Download guyana goldfields inc. management`s discussion and analysis for

 GUYANA GOLDFIELDS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED
JANUARY 31, 2012
Prepared by:
GUYANA GOLDFIELDS INC.
141 Adelaide Street West, Suite 1608
Toronto, Ontario M5H 3L5
-1 Company business ...................................................................................................................................................................... 4 Highlights and Milestones ......................................................................................................................................................... 4 (a) Changes in Management and Board of Directors ..................................................................................................... 4 (b) Project development – Aurora ....................................................................................................................................... 4 (c) Project development – Aranka ...................................................................................................................................... 7 (d) Financial .............................................................................................................................................................................. 7 Project Activities .......................................................................................................................................................................... 7 Aurora Project - Feasibility Study ....................................................................................................................................... 7 Highlights of the Feasibility Study ................................................................................................................................ 7 Alternative Cases ............................................................................................................................................................... 8 Aranka Properties ................................................................................................................................................................... 8 Technical Disclosure .................................................................................................................................................................. 9 Trends ........................................................................................................................................................................................... 10 Summary of Quarterly Results ............................................................................................................................................... 10 Results of operations ................................................................................................................................................................ 12 Use of proceeds from the financing by short form prospectus dated January 19, 2010 ........................................ 12 Budget for the Aurora Project ................................................................................................................................................ 13 Budget for the Aranka Properties .......................................................................................................................................... 13 Three months ended January 31, 2012, compared with the three months ended January 31, 2011 .................... 13 Liquidity, capital resources and business prospects ....................................................................................................... 14 Off-Balance-Sheet Arrangements .......................................................................................................................................... 15 Commitments .............................................................................................................................................................................. 15 Proposed Transactions ............................................................................................................................................................ 16 Related party transactions ...................................................................................................................................................... 17 Changes in Accounting Policies ............................................................................................................................................ 18 International Financial Reporting Standards ................................................................................................................. 18 Future accounting pronouncements ............................................................................................................................... 19 Critical Accounting Estimates ................................................................................................................................................ 20 Outlook ......................................................................................................................................................................................... 22 Capital Management .................................................................................................................................................................. 22 Property and Financial Risk Factors ..................................................................................................................................... 23 Multilateral Instrument 52-109 Disclosure ........................................................................................................................... 24 Outstanding Share Data ........................................................................................................................................................... 24 Risk Factors ................................................................................................................................................................................ 24 Subsequent events .................................................................................................................................................................... 25 Forward-Looking Statements and Additional Information .............................................................................................. 25 -2 GUYANA GOLDFIELDS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JANUARY 31, 2012
(Amounts are expressed in thousands of US dollars, unless otherwise noted)
The following management’s discussion and analysis (“MD&A”) of the financial condition and results of
operations of Guyana Goldfields Inc. (“Guyana Goldfields” or “Company”) constitutes management’s
review of the factors that affected the Company’s financial and operating performance for the three
months ended January 31, 2012. References to “Guyana Goldfields” in this MD&A refer to the Company
and its subsidiaries taken as a whole. This MD&A has been prepared in compliance with the
requirements of National Instrument 51-102 – Continuous Disclosure Obligations. This discussion should
be read in conjunction with the unaudited condensed interim consolidated financial statements of the
Company for the three months ended January 31, 2012 and 2011, together with the notes thereto, as well
as the audited annual consolidated financial statements for the year ended October 31, 2011 and 2010
together with the notes thereto, Results are reported in thousands of United States dollars, unless
otherwise noted. In the opinion of management, all adjustments (which consist only of normal recurring
adjustments) considered necessary for a fair presentation have been included. Information contained
herein is presented as at April 12, 2012, unless otherwise indicated.
As of November 1, 2010, the Company adopted International Financial Reporting Standards (“IFRS”).
The unaudited condensed interim consolidated financial statements for the three months ended January
31, 2012 and 2011, have been prepared in accordance with International Accounting Standard 34, Interim
Financial Reporting (“IAS 34”), and using accounting policies consistent with IFRS. Accordingly, they do
not include all of the information required for full annual financial statements required by IFRS as issued
by the International Accounting Standards Board (“IASB”) and interpretations of the International
Financial Reporting Interpretations Committee (“IFRIC”). Readers of this MD&A should refer to “Changes
in Accounting Policies” below for a discussion of IFRS and its effect on the Company’s financial
presentation.
The comparative financial information for 2011 in this MD&A has been restated to conform to IFRS,
unless otherwise stated.
As a result of ongoing review and possible amendments by interpretive guidance from the IASB and
IFRIC, IFRS in effect at October 31, 2012 may differ from IFRS and interpretation statements applied in
preparing the consolidated financial statements for the year ended October 31, 2011 and the unaudited
condensed interim consolidated financial statements for the three months ended January 31, 2012 and
2011.
For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors,
considers the materiality of information. Information is considered material if: (i) such information results
in, or would reasonably be expected to result in, a significant change in the market price or value of
Guyana Goldfields common shares (“Common Shares”); or (ii) there is a substantial likelihood that a
reasonable investor would consider it important in making an investment decision; or (iii) it would
significantly alter the total mix of information available to investors. Management, in conjunction with the
Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential
market sensitivity.
Further information about the Company and its operations is available on Guyana Goldfields’ website at
www.guygold.com or on SEDAR at www.sedar.com.
The Company is a reporting issuer under applicable securities legislation in each of the provinces of
Canada and its outstanding Common Shares are listed on the Toronto Stock Exchange under the symbol
“GUY”.
-3 Company business
The Company is a Canadian-based mineral exploration and development company primarily focused on
the acquisition, exploration and development of gold deposits in the Guiana Shield of South America. The
Company has one advanced development stage project, subject to a National Instrument 43-101
Technical Report, Feasibility Study (the “Feasibility Study”) filed April 9, 2012, the Aurora Gold Project
located in Guyana (the “Aurora Project” or the “Project”). The Company owns a 100% interest in the
Aurora Project, subject to a net smelter return royalty (“NSR”) currently stated at 5% or 8%, depending on
the price of gold, payable to the Guyana Geology and Mines Commission (the “GGMC”). The Company
has held its interest in the Aurora Project since 1998 and is required to pay an annual fee to the vendor of
$100 for as long as Guyana Goldfields maintains an interest in the Aurora Project, up to a maximum of
$1,500. A total of $800 has been paid to date. See also “Highlights and Milestones”, “Project Activities”,
and “Risk Factors” below.
