Guyana Goldfields Approves US$238M Aurora Gold Project Spend; Selects EPC Contractor and Confirms Capital Cost and Schedule

TORONTO, Dec. 9, 2013 /CNW/ - Guyana Goldfields Inc. ("GGI" or "the Company") (TSX: GUY) is pleased to report that the Board of Directors has approved a US$238 Million ("M") expenditure for the Aurora Gold Project (the "Project") to reach commercial production. The Company has executed a Heads of Agreement and Term Sheet, documenting the principal terms and conditions with joint venture ("GSJV") partners, Sedgman Limited and Graña y Montero for the full Engineering, Procurement, and Construction ("EPC") of the initial processing facility and power plant at the Project in Guyana, South America. The proposed EPC contract will be on a "not-to-exceed" basis, valued at US$137M. The updated capital costs and corresponding schedule for the Project set forth below were determined in conjunction with guidance from the GSJV. The capital expenditure is contingent upon successful completion of Project financing and other approvals, which is expected to be finalized by the second quarter of 2014.

Project Finance

The Company recently signed a mandate letter with the International Finance Corporation ("IFC"), of the World Bank Group (see press release dated November 5, 2013), to lead a senior debt facility in the amount of US$165M. IFC has provided indicative financial terms whereby IFC will lead the coordination of the overall debt syndicate with other commercial banks and multi-lateral and development institutions. There are no gold hedging provisions foreseen as part of the facility. Due diligence is proceeding and the completion of the transaction is expected in the second calendar quarter of 2014. Additionally, the GSJV has provided an offer for a level of unsecured funding support which is being considered by GGI. The Company's cash balance as of October 31, 2013 was US$109M. All additional costs incurred by GGI to reach commercial production including corporate general and administrative costs, exploration costs and debt fees, are estimated to total US$28M. Management is confident that it will be able to fulfill all foreseen project financing requirements and is closely monitoring its expenditures and commitments for the Project in order to rationally synchronize spending with the debt financing timeframe. The table below provides a breakdown of cash sources.

EPC

GGI has agreed to the general terms and conditions for the engineering, procurement, management and construction of the initial 5,000 tonnes per day ("tpd") processing facility and power plant for the "not-to-exceed amount" of US$137M. The total capital cost for the entire Project is now estimated to be US$249M, of which US$11M has been spent to date. The remaining capital required to achieve commercial production is expected to be approximately US$238M. The total estimated capital expenditure breakdown is shown in the table below.

The revised capital costs allocate additional funds to engineering, integration management, more robust operational readiness, and costs associated with the schedule delay.

Opportunities

GGI is examining opportunities to reduce the capital expenditure for the Project. These opportunities include contract mining, and third-party ownership and operation of the power plant.

The Company is also reviewing the potential of extending open pit production and deferring the capital required for the planned underground expansion.

Project Economics

The following table provides updated Project economics based on the current capital cost estimate at various gold prices.

1. Royalty rate of 5% at a price of gold of US$1,000 per ounce or less, royalty rate of 8% at a price of gold above US$1,000 per ounce
2. Base Case
3. Cumulative cash flow defined as revenue less operating costs less capital expenditures.
4. Financials at a 5% discount rate.

Mine Plan Schedule

Construction is anticipated to last 18 months; with commissioning of the mill beginning in the first quarter of 2015. Commercial gold production is expected to be achieved by mid-2015. All other fundamentals of the original feasibility study (see press release dated January 11, 2013) remain the same, with the overall mine plan producing a total of 3.29 million ounces of gold over an initial 17 year mine life at an operating cash cost of US$527 per ounce (operating costs including royalty). 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. In the current plan, gold production will be staged, with initial open pit production of 5,000 tonnes per day from the Rory's Knoll deposit and expanding to 10,000 tonnes per day in 2018 when underground mining commences. A ball mill will be added to facilitate the expansion and the additional throughput.

Building the Project Team

The Company continues to strengthen its internal Project team in Guyana and at the corporate level. Additions include Reed Huppman as Vice President of Sustainability, Health and Safety, Terry Tweedle as In-Country Controller, Victor "Vic" Rozon as General Manager, Operations, and Johannes "Hans" Rygersberg as Engineering and Maintenance Manager.

Mr. Huppman has over 25 years of experience in applied sustainability consulting, particularly related to major international project development and finance, including corporate and project environmental and social policies and management systems. Mr. Huppman has worked as an environmental specialist for the World Bank in the former Soviet Union and was seconded for two years to the IFC where he worked as an environmental specialist in both the financial intermediary program and in direct investments. He is an IFC-certified trainer on the performance standards on social and environmental sustainability, and has delivered training to a number of Equator Principle financial institutions.

