Mining in Guyana

Country and Sector Background

Guyana
Guyana has consistently demonstrated itself to be friendly toward foreign investment, and in particular, to investment in natural resource development during the past decade. General business, tax and mining laws are well developed and uniformly administered. Special facilities for natural resource development include duty and tax free import privileges for mining and forestry equipment. Several major successful natural resource ventures have been commissioned by foreign investors in the past ten years, including the world class Omai gold mine, a joint venture including two North American mining companies, Cambior and Golden Star.

Selected key information about Guyana is as follows:

• Official Name: Co-operative Republic of Guyana (Attained independence on May 26, 1966)
• Capital: Georgetown
• Official Language: English
• Area: 83,000 sq mi (215,000 sq km)
• Population: 775,000
• Currency: Guyana dollar, but the US dollar is widely accepted. Foreign currency can be changed at banks, cambios and hotels
• Government: The Parliamentary-style Government is based on proportional representation with an Executive President and a unicameral National Assembly consisting of 53 directly elected members and 12 indirectly elected members. Under the 1980 Constitution, the country is divided into ten regions and each region has an administrative body known as the Regional Democratic Council.
• Legal System: The legal system is based on Roman Dutch Law modified by British Common Law. There are magistrates' courts, a High Court and a Court of Appeal.
• Economy: Agriculture, mining, forestry, fishing and manufacturing are the major sectors of the economy. The main agricultural exports are rice and sugar. Bauxite and gold are the major mineral exports.
• People: The present population of Guyana consists of Africans, East Indians, Chinese, Portuguese, Europeans, Amerindians, and a mix of all of these races. The Amerindians number approximately 45,000 and are divided into nine tribes, Arawaks, Warraus, Caribs, Wapisianas, Arecunas, Akawaios, Macusis, Patamonas, and Wai-Wais.
• Climate: The climate in Guyana is hot, but pleasant for most of the year, particularly in the coastal belt which is cooled by the ocean breeze. The average temperature ranges between 75°F and 87°F (24°C and 31° C). The rainy season occurs in May through July, and then again in December through February, with an average annual rainfall of 91 inches (231 cm).

Mining Rights in Guyana
In Guyana all mineral rights are vested in the state. Mineral policy is administered by the Prime Minister and the chief executive of the GGMC. The GGMC was created by legislative act in 1978 and amended in 1989 to its current form referred to as the "Mining Act 1989". This act provides for three types of mineral concessions known colloquially as "small", "medium", and "large" scale concessions. Each type is divided into phases to reflect the primary nature of activities, generally exploration or production.

Small scale concessions, or "claims" are reserved for local artisanal miners. The maximum size for a claim license is nominally 27 acres. Claims may be located by qualified Guyanese entities on any land of the state which is open to mineral entry, and which is not subject to any prior grant of exploration or mining right. Medium scale concessions are also reserved for Guyanese entities, but are generally held only by more substantial individuals or corporations.

Medium scale concessions, or "permits" can be up to 1,200 acres each, in any shape. Permits can also be grouped in contiguous blocks without limitation, as in the case of the Million Mountain project which consists of 21 contiguous permits, together comprising approximately 36 square miles.

Both claims and permits require annual renewal during the exploration phase, which is accomplished with payment of nominal annual rentals for permits beginning at the rate of US$0.25 per acre and increasing at the rate of US$0.10 per year to a maximum of US$1.65 per acre after fifteen years. Annual rental for claims is flat at US$0.10 per acre. Upon commencement of production, the status is changed from "prospecting" to "production" and the annual rental for permits or claims becomes US$1.00 per acre.

Though both claims and permits must be held in the name of Guyanese entities, these entities are permitted to vend all or a portion of the attendant mining and exploration rights thereunder to others, without limitation, subject to ordinary contracts under general civil code.

Large scale concessions may be held directly by a "company" regardless of nationality, so long as it is registered to do business in Guyana under the Companies Act. Large scale concessions or licenses, may be up to 20 square miles in area, and may overlay either claims or permits subject to exclusion of those prior existing rights. Practically speaking, the principal differences between permits and licenses, other than those already described with respect to area and by whom they may be held, are as follows:

• Mining (production phase) Licenses are granted for a period of twenty years, and can be renewed indefinitely.
• Operating plans and budgets for activities contemplated must be filed with GGMC.
• Annual rentals are progressive, beginning at US$0.50 per acre and increasing to a maximum of US$3.00 per acre over six years during the prospecting phase. Once production begins, the prospecting license must be converted to a mining license and the annual rental increases to US$5.00 per acre.

Gold production from all types of mineral concessions in Guyana is subject to a statutory 5% net smelter return royalty, payable to the Guyana Gold Board. From time to time the government of Guyana has reduced this royalty/severance tax to a lesser figure during periods of low gold prices and under individually negotiated tax concessions to encourage development of major resource projects.

Guyana Map

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