On November 18, 2011, the Company signed a Mineral Agreement ("MA") with the Government of
Guyana and received the Mining Licence for the Aurora Project. The MA details all fiscal, property,
import-export procedures, taxation provisions and other related conditions for the continued exploration,
mine development and operation of the Aurora Project.
Significant terms include:
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Mining royalty of 5% on gold sales at a price of gold of a thousand dollars per ounce or less;
Mining royalty of 8% on gold sales at a price of gold over a thousand dollars per ounce;
Corporate income tax rate of 30% and no withholding tax on interest payments to lenders; and
Duty and value added tax exemptions on all imports of equipment and materials for all continuing
operations at the Aurora Project, including the construction and operation of a planned port
facility, road and power improvements and the construction and operation of the mine.
The Mining Licence is the Company's permit to build and operate mining facilities at the Aurora Project.
The Mining Licence is valid for an initial 20-year term with provisions for extension on application by the
Company.
The Company also holds a contiguous 307,000 acre land package located in the Aranka district of
Guyana approximately thirty kilometres northeast of the Aurora Project, known as the “Aranka
Properties”. The Aranka Properties consist of four separate properties known as Sulphur Rose, North
Ridge, Wynamu and Parika Hills. See also “Project Activities”.
Highlights and Milestones
(a) Changes in Management and Board of Directors
On March 19, 2012 the Company announced that Mr. Claude Lemasson resigned as President and Chief
Operating Officer of the Company with effect on April 9, 2012, and as a Director of the Board effectively
immediately. Mr. Patrick Sheridan Jr., Founder and Chief Executive Officer of the Company has replaced
Mr. Lemasson on a temporary basis until a successor is appointed. The Company also announced the
appointment of Mr. J.P. Chauvin, P.Eng as its newest member of the Board of Directors. Mr. Chauvin
brings more than forty years of combined experience in mining operations and construction management
to the Company. The Company has also appointed a Vice-President, Projects, with an effective initiation
date of early May, who will be based in Guyana, South America and will be responsible for advancing the
technical studies, development, and construction of the Aurora Gold Project and managing the overall
project team.
(b) Project development – Aurora
On February 24, 2012, Guyana Goldfields released the key findings of its Feasibility Study for the Aurora
Project. The Feasibility Study is available at www.sedar.com and on the Company’s web site. The
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Feasibility Study required the application of mining standards, actual vendor quotations for the capital and
operating costs parameters, and detailed analysis of the related testing and engineering for the
construction of the Aurora Project gold mine, capable of being developed at a sufficient return to justify
the capital and managerial resources that must be committed. The Feasibility Study identified 4.6 million
ounces of contained gold in the proven and probable reserve category from a combined open pit and
underground mining scenario over a twenty two year mine life.
The Company has commenced the process of executing a revised Feasibility Study (as discussed below)
as a follow up to the Feasibility Study filed on April 9, 2012, with the goal of identifying significant
opportunities to improve the financial return on the construction and operation of the Aurora Project gold
mine. Specific attention will be placed on reducing development costs and improving operating costs
over the life of mine.
Upon completion of the revised Feasibility Study later this year, the Board of Directors of the Company is
expected to approve the development of the Aurora Project.
The Company recently submitted its mine plan for the Aurora Project as proposed by the Feasibility Study
to the Commissioner of the GGMC for approval. The Company expects to amend the Mine Plan to
incorporate the results of the revised Feasibility Study later this year.
2012 Strategic Plan and Key Milestones
On April 11, 2012, the Company announced the following details of its strategic plan for 2012 and key
milestones:
Revised Feasibility Study
The revised Feasibility Study for the Aurora Gold Project has the potential to significantly improve the
project’s economics. The decision to deliver a revised Feasibility Study resulted from current
management’s disappointment surrounding the overall mine plan and approach to the optimization of the
project, as outlined in the National Instrument 43-101 Technical Report, dated April 9, 2012. Alternative
mining methods are being investigated, specifically for the underground resource. The revised Feasibility
Study is expected to be prepared in accordance with National Instrument 43-101 and compiled by SRK
Consulting (Canada) Inc. ("SRK"), who authored the prior Feasibility Study, with additional contributions
provided by prominent industry consultants. The revised Feasibility Study is expected to be completed in
Q4 and is expected to investigate all opportunities listed below.
Underground:
 New study will concentrate on mining the deposit from surface to approximately 750m vertical
depth,
 Removal of the vertical shaft component, refrigeration plant, and paste backfill plant,
 Analysis and tradeoff study of underground mining methods, and
 Examination of contract mining proposals, including possible dual decline access to Rory’s Knoll
underground.
Open pit:
 Removal of some of the smaller open pits considered to be marginal in the current study,
 Review and optimization of mobile equipment fleet, ramps, haul roads and strip ratio, and
 Review of contract mining for open pit pre-stripping.
Civil works:
 Optimization of mine site facilities: Overhaul of mine plan with particular focus on improving the
location of key facilities such as the waste dumps, processing plant, and tailings area with the
objective of significantly decreasing operating costs and reducing the footprint of the overall site
plan.
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Processing:
 Re-evaluation of the size of the processing plant to maximize throughput in the first ten to twelve
years of the mine life.
Economics:
 Full review of all capital expenditure and operating costs, including but not limited to the power
plant, general & administration, mobile fleet (trucks), and the processing facility, and
 Quotes for contract mining will be reviewed during this process.
Sub-level Retreat Scoping Study
The Company has commissioned SRK (Vancouver) to complete a separate scoping study for sub-level
retreat underground mining method for Rory’s Knoll, which is due to be completed in Q2 2012. Based on
the results from this scoping study, the Company may utilize this alternative underground mining method
for Rory’s Knoll. The sub-level retreat scoping study is expected to be completed in Q2.
Revised Aurora Resource Estimate
The Company plans to report a revised mineral resource estimate for the Aurora Gold Project in Q2 2012
which will provide an update to SRK’s previous resource estimate of 5.71 million ounces in the measured
& indicated categories (47.040 million tonnes at a grade of 3.83 g/t) and 1.17 million ounces in the
inferred category (9.97 million tonnes at a grade of 3.63 g/t) (see press release dated September 9,
2011).