Mr. Tweedle has 35 years of financial and management experience with various Canadian and U.S. companies. He is a seasoned financial reporting executive and is based in Guyana for the Company. Mr. Tweedle is a Canadian Chartered Accountant.

Mr. Rozon has over 30 years of experience in mineral processing. Vic was Mill Superintendent / Plant Manager at Cambrior's Omai Gold Mine in Guyana for a number of years.

Mr. Rygersberg has over 40 years of experience in project engineering roles. Previously, Hans was Project Manager and Engineering Manager for Victoria Gold and was responsible for the detailed design and construction of a 10 million tonnes per year gold mine in Yukon. Hans also worked for Bechtel Canada as Project Engineering Manager where he was responsible for the design, materials handling, and execution of various mine projects in Guinea, Suriname, and northern Canada.

Sedgman Limited is a services company listed on the Australian Stock Exchange and is a market leader in testwork, design, construction and operation of mineral processing plants. Sedgman Limited has significant experience working in the mining industry and is well known for its successful large mining project implementation experience, having executed the successful design and construction of many global projects with a proud record of "on time and in budget" awards. Examples include Lynch Mining's Big Rush and Camel Creek Projects, Newcrest's Cadia Project, First Quantum Minerals' Guelb Moghrein Project, Newmont Mining's Minahasa Project and Lihir Gold's Lihir Island Project.

Graña y Montero is the oldest and largest engineering and construction company in Peru and is publically listed on the Lima and New York Stock Exchange with a market capitalization of over US$ 2.3 billion. Graña y Montero services projects in Latin America and the Caribbean, rendering their technicians highly specialized and experienced in tropical climates, while formally incorporating social responsibility into the development of all their operations. Examples of projects include Barrick's Pueblo Viejo Project, Vale's Bayovar Project, Phelps Dodge Cerro Verde Project, and Apex Silver's San Cristobal Project.

Scott A. Caldwell, President & CEO, states, "This is an extremely significant milestone for the Project and for the Company. We are excited to be moving the Aurora Gold Project forward and have engaged an excellent team whose strengths complement each other. Both of the GSJV companies have recognized industry expertise and a solid reputation for building and designing projects in tropical environments similar to Guyana."

Conference Call

GGI will hold a conference call today at 10:00am EST where senior management will discuss the contents of this press release and respond to any questions. A webcast will also be available at www.guygold.com for 90 days following the call. To join the call:

Conference Call Details:
Date: Monday, December 9, 2013
Time: 10:00am EST
Conference ID: 22340024

Dial-In Numbers:
North America Toll-Free: (888) 231-8191
International: (647) 427-7450

Webcast link: http://www.newswire.ca/en/webcast/detail/1275731/1407361

For further details, please refer to the report entitled "NI 43-101 Technical Report, Updated Feasibility Study - Aurora Gold Project" dated January 29, 2013 available on SEDAR at www.sedar.com.

Augusto Flores IV, (P.Geo) of Guyana Goldfields Inc., a qualified person within the meaning of National Instrument 43-101, has approved the scientific and technical information in this news release. Mr. Flores is not independent of GGI.

About Guyana Goldfields Inc.

Guyana Goldfields Inc. is a Canadian based Company, focused on the exploration and development of gold deposits in Guyana, South America. The Company is focused on the construction and development of the Aurora Gold Project scheduled for initial production in early 2015. The mine plan for the Project is designed to produce 3.29 million ounces of gold, averaging 194,000 ounces per year, over an initial 17 year mine life. The Aurora Gold Project has a total gold resource of 6.54 million ounces in the measured and indicated categories (62.83 million tonnes at 3.24 g/t Au) as well as an additional 1.82 million ounces in the inferred category (16.93 million tonnes at 3.34 g/t Au). For further details, please refer to the report entitled "NI 43-101 Technical Report, Updated Feasibility Study - Aurora Gold Project" dated January 29, 2013 available on SEDAR at www.sedar.com. The Company also holds a significant portfolio of attractive exploration properties and currently holds cash balances of US$109 Million as of October 31, 2013.

Forwarding-Looking Information

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the estimation of mineral resources and plans, timelines and estimated costs and financing of proposed mining operations. Often, but not always, forward-looking statements can be identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are based on various assumptions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the receipt of applicable regulatory approvals and permits, the availability of funding upon terms acceptable to the Company or at all including risks relating to the planned debt facility proceeding, the actual costs of development and construction activities, fluctuations in the price of gold and applicable exchange rates, general business, economic, competitive, political and social uncertainties; the actual results of exploration activities; changes in project parameters as plans continue to be refined; accidents, labour disputes and other risks of the mining industry; political instability; delays in obtaining governmental approvals or in the completion of development, construction or proposed mining activities, as well as those factors discussed in the section entitled "Risk Factors" in the Company's annual information form available on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

SOURCE Guyana Goldfields Inc.