GEORGETOWN, Guyana, CMC—The Guyana government said Monday it has signed an agreement with the Canadian-based Reunion Gold Corporation (RGD) to establish stable fiscal and operating conditions for the Oko West gold project, which is owned entirely by the company’s Guyanese subsidiary.
The Ministry of Natural Resources said that the critical components of the “Minieral Agreement” include royalty payable to the government for gold produced from the operations, as established under the fiscal regime for mineral agreements.
“As part of the agreement, Reunion Gold commits to prioritizing the employment of qualified Guyanese individuals and implementing a comprehensive training program to develop additional skills necessary for Guyanese personnel at all operational levels.
“This approach aims to contribute to the country’s sustainable development by nurturing local talent. Additionally, the company pledges to establish a financial support program for environmental and social projects, allocating one million US dollars annually towards initiatives that promote environmental sustainability and address social needs within surrounding communities.
“This commitment will commence upon commercial production or within 24 months from the issuance of a mining license, whichever occurs first,” the government said, adding that the agreement reaffirms “the shared commitment to sustainable mining practices, aimed at minimizing environmental impacts, fostering positive community relationships, and creating lasting benefits for Guyana and its citizens.”
Meanwhile, RGD announced Monday that it had agreed with G Mining Ventures Corporation (GMIN) to combine the two companies, setting the stage for creating a leading intermediate gold producer.
Through the transaction, GMIN will acquire RGD’s flagship Oko West Project in Guyana, within the Guiana Shield region, which it described as “one of the most attractive mining jurisdictions in South America.
“Oko West has emerged as a globally significant gold discovery over the last few years, with excellent potential to become a top tier deposit that could support a large, long-life mine complex to accelerate GMIN’s vision of building a leading intermediate gold producer.”
The statement said that GMIN plans to move Oko West quickly through technical studies to a construction decision, leveraging the considerable amount of exploration and development and permitting work already completed by RGD. This is supported by the expected free cash flow from the Tocantinzinho Gold Project (Tocantinzinho or TZ), which is trending on schedule and on budget for commercial production in the second half of 2024.
It said the transaction sets the stage for creating an Americas-focused leading intermediate gold producer.
Under the terms of the agreement, GMIN and RGD shareholders will receive common shares of the newly formed company (New GMIN), equivalent to RGD shareholders being issued 0.285 GMIN common shares for each RGD common share.
In addition, RGD shareholders will receive common shares in a newly created gold explorer (“SpinCo”) that will hold all of RGD’s assets other than Oko West. GMIN has agreed to fund SpinCo with CAD$15 million (One Canadian dollar = 0.72 cents).
RGD shareholders will receive an estimated consideration of $0.65 per RGD common share, an estimated transaction equity value of CAD$875 million, based on the closing price of GMIN common shares on the Toronto Stock Exchange on April 19, 2024, excluding the value of the SpinCo consideration.
Upon completion of the transaction, existing GMIN and RGD shareholders will own approximately 57 and 43 percent of the combined company on a fully diluted in-the-money basis prior to the concurrent US$50 million equity financing, and the combined company and RGD shareholders will own 19.9 percent and 80.1 percent, respectively, of the outstanding common shares of SpinCo.
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