This new resource estimate will be used in the revised Feasibility Study and will include an additional 159
holes completed from May 31, 2011 to the end of March 2012. Drilling focused on improving the
geological model with the intent of upgrading inferred ounces at Aleck Hill. The revised estimate will also
include exploration results received from Rory’s Knoll at depth where new deep drilling extended the
mineralization model approximately 530 metres below the known mineralization boundary of 1,556m to
beyond 2,100m (see press release dated September 9, 2011).
Aurora Infrastructure
The Company continues to carry out off-site and on-site civil and infrastructure works that are critical to
the start of the mine development and construction. These initiatives include the port facility, camp
facilities, and upgrade to the road access already established to the mine site.
The Company expects to enter into contractual arrangements with a third party contractor to perform soil
investigation services that will enable the subsequent extension and upgrade of the Company’s port
facility at Buckhall. The Company is currently coordinating the necessary customs clearances and work
permits that are required.
The Aurora Project has already been granted environmental approval. The Company intends to secure
long term financing through a combination of equity and debt once it has completed its revised Feasibility
Study. See “Liquidity, capital resources and business prospects” below. During the three months ended
January 31, 2012, the Company incurred exploration and project development expenditures on the
Aurora Project of approximately $9 million, compared to approximately $6 million in the comparative prior
year period.
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(c) Project development – Aranka
On February 28, 2012 the Company announced initial trench and drill results from a new discovery at its
Aranka Properties. At the Greater Sulphur Rose Area (“GSRA”), assay results have been received from
initial trenching and drilling programs conducted at the newly discovered “N-1” prospect indicating a 400
meter strike length consisting of altered and mineralized quartz diorite comparable to the style of
mineralization at the Sulphur Rose gold deposit. Visible gold was observed in the cores of both drill
holes. In addition, three other gold targets including the S-3 anomaly have been identified adjacent to the
Sulphur Rose artisanal mining area.
Results of trenching and drilling at N-1 and soil sampling at S-3 support a potentially 10 kilometre long
northeast trending corridor of gold mineralized zones similar to Sulphur Rose deposit. An extensive soil
sampling program is ongoing to fully cover this northeast corridor.
During the three months ended January 31, 2012, the Company incurred exploration and project
development expenditures on the Aranka Properties of approximately $1 million, compared to
approximately $2 million in the comparative prior year period.
(d) Financial
At January 31, 2012, Guyana Goldfields had working capital of approximately $31 million (October 31,
2011 – approximately $40 million; November 1, 2010 – approximately $52 million). The Company had
approximately $31 million in cash and bank-backed guaranteed investment certificates (October 31, 2011
– approximately $41 million; November 1, 2010 – approximately $64 million). The decrease in cash was
largely due to ongoing exploration, development and operating activities. See “Liquidity, capital resources
and business prospects” below.
Project Activities
Aurora Project - Feasibility Study (Press release dated February 24, 2012)
On February 24, 2012, Guyana Goldfields reported its Feasibility Study results for the Aurora Project. The
Feasibility Study has been compiled under the supervision of SRK Consulting (Canada) Inc. ("SRK") with
contributions provided by prominent industry consultants. A complete Technical Report dated April 9,
2012 which effectively summarizes the results of the Feasibility Study is available on the Company's
website and on SEDAR.
Highlights of the NI 43-101 Technical Report, Feasibility Study
All figures include contingency where applicable.
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The Base Case scenario used in the Feasibility Study is calculated using a one thousand three
hundred dollar per ounce of gold ("oz") and one hundred dollar per barrel WTI Crude Oil
Proven and probable reserves of 4.6 million ounces of contained gold
22 full years life of mine ("LOM") for combined open pit ("O/P") and underground ("U/G") mining
scenario
Mill throughput rate of 8,000 tonnes per day ("tpd") from years 2015 - 2023 and an average of
~4,500 tpd (nominal) from years 2024 to 2035. In year 2019, production from the underground
will commence and will gradually replace open pit feed
Underground mine access via ramp and shaft (mine depth to 1,320m)
Average LOM grade of 3.17 grams of gold per tonne ("g/t Au")
Total gold production is 4.359 million ounces
Average initial gold production of approximately 256,800 ounces per year for the first 10 full years
(2015 - 2024)
Average LOM cash operating costs of five hundred twenty two dollars per ounce (pre-royalty)
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Pre-tax Net Present Value (NPV) of $644 million at a 5% discount rate generating a pre-tax
Internal Rate of Return (IRR) of 14.9% and a payback period of 6.9 years
Estimated initial capital costs for surface and open pit is $525 million, with underground
development being funded from cash flow
On the date of announcement of the Feasibility Study with a recent spot gold price of one thousand seven
hundred and seventy five dollars per ounce and one hundred dollars per barrel WTI Crude Oil, pre-tax
NPV increases to $1.7 billion at a 5% discount rate generating a pre-tax IRR of 28.6% with cash costs of
five hundred and twenty two dollars per ounce (pre-royalty).
Alternative Cases
The table below outlines key sensitivities for the NPV and IRR of the Aurora Project. Fuel costs represent
a significant proportion of all cash costs. It has been observed that the price of crude oil, which is the
base to derive fuel prices, is correlated with the price of gold. Guyana Goldfields has compiled certain
sensitivities to differing gold prices and used a historical correlation of oil to gold to re-compute power
consumption costs. A Gold/Oil Ratio of 16 to 1 was determined based on the 3-year (2009-2011)
averages of the Gold Price and of WTI Crude Oil.
Financials @ 5% Discount Rate
Fuel Price (WTI Crude Oil)
Average Operating Cash Cost (LOM)
Average Operating Cash Cost w/Royalty
(LOM)
Pre-Tax NPV
Pre-Tax IRR
Payback
After-Tax NPV
After-Tax IRR
Payback
(Units)
US$
$/oz
$/oz
$1,300/oz
gold price
81.25
495
599
$1,775/oz
gold price
110.94
537
679
$2,250/oz
gold price
140.63
578
758
BASE CASE
$1,300/oz
gold price
100.00
522
626
$M
%
Years
$M
%
Years
706
15.7
6.7
476
13.4
7.0
1,683
28.2
3.5
1,164
23.6
4.3
2,660
39.3
2.4
1,849
32.6
2.8
644
14.9
6.9
432
12.7
7.2
Aranka Properties
On February 28, 2012 the Company announced initial trench and drill results from a new discovery at its
Aranka Properties. At the Greater Sulphur Rose Area (“GSRA”), assay results have been received from
initial trenching and drilling programs conducted at the newly discovered “N-1” prospect. The N-1
prospect is a 400m by 300m Au soil anomaly located approximately 5kms northeast of the Company’s
Sulphur Rose Resource.
