Government, Cambior sign feasibility study pact
Stabroek News
June 7, 2002
The Guyana government and Canadian mining company Cambior Inc yesterday signed a preliminary agreement, paving the way for the preparation of a "bankable feasibility study" that would be presented to the international financial institutions. Cambior Inc is the parent company of Omai Gold Mines Ltd.
A release from the Office of the Prime Minister (OPM) said "the signing of this agreement is only the preparatory stage for this project which could lead to a joint venture between the government and Cambior Inc to create a new operating company." Cambior will have an 80 per cent stake in the company with the government retaining a 20 per cent share.
"Both parties are working in a spirit of trust and confidence to make this project a success. However, it is too early in the process to make any further predictions at this time until financing is organised," the OPM release said.
Speaking with Stabroek News, the Prime Minister said that the feasibility study should be completed in about four to six months. Cambior is organising the study. He added that the packet of benefits - severance pay, make-up of pensions, National Insurance Scheme, PAYE taxes and the Thrift Plan - would cost the new operations at Linmine more than US$5 million.
The operations will employ just about 400 of Linmine's 1,250 workforce, who it plans to pay competitively and provide with stable and secure employment and rewarding work. The government will be responsible for the severance payment, according to the Cambior plan with the restructured company responsible for current and future operating areas.
The approach to the international financial institutions, which will be done jointly, is to raise US$20 million that will be used for upgrading processing equipment and the mine site, purchasing mining machinery and for working capital. The restructured Linmine will be expected to repay the US$20 million by the tenth year of operation.
Cambior's plan for the restructured company projects a net cash flow of US$3.4 million in the second year rising to US$7.7 million in the third year. Its plans also call for the introduction of mullite-based products and kaolin as well as other grades of refractory products made by the same process that generates Linmine's present product line.
Preliminary talks with a company in the field indicate an interest in a strategic alliance to develop mullite-based products. The company has a well-equipped research facility and knowledge to develop mullite products.
Cambior's objective is for the restructured Linmine to be able to better serve the smaller refractories by increasing the company's product lines.