2014 totalled $157,347 (October 31, 2013 - $126,497), and (2)
long-term debt, which at December 31, 2014 was $58,077 net of unamortized debt issuance costs (October 31,
2013 – nil). The Company manages capital through its financial and operational forecasting processes. The
-70-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and
other investing and financing activities. The forecast is regularly updated based on exploration and development
activities. Selected information is frequently provided to the Board of Directors of the Company. The Board of
Directors does not establish quantitative return on capital criteria for management but rather relies on the
expertise of the Company's management team to sustain the future development of the business. The Company’s
capital management objectives, policies and processes have remained unchanged during the fourteen months
ended December 31, 2014.
Under the Project Loan Facility, the Company’s long-term debt is expected to increase to $160 million by the time
the Aurora Gold Project reaches commercial production, anticipated in the third calendar quarter of 2015.
22. FINANCIAL INSTRUMENTS
As at December 31, 2014 and October 31, 2013 the Company’s financial instruments consisted of cash and cash
equivalents, short term investments, accounts receivable, restricted cash, accounts payable and accrued liabilities
and long-term debt. The Company estimates that their fair values approximate their carrying values at December
31, 2014 and October 31, 2013 respectively.
The following table illustrates the classification of the Company’s financial instruments within the fair value
hierarchy as at December 31, 2014:
Financial assets and liabilities at December 31, 2014
Level 1
Level 2
Level 3
Cash and cash equivalents
Short-term investments
Restricted cash
$
$
17,211
$
34
33,311
50,556
$
-
-
-
-
$
$
-
-
-
-
$
$
Total
17,211
34
33,311
50,556
The Company’s activities expose it to a variety of financial risks: liquidity risk, market risk (including interest rate,
currency rate and price risk) and credit risk.
Risk management is carried out by the Company's management team with guidance from the Board of Directors.
The Board of Directors also provides regular guidance for overall risk management.
(a) Liquidity risk:
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations
as they come due. The timeline to build the Aurora Gold Project into a producing mine is dependent on continuing
to satisfy all required financial and non-financial covenants under the Project Loan Facility and successful
construction and development of the Project. There can be no assurances that future draws under the Facility will
occur or take place in a timely fashion, or that other supplemental financing activities will be successful, if
required, or that execution of the construction of the mine at the Project will proceed as planned.
The Company’s liquidity and operating results may be adversely affected if its access to the capital market is
hindered, whether as a result of a downturn in stock market conditions generally or as a result of conditions
specific to the Company. The Company generates cash flow primarily from its financing activities and interest
income earned on its cash and cash equivalents. At December 31, 2014 the Company on a consolidated basis
had cash and cash equivalents of $17,211 (October 31, 2013 - $108,649) to settle consolidated current liabilities
of $38,501 (October 31, 2013 - $2,722).
-71-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
Included in the Company’s consolidated cash position and current liabilities at December 31, 2014 is
approximately $14 million and $37 million, respectively, attributable to the Aurora Gold Project. The $14 million
represents cash drawn under the Facility, that the Company is contractually obligated to finance the development
of the Aurora Gold Project. Draws under the Facility are received on a monthly basis, as determined by Project
funding requirements, reflecting the Company’s amounts due and payable or reasonably expected to be, before
the next draw date. Consequently, the amount of cash on hand drawn under the Facility will reduce over time as
payments are made. Included in the Project’s current liabilities of $37 million, is approximately $4 million of
current long-term debt expected to be payable on December 31, 2015.
The Company regularly evaluates its overall cash position and forecasted cash flows to ensure preservation and
security of capital as well as maintenance of liquidity. All of the Company's financial liabilities are subject to
normal trade terms.
(b) Market risk:
Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will
significantly fluctuate due to changes in market prices. The value of the financial instruments can be affected by
changes in foreign exchange rates, interest rates, and equity prices.
Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will
fluctuate because of changes in foreign exchange rates. The Company's functional currency is the United States
dollar and major purchases are transacted in United States dollars.
The Company is subject to gains and losses due to fluctuations in the Canadian and Guyanese dollar against the
United States dollar. Sensitivity to a plus or minus 10% change in all foreign currencies (Guyanese and Canadian
dollars) against the United States dollar with all other variables held constant as at December 31, 2014, would
affect the statement of operations and comprehensive loss by approximately $58 (October 31, 2013 - $5,667).