Results from two trenches out of six excavated to date have returned an interval of 1.41 g/t Au over 52
metres, including 1.80 g/t over 32 metres and 4.34 g/t Au over 12 metres in Trench # 12-01A. The
estimated true width is around 14.4 metres with an overall average grade of 2.65 g/t Au. Trenching has
confirmed a 400 metre strike length consisting of altered and mineralized quartz diorite comparable to the
style of mineralization at Sulphur Rose Gold deposit. Several other altered quartz diorite zones have been
recognized and mapped in other trenches.
Four diamond drill holes, totalling 797 meters, have been drilled to date to test the sub-surface continuity
of the Au anomalous zones delineated from the trenches. The Company has received assays from two
holes to date, the rest are pending.
Drill Hole N1D-01 returned gold grades of 1.06 g/t Au over 29 meters including a higher grade interval of
2.44 g/t Au over 8 metres and 14.13 g/t Au over 1 metre. N1D-02, drilled below N1D-01, yielded 4.35 g/t
Au over 20 meters including higher grade intervals of 6.42 g/t Au over 13 metres and 53.21 g/t Au over 1
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metre. Visible gold is observed in the cores of both drill holes. Results from N1D-01 and N1D-02 so far
has confirmed an altered and gold mineralized quartz diorite host traceable to over 100 metres below
surface; with a notable increase in gold grades at depth.
Three other gold targets aside from N1 have been identified adjacent to the Sulphur Rose artisanal
mining area. Of particular interest is the S3 gold anomaly situated halfway between N1 and the Sulphur
Rose Gold deposit was discovered in 2010. Results from infill soil auger sampling at S3 have delineated
two gold anomalies measuring 400m by 300m and 300m by 200m, respectively.
Results of trenching and drilling at N-1 and soil sampling at S-3 support a potentially 10 kilometre long
northeast trending corridor of gold mineralized zones similar to Sulphur Rose deposit and N-1 prospect.
An extensive soil sampling program is ongoing to fully cover this northeast corridor.
Trenching and drilling is planned to continue at N1 to trace the northwest and southeast extension of the
mineralization. Two drill rigs are currently on site. The Company has mobilized a third drill rig to the area
in order to expedite the ongoing drilling program. Five geologists are actively exploring the GSRA.
Potential quantity and grade is conceptual in nature. There has been insufficient exploration to date to
establish a Mineral Resource at either the S3 or N-1 targets, and it is uncertain if further exploration will
result in such targets being delineated as a Mineral Resource in the future.
In addition, approximately 35-kms north from Sulphur Rose, a team of three geologists are on site to
conduct in-fill soil sampling programs and follow-up stream sediment sampling at the Wynamu prospect.
The Company previously identified a broad alteration zone measuring approximately 3km by 2km at this
location. Currently, this program is helicopter-supported in order to fast track collection of data for drill
target development.
Technical Disclosure
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The
Feasibility Study was prepared by leading independent consulting firms. Qualified Persons ("QP") under
Canadian Securities Administrators' NI 43-101 are listed below. The work was completed with the
collaboration of the Aurora Project technical group and Company staff. The QPs have reviewed and
approved the details supporting the information disclosed under “Aurora Project – Feasibility Study” under
subheading “Project Activities”. The following consultants participated in the study:
o
o
o
o
o
o
o
Mineral resource estimation, open pit and underground mine planning, and the mineral resource
and mineral reserve statements were prepared by SRK Consulting (Canada) Inc. (“SRK”)
(Toronto) under the direction of Glen Cole, P.Geo. (mineral resources), Brian Connolly, P. Eng.
(open pit reserves), and Ken Reipas, P. Eng. (underground reserves)
The design of the underground mine shaft was prepared by DMC Mining Services "Dynatec"
(Toronto), under the direction of Leo Hwozdyk P.Eng
The environmental management system was designed by AMEC Environment & Infrastructure, a
Division of AMEC Americas Limited, under the general direction of Pedram MolkAra, M.Sc.,
M.Eng., P.Geo. and senior review of David Bleiker, M.A.Sc., P.Eng.. Adam Coulson, Ph.D.,
P.Eng. directed the open pit and underground rock mechanics study, Prapote Boonsinsuk, Ph.D.,
P.Eng. directed the foundation design, Simon Gautrey, M.Sc., MBA, P.Geo. directed the
hydrogeology study and Norman Schwartz, M.Sc.Eng., P.Eng. directed the hydrological studies
The design of the Ventilation System was prepared by Bluhm Burton Engineering (PTY) Ltd.
"BBE" (South Africa), under the direction of Frank von Glehn
The design of the Paste Backfill System was prepared by Golder PasteTec (Sudbury), under the
direction of Chris Lee, P.Eng
The design of the Processing Facilities was prepared by Ausenco Solutions Canada Inc., under
the direction of David John Brimage , MAusIMM CP
Environmental design was prepared by Environ Corp. (Washington, DC), under the direction of
Reed Huppman, Principal, and Glenn Mills, Principal Consultant and Matthew Trout, Associate
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o
o
o
Consultant
The design of the Power Systems was prepared by Martin Menard & Associates (Montreal),
under the direction of Martin Menard
Design of off-site and on-site infrastructure items were the responsibility of Guyana Goldfields
under the direction of Claude Lemasson, P.Eng with review by SRK
The financial model and economic analysis were prepared by Guyana Goldfields with review by
SRK
Chief Geologist Augusto Flores IV, (P.Geo), a “Qualified Person” within the meaning of NI 43-101, has
supervised the preparation of the disclosure under the heading “Project Activities - Aranka Properties”.
Trends
The Company is a Canadian-based mineral exploration company primarily focused on the acquisition,
exploration and development of gold deposits in the Guiana Shield of South America. The Company
attempts to acquire properties in Guyana, should such acquisitions be consistent with the objectives and
acquisition criteria of the Company. The Company’s future financial success will be dependent upon
management’s successful execution of the revised Feasibility Study, sourcing adequate financing and the
development of the Aurora Project into a producing gold mine. In addition, both the price of, and the
market for, gold is volatile, difficult to predict and subject to changes in domestic and international
political, social and economic environments. The Company remains cautious in case the economic
factors that impact the mining industry deteriorate. Currently, access to capital to fund small exploration
companies is difficult.
