Omai to brief President on possible shareholder change
By Gitanjali Singh
Omai Gold Mines Limited (OGML) will today brief President Bharrat Jagdeo on the possibility of the company changing shareholders in the current attempt by its parent company, Cambior, to deleverage itself. "In fairness to the government we have to let them know what to expect...that people will be coming down here to look at the mine and they may make offers which may be accepted," OGML Human Resources Manager, Norman McLean told Stabroek News yesterday. The government is a five per cent shareholder in Omai and McLean does not believe that its permission is required for a change in the main shareholder for the firm. It will be Cambior's decision to accept or reject any offers made for its 65 per cent shareholding in Omai by investors. The other 30 per cent shares in Omai are held by Golden Star Resources Limited. Omai is among Cambior assets (which include the Doyon, Bouchard-Hebert and Mouska mines) which are up for grabs as the company seeks to deleverage amid a financial crisis after it announced that it had forward sold gold at amounts lower than the world market price. Cambior entered into a restructuring agreement with creditors and hedge providers to extend its loan obligation to this year-end and took a decision to sell substantial assets. McLean said that Omai's management believes that it is a necessary courtesy to inform the government formally on what to expect and the options available to Omai in the current deleveraging exercise by Cambior. The Omai spokesman said too that the firm will also be briefing the President on its projections for this year and the redundancies which were effected at the mine operations. McLean said Omai has revised its projections provided to the Guyana Geology and Mines Commission (GGMC), and is now hoping to produce 14,000 ounces of gold more on its original 303,000 ounces target. Omai produced 306,063 ounces of gold last year, higher than the projection by 20 ounces. This is the first time in seven years that Omai's production has been close to its budget, the only other time it came close was in 1995, the year of the cyanide spill. The firm will also be briefing the President on the redundancies at the mine which left four trucks idle and 105 employees, about 80 of whom are Guyanese, unemployed. McLean said this was because Omai this year has less stripping to do to get to the gold mines. Omai also expects to brief President Jagdeo on its desire to continue contracting work for Linmine as it did last year. Asked whether corporation taxes will be the subject of discussion, McLean said "no" as the projection had been for Omai to start paying corporation taxes in 2003 when it was expected to start making profits on the assumption that gold prices would be averaging US$360 per ounce. However, he noted that gold prices have not been stable, reaching a low of US$280 per ounce last year. At such prices, he noted, it would be difficult for Omai as the investment would not begin to pay for itself. Gold and diamond companies are not granted tax holidays in Guyana but rather are allowed to write off exploration/development expenditure over a period of time. McLean also noted that Omai's operation is a low grade, high volume and high cost one and while the company produces about 50 per cent of Cambior's gold production, it does not do so at a low cost.
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