The Aurora Gold Project is funded by the Project Loan Facility that is denominated in United States currency, and
for disbursement purposes is supported by maintaining bank accounts denominated in United States, Canadian,
and Guyanese dollars. The Project’s exposure to fluctuations in the Canadian and Guyanese dollar against the
United States dollar is not significant as substantially most development costs are incurred in United States
dollars, and the exchange rate between the Guyanese and United States dollar has remained relatively constant.
The Company funds its exploration activities in Guyana on a cash call basis using United States dollars converted
from its Canadian dollar bank accounts held in Canada. The Company maintains Canadian and United States
dollar bank accounts in Canada, and Guyanese and United States dollar bank accounts in Guyana. Similarly, the
Company foreign exchange exposure is not significant as its annual exploration expenditures are relatively small.
Interest rate risk is the impact that changes in interest rates could have on the Company’s earnings and assets.
In the normal course of business, the Company is exposed to interest rate fluctuations as a result its long-term
debt, and its cash and cash equivalents being invested in interest-bearing instruments. The Project Loan Facility
bears interest at a variable rate (3-month LIBOR plus 5.11% for the Tranche 1 facility).
Excluding cash balances and long-term debt attributable to the Aurora Gold Project, sensitivity to a plus or minus
1% interest rate change with all other variables held constant as at December 31, 2014, would affect the
statement of operations and comprehensive loss by approximately $32 (October 31, 2013 - $1,086). Prior to
commercial production of the Project, related interest earned on cash balances and interest incurred on long-term
debt will be credited to/charged to Aurora Project assets under development. Sensitivity to a plus or minus 1%
interest rate change on the Project’s cash balances and long-term debt with all other variables held constant as at
-72-
GUYANA GOLDFIELDS INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share amounts)
For the fourteen months ended December 31, 2014 and the twelve months ended October 31, 2013
December 31, 2014, would affect assets under development by approximately $216 (October 31, 2013 – N/A).
The Company is evaluating opportunities to hedge its interest rate exposure on its long-term debt.
Fluctuation in the price for gold may adversely affect the Company’s ability to obtain additional financing,
influence the course of action taken in developing the Project, and affect the Company’s ability to meet the
Facility’s financial and non-financial covenants. As at December 31, 2014, although the Company was not a gold
producer, gold price risk may also affect the Company’s liquidity and its ability to meet ongoing obligations.
(c) Credit risk:
Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The
Company's credit risk is primarily attributable to cash and cash equivalents, restricted cash, accounts receivable
and contract advances from the GSJV. The maximum credit exposure at December 31, 2014 is approximately
$11,156 (October 31, 2013 - approximately $294). The Company has a significant concentration of credit risk
arising from its advances to the GSJV. The Company maintains substantially all of its cash and cash equivalents
in interest bearing bank accounts at select Canadian chartered banks.
23. PAYMENTS MADE TO FOREIGN GOVERNMENT AUTHORITIES
During the fourteen months ended December 31, 2014, the Company made in total approximately $6,767 (twelve
months ended October 31, 2013 - $1,572) in payments to the Government of Guyana or related government
authorities in respect of taxes, property licences, duties, payroll deductions, property rentals, and other similar
charges.
24. SUBSEQUENT EVENT
(a) Financing:
Subsequent to December 31, 2014 the Company’s wholly subsidiary AGM Inc., received proceeds of $25,500
from its Project Loan Facility to fund ongoing development and construction activities relating to the Aurora Gold
Project.
-73-
Directory
Directors
Alan Ferry,
John Patrick Sheridan,
Dan Noone,
Scott Caldwell,
Jean‐Pierre Chauvin,
David Beatty,
Michael Richings,
Rene Marion
Officers
Scott Caldwell
Peter Lello Galassi
Paul Murphy
Offices
President & Chief Executive Officer
Chief Operating Officer
Executive VP, Finance & Chief Financial Officer
141 Adelaide Street West, Suite 1608
Toronto, Ontario, Canada M5H 3L5
and
7 North Rd., Lacytown, Georgetown,
Guyana, South America
and
258 Thomas St., North Cummingsburg,
Georgetown, Guyana, South America
Transfer Agent
TMX Equity Transfer Services
200 University Avenue, Suite 300,
Toronto ON M5H 4H1
Legal Counsel
Cassels Brock LLP
2100 Scotia Plaza, 40 King Street West,
Toronto, Ontario M5H 3C2
Auditors
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2600,
Toronto ON M5J 0B2
Shares Traded
TSX Exchange
Symbol T.GUY
Y
R
O
T
C
E
R
I
D
Capital at December 31, 2014
Issued
Options
Total Outstanding
150,443,899
11,501,250
161,945,149
-74-