The Company is aware that governments around the world are looking to the resource sector as a
possible source of additional revenue, be it taxes or royalties. The Company has negotiated a long-term
agreement it considers to be fair which should benefit all stakeholders.
Apart from these and the risk factors noted under the heading “Risk Factors”, management is not aware
of any other trends, commitments, events or uncertainties that would have a material effect on the
Company’s business, financial condition or results of operations.
Summary of Quarterly Results
At January 31, 2012, the Company was an exploration stage entity engaged in the acquisition,
exploration, evaluation and development of principally gold resource properties in Guyana, South
America. At this time, any issues of seasonality or commodity market fluctuations have no direct impact
on the Company’s results or operations. The Company currently defers exploration expenditures incurred
to exploration and evaluation assets.
For fiscal quarters ending after November 1, 2010, the quarterly results have been restated to reflect
accounting policies consistent with IFRS. Quarterly results for fiscal quarters ended before November 1,
2010 have been prepared in accordance with previous Canadian generally accepted accounting
principles (“Canadian GAAP”).
A summary of selected information for each of the eight most recent quarters is as follows:
Three Months Ended (*)
January 31, 2012
(Loss) / Income
Basis Of Preparation
IFRS
($2,038) (1)
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Basic and diluted (loss)
/ income per share
($0.02)
Three Months Ended
October 31, 2011
(Loss) / Income
(*)
Basis Of Preparation
IFRS
Basic and diluted (loss)
/ income per share
($2,143) (2)
($0.02)
(3)
($0.05)
($0.03)
July 31, 2011
IFRS
($3,881)
April 30, 2011
IFRS
($2,082) (4)
January 31, 2011
IFRS
$2,981 (5)
($1,303)
$0.04
(6)(9)
($0.02) (9)
October 31, 2010
Canadian GAAP
July 31, 2010
Canadian GAAP
($979) (7)(9)
($0.01) (9)
April 30, 2010
Canadian GAAP
($3,009) (8)(9)
($0.04) (9)
(*)
Guyana Goldfields does not have any (loss) income before discontinued operations or extraordinary
items for each period presented.
Notes:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Net loss of $2,038 principally relates to (i) stock-based compensation of $352; (ii) professional
fees of $367; (iii) office expenses of $721; (iv) offset by interest income of $150; (v) unrealized
loss of $310 on short-term investments resulting from a mark to market adjustment on January
31, 2012; (iv) loss on foreign exchange of $172; and all other expenses related to general
working capital purposes.
Net loss of $2,143 principally relates to (i) stock-based compensation of $392; (ii) professional
fees of $139; (iii) office expenses of $437; (iv) offset by interest income of $112; (v) unrealized
loss of $437 on short-term investments resulting from a mark to market adjustment on October
31, 2011; (vi) loss on foreign exchange of $953; (vii) offset by an impairment reversal of $506;
and all other expenses related to general working capital purposes.
Net loss of $3,881 principally relates to (i) stock-based compensation of $1,179; (ii)
professional fees of $126; (iii) office expenses of $439; (iv) offset by interest income of $34; (v)
unrealized loss of $1,374 on short-term investments resulting from a mark to market
adjustment on July 31, 2011; and (vi) loss on foreign exchange of $497. All other expenses
related to general working capital purposes.
Net loss of $2,082 principally relates to (i) stock-based compensation of $1,657; (ii)
professional fees of $144; (iii) office expenses of $638; (iv) offset by interest income of $16; (v)
shareholder relations and filing fees of $152; (vi) offset by an unrealized gain of $990 on shortterm investments resulting from a mark to market adjustment on April 30, 2011; (vii) offset by a
gain on foreign exchange of $1,790; (viii) warrant revaluation loss of $2,161. All other
expenses related to general working capital purposes.
Net income of $2,981 principally relates to (i) stock-based compensation of $2,819; (ii)
professional fees of $179; (iii) office expenses of $545; (iv) offset by interest income of $27; (v)
shareholder relation and filing fees of $57; (vi) offset by an unrealized gain of $1,937 on shortterm investments resulting from a mark to market adjustment on January 31, 2011; (vii)
warrant revaluation gain of 4,219; and (viii) gain on foreign exchange of $602. All other
expenses related to general working capital purposes.
Net loss of $1,303 principally relates to (i) stock-based compensation of $1,021; (ii)
professional fees of $261; (iii) office expenses of $515; (iv) offset by interest income of $129;
(v) transfer, listing and filing fees of $8; and (vi) offset by an unrealized gain of $1,223 on shortterm investments resulting from a mark to market adjustment on October 31, 2010. All other
expenses related to general working capital purposes.
Net loss of $979 principally relates to (i) stock-based compensation of $300; (ii) professional
fees of $112; (iii) office expenses of $388; (iv) offset by interest income of $79; (v) offset by a
-11-
(8)
(9)
foreign exchange gain of $316; and (vi) an unrealized loss of $266 on short-term investments
resulting from a mark to market adjustment on July 31, 2010. All other expenses related to
general working capital purposes.
Net loss of $3,009 principally relates to (i) stock-based compensation of $2,129; (ii)
professional fees of $292; (iii) office expenses of $492; (iv) offset by interest income of $183;
and (v) offset by unrealized income of $187 on short-term investments resulting from a mark to
market adjustment on April 30, 2010. All other expenses related to general working capital
purposes.
Amounts are in Canadian dollars.
Results of operations
Use of proceeds from the financing by short form prospectus dated January 19, 2010
The Company's activities do have considerable scope for flexibility in terms of the amount and timing of
exploration expenditure, and expenditures may be adjusted accordingly. The Company had originally budgeted approximately Cdn $68 million for its use of proceeds as disclosed
in the short form prospectus dated January 19, 2010. In fiscal 2010, the Company spent approximately
Cdn $34 million, leaving a remaining balance of approximately Cdn $34 million. The Company
subsequently revised its budget requiring it to spend approximately Cdn $71 million. Specific items within
the budget and a comparison to actual are outlined in the table below:
Use of Proceeds
Hydroelectric Study at the Aurora Project
Continue Phase II of Pre-Development
Study
Initiate building of access road to Aurora
Project, site roads and civil works
Initiate building of Buckhall Port facilities,
airstrip and river dyke for the Aurora
Project
Initiate mobile equipment purchase and
establishment of new camp, cookery and
guardhouse at the Aurora Project
Initiate power plant and fuel storage
equipment purchases at the Aurora
Project
Ongoing exploration work, drilling and
assaying of Aranka properties
General corporate expenses
Total(1)
Budget (approx.)
(In 000’s of Cdn
dollars)
$
380
Spent (2)
(approx.)
(In 000’s of Cdn
dollars)
$
367
Under (Over) Budget
(approx.)
(In 000’s of Cdn
dollars)
$
13
20,000
32,399
(12,399)
18,283
3,680
14,603
9,113
3,870
5,243
415
2,079
(1,664)
7,000
nil
7,000
10,000
7,358
2,642
5,500
70,691
5,578
$55,331
(78)
15,360
(1)
(2)
As of January 31, 2012 the Company is holding all unused proceeds of the public offering
(including the over-allotment) at a major Canadian chartered bank and financial institutions in
Guyana and Barbados; and
Column includes expenditures from November 1, 2010 to January 31, 2012.
-12-
The Company was under budget by approximately Cdn$15 million in aggregate. Phase II of the predevelopment study was over budget by approximately Cdn$12 million and the purchase of mobile
equipment was over budget by approximately Cdn$2 million due to continued exploration activity at the
Aurora site and the advance purchase of certain earth moving equipment. Significant work has been
deferred at site with respect to the power plant pending finalization of the revised Feasibility Study.
As of January 31, 2012, although the Company’s work on the Feasibility Study was substantially
completed, efforts have commenced on the Company’s revised Feasibility Study with the goal of
identifying significant opportunities to improve the financial return on the construction and operation of the
Aurora Project gold mine.
Budget for the Aurora Project
The Company has not adopted a formal budget for fiscal 2012. The Company anticipates an ongoing
monthly cash outflow of approximately $1.5 million over the short term on the continued infrastructure
development at the Aurora Project and for general corporate expenses. Upon the expected completion of
the proposed non-brokered private placement announced on April 11, 2012 (see “Subsequent Events”),
proceeds from the financing are expected to be used towards the 2012 strategic plan and key milestones
(see “Project Development Aurora” under “Highlights and Milestones”). Once management has
completed its revised Feasibility Study later this year, the Company will prepare an overall capital and
operating cost forecast in line with the financing requirement to develop the Aurora Project.
Budget for the Aranka Properties
The Company has revised its exploration budget for Sulphur Rose and its other Aranka Properties to be
approximately $4.5 for all of fiscal 2012. During the first quarter of fiscal 2012, the Company incurred
approximately $1 million in exploration expenditures.
Three months ended January 31, 2012, compared with the three months ended January 31, 2011
The Company’s loss for the three months ended January 31, 2012 totalled $2,038, with basic and diluted
loss per share of $0.02. This compares with income for the three months ended January 31, 2011 of
$2,981 with basic and diluted income per share of $0.04. The increase of $5,019 in loss was
substantially attributable to:

Warrant revaluation gain for the three months ended January 31, 2012 was $nil (three months
ended January 31, 2011 - $4,219), a decrease of $4,219 compared to the same period in 2011.
The decrease is attributable to 1,730,000 Canadian dollar warrants that were fair valued using the
Black-Scholes option pricing model and translated into United States dollars at January 31, 2011.
These warrants were exercised during the second quarter of fiscal 2011. 
Stock-based compensation during the three months ended January 31, 2012, was $882. The
value of stock options vested and capitalized to mineral exploration properties was $530 for a net
expense of $352 (three months ended January 31, 2011 – $2,819), a decrease of $2,467
compared to the same period in 2011. During the three months ended January 31, 2012, the
Company did not issue any options compared with 1,855,000 in the comparative period. Stockbased compensation expense varies due to the calculated Black-Scholes value and vesting terms
of options issued in the current period and prior periods. The options issued vested in accordance
with the stock option plan. Users of the financial statements should be cautious of the valuation of
stock-based compensation since its calculation is subjective and can impact net earnings/loss
significantly.
Under IFRS, the Company has applied a 10% forfeiture rate in arriving at the fair value of stock
based compensation to be recognized, reflecting historical experience. Historical experience may
not be representative of actual forfeiture rates incurred.
-13-
Several variables are used when determining the value of stock options using the Black-Scholes
valuation model:




The expected life: the Company used a term close to the maximum term ascribed to
the stock options granted for the purposes of calculating their value. The Company
chose this approach because it is difficult to determine with any reasonable degree of
accuracy when these stock options will be exercised.
Volatility: the Company used historical information on the market price of its common
shares to determine the degree of volatility at the date the stock options were
granted. Therefore, depending on when the stock options were granted and the
period of historical information examined, the degree of volatility can be different
when calculating the value of different stock options.
Risk-free interest rate: the Company used the interest rate available for government
securities of an equivalent expected term as at the date of the grant of the stock
options. The risk-free interest rate will vary depending on the date of the grant of the
stock options and their expected term.
Dividend yield: the Company has not paid dividends in the past because it was in the
exploration stage and has not yet earned any significant income. Also, the Company
does not expect to pay dividends in the foreseeable future. Therefore, a dividend
rate of 0% was used for the purposes of the valuation of the stock options.
Stock options are issued to attract and retain key personnel to work for the Company.

Unrealized loss on short-term investments for the three months ended January 31, 2012, was
$310 (three months ended January 31, 2011 – unrealized gain of $1,937), an increase in loss of
$2,247 compared to the same period in 2011. The unrealized loss on short-term investments
arose from an overall decrease in the market value of the Company’s junior resource company
portfolio. 
Foreign exchange loss for the three months ended January 31, 2012, increased by $774,
compared with the same period in 2011. The increase in loss can be attributed to Guyana and
Canadian dollar exchange rate fluctuations on the Company’s cash and cash equivalent holdings.

General and administrative expenses were $332 higher in the current quarter versus the
comparable period last year. The increase can be attributable to additional professional fees
incurred in relation to negotiating the Mineral Agreement with the Government of Guyana and
higher travel costs, investor relations and payroll costs included in office expenses.
Liquidity, capital resources and business prospects
The Company does not generate cash from mining operations and therefore, it must utilize its current
cash reserves, income from short-term investments, funds obtained from stock options and other
financing transactions to maintain its capacity to meet working capital requirements and planned
expenditures, or to fund any further exploration and development activities.
On January 31, 2012, the Company’s total assets amounted to $179,984, which compares to $182,903 at
October 31, 2011 and $163,704 at November 1, 2010. Excluding cash, bank investment certificates and
short-term investments, total assets mostly consist of exploration and evaluation assets, which as at
January 31, 2012, totalled $139,181 ($130,560 at October 31, 2011; $89,426 at November 1, 2010),
being $113,778 incurred at the Aurora Project (October 31, 2011 - $106,116; November 1, 2010 $68,893), $22,426 at the Aranka Properties (October 31, 2011 - $21,275; November 1, 2010 - $12,972)
and $2,977 for other properties (October 31, 2011 - $3,169; November 1, 2010 - $7,561). The
Company’s total assets also include $6,693 ($7,135 at October 31, 2011; and $7,579 at November 1,
2010) related to property and equipment.
-14-
The Company’s total liabilities at January 31, 2012, include accounts payable to suppliers and other
accrued liabilities of $2,547 ($4,806 at October 31, 2011; November 1, 2010 - $2,474). The Company’s
cash as at January 31, 2012, is more than sufficient to satisfy these liabilities.
The Company continues to have no debt and its credit and interest rate risk is minimal. Accounts payable
and accrued liabilities are short-term and non-interest bearing.
The Company’s liquidity risk with financial instruments is minimal as excess cash is invested in short-term
guaranteed deposits. In addition, accounts receivable are composed mainly of sales tax receivable from
government authorities in Canada and deposits held with consultants and other service providers.
The Company believes it has sufficient cash resources to meet its exploration and administrative
overhead for the next twelve months. The Company anticipates an ongoing monthly cash outflow of
approximately $1.5 million over the short term on the continued infrastructure development at Aurora
Project and for general corporate expenses. The Company does not have sufficient funds to develop the
Aurora Project into a producing mine at this time. The Company intends to examine opportunities to raise
additional capital through equity markets when the funds are required (see “Subsequent Events”);
however, there can be no assurance it will be able to raise funds in the future. The Company's activities
do have considerable scope for flexibility in terms of the amount and timing of expenditure, and
expenditures may be adjusted accordingly.
The Company’s aggregate operating, investing and financing activities during the three months ended
January 31, 2012, resulted in a net cash position of $17,775 ($21,809 at October 31, 2011; $44,505 at
November 1, 2010). The Company's primary source of funding for the three months ended January 31,
2012 has been the conversion of bank investment certificates for cash and the exercise of stock options.
The Company’s working capital of approximately $31 million as of January 31, 2012, is anticipated to be
adequate for it to continue operations for the next twelve months ending January 31, 2013, at reduced
operating levels. The development of the Aurora Project will require that the Company raise significant
cash through a combination of equity and debt issuances. There can be no assurance that such
financing will be available to the Company on reasonable terms.
Off-Balance-Sheet Arrangements
As of the date of this filing, the Company does not have any off-balance-sheet arrangements that have, or
are reasonably likely to have, a current or future effect on the results of operations or financial condition of
the Company, including, and without limitation, such considerations as liquidity and capital resources.
Commitments
The recently signed Mineral Agreement and Mining Licence for the Aurora Project requires the Company
to undertake various obligations and commitments over the twenty year life of the agreements. Prior to
commercial production, in addition to ongoing reporting and compliance matters, the Company is required
to (1) commence installation of the necessary plant, machinery and buildings to the satisfaction of the
Commissioner of GGMC no later than six months or such other period as the Commissioner shall
determine in the exercise of his discretion after the date of issuance of the licence, provided that
construction adhere to a detailed mine plan approved by the Commission, and (2) submit a financing plan
for the Aurora Project. The government of Guyana has the right to terminate the agreements in the event
of default by written notice to the Company, subject to a dispute resolution process involving arbitration.
In addition to commitments otherwise reported in this MD&A, the Company’s contractual obligations as at
January 31, 2012, include:
-15-
Contractual
Obligations
Capital Lease Obligation
Total
Up to 1
year
1-3 years
4-5 years
After 5
years
$nil
$nil
$nil
$nil
$nil
$451
$155
$296
$nil
$nil
$205
$205
$nil
$nil
$nil
Other Obligations (3)
$1,417
$1,417
$nil
$nil
$nil
Total Contractual Obligations
$2,073
$1,777
$296
$nil
$nil
Operating Leases
(1)
Purchasing Obligations (2)
(1)
(2)
(3)
Related mainly to premises rent agreements;
Amounts relate to purchase contracts for capital equipment; and
Contractual commitments related to the Feasibility Study.
The Company originally acquired 100% of the mineral exploration rights to the Aurora Mine Property
pursuant to an agreement dated May 20, 1998 between the Company and Alfro Alphonso (“Alphonso”). In
March 2004, the agreement with Alphonso was amended. In lieu of Alphonso's interest and rights to
advances in and to production royalty and net smelter royalty, the Company agreed to pay Alphonso an
annual fee of $100, payable on January 2 each year, up to a maximum of $1,500. Such payments shall
be due and payable for such period that the Company maintains an interest in the property. As at January
31, 2012, total payments of $800 have been made (October 31, 2011 - $700; November 1, 2010 - $600)
and are capitalized as part of exploration and evaluation assets.
The Company is also party to certain management and consulting contracts. These contracts contain
clauses requiring additional payments to be made upon the occurrence of certain events such as contract
termination or change of control by the Company. The additional commitments for the top three
executives range up to $3,588 as a result of the change of control. As the likelihood of these events
taking place is not determinable, the contingent payments have not been reflected in the consolidated
financial statements.
Proposed Transactions
The Company evaluates various opportunities and transactions as they arise. There are no material
transactions pending at the date of this MD&A, except for the proposed non-brokered private placement
for the issuance of 8,391,069 common shares as discussed under “Subsequent Events”.
-16-
Related party transactions
(a) Remuneration of directors and key management personnel of the Company was as follows:
Three Months
Ended
January 31, 2012
$25
Three Months
Ended
January 31, 2011
$26
1140301 Ontario Limited, controlled by Alan Ferry, Director
$10
$6
Bob Bondy, Director
$10
$6
Richard Williams, Director
$10
$6
Daniel Noone, Director and V.P. Exploration of the Company
and General Manager, 2260200 Ontario Inc., geological
consulting firm
J. Patrick Sheridan, CEO and Director
$42
$39
$97
$97
Claude Lemasson, President and Chief Operating Officer
$86
$87
Paul J. Murphy, Executive Vice-President, Finance and CFO
$72
$72
$352
$339
Salaries and benefits (1)
Alexander Po, Exploration Manager and Director
(1)
Salaries and benefits include director fees. During the three months ended January 31, 2012, $144
(three months ended January 31, 2011 - $102) of salaries and benefits was capitalized to exploration and
evaluation assets.
Three Months
Ended
January 31, 2012
$16
Three Months
Ended
January 31, 2011
$106
Alan Ferry, Director
$16
$97
Bob Bondy, Director
$16
$113
Richard Williams, Director
$16
$97
Daniel Noone, Director and V.P. Exploration of the Company
and General Manager, 2260200 Ontario Inc., geological
consulting firm
J. Patrick Sheridan, CEO and Director
$nil
$92
$242
$1,502
Claude Lemasson, President and Chief Operating Officer
$81
$485
Paul J. Murphy, Executive Vice-President, Finance and CFO
$16
$240
$403
$2,732
Share-based payments
Alexander Po, Exploration Manager and Director
-17-
(b) Included in trade and other payable are the following amounts due to related parties:
January 31, 2012
January 31, 2011
J. Patrick Sheridan, CEO and Director
$nil
$49
Paul J. Murphy, Executive Vice-President, Finance and CFO
$nil
$12
1140301 Ontario Limited, controlled by Alan Ferry, Director
$11
$7
Bob Bondy, Director
$11
$7
Richard Williams, Director
$12
$7
$34
$82
The balances are non-interest bearing and are payable on demand.
(c) Included in accounts receivable is $24 owing from an officer of the Company (J. Patrick Sheridan).
(d) The Company has agreed to provide established logistical and geological support to Guyana Precious
Metals Inc. (“Guyana Precious”). The Company and Guyana Precious have signed an "Area of Influence"
agreement that restricts Guyana Precious from participating in property acquisition and development
within a defined area of the Company’s exploration and development activities in Guyana. In addition, the
Company will have a "Right of First Opportunity" to acquire advanced stage properties in which there is a
defined resource.
All the above related party transactions are in the normal course of operations and are measured at the
exchange amount, which is the amount of consideration established and agreed to by the related parties.
Changes in Accounting Policies
International Financial Reporting Standards
Impact of Adopting IFRS on the Company’s Accounting Policies
Effective the first quarter of 2012, the Company prepares its financial statements in accordance with
IFRS. Reconciliations, descriptions and explanations of how the transition to IFRS has affected the
reported financial position, financial performance and cash flows of the Company are provided in note 22,
“Explanation of Transition to IFRS”, of the unaudited condensed interim consolidated financial
statements. This note also includes reconciliations of equity and comprehensive loss for comparative
periods reported under Canadian GAAP with those reported for those periods under IFRS.
IFRS 1 First-time Adoption of International Financial Reporting Standards (“IFRS 1”), generally requires
retrospective application of IFRS from the date of transition and provides certain optional exemptions in
the application of particular standards in order to assist companies with the transition process. The
Company has elected to take the following:


To apply IFRS 2 Share-based Payments only to equity instruments issued after November 7,
2002, and that had not vested by the transition date.
To apply IFRS 3 Business Combinations prospectively from the transition date, therefore not
restating business combinations that took place prior to the transition date.
The changes to the Company’s accounting policies have resulted in certain changes to the recognition
-18-
and measurement of assets, liabilities, equity, revenue and expenses within its financial statements. The
following highlights the significant impacts of the changes in accounting policies on the comparative
results for the period ended January 31, 2011:
(i) Functional Currency Assessment
IFRS requires that the functional currency of each entity in the consolidated group be determined
separately in accordance with IAS 21 and the entity’s financial results and position measured using the
currency of the primary economic environment in which the entity operates (“the functional currency”).
The factors considered to determine functional currency under IFRS are somewhat different than
previous Canadian GAAP. Effective with the Company’s conversion to IFRS on November 1, 2010, the
Company adopted the United States dollar as its functional currency. At January 31, 2011 the change in
functional currency reduced both total assets and total liabilities and equity by $2,855, after reducing loss
and comprehensive loss for the period by $909.
(ii) Derivative liability
Under IFRS, foreign currency denominated contracts issued by an entity that are indexed to its own
equity instruments are treated as derivatives. This applies to the Company’s Canadian dollardenominated share purchase warrants as the United State dollar is the Company’s functional currency;
the warrants being indexed to both the Company’s stock and also to foreign exchange rates. Accordingly,
the share purchase warrants were reclassified from equity to liabilities and a fair value revaluation gain of
$4,219 was recorded at January 31, 2011.
(iii) Stock options
IFRS requires that the cost associated with stock based compensation be subject to graded vesting and
have each vesting instalment recognized proportionately over the vesting period. Under previous
Canadian GAAP stock based compensation expense was recognized on the vesting date. Forfeiture of
stock option awards were recognized as they occur under Canadian GAAP whereas IFRS requires the
Company to estimate the forfeiture rate at the time of grant and adjust the expense if actual forfeitures are
likely to differ from the estimate. Overall for the Company, IFRS accounting requirements have resulted in
the acceleration of stock-based compensation expense compared to vesting expense recognized under
previous Canadian GAAP. The Company has retrospectively applied IFRS 2 and elected the IFRS 1
optional exemption relating to equity instruments issued after November 7, 2002 that have not vested as
of the transition date November 1, 2010. For the three months ended January 31, 2011, the accounting
under IFRS increased exploration and evaluation assets, stock options, and stock-based compensation
expense by the amount of $392, $1,310 and $877, respectively, while contributed surplus decreased by
$41.
Impact of Adopting IFRS on the Company’s Business
The adoption of IFRS has resulted in some changes to Guyana Goldfield’s accounting systems and
business processes. However, the impact has been minimal. The Company has not identified any
contractual arrangements that are significantly impacted by the adoption of IFRS. The Company's staff
and advisers involved in the preparation of financial statements have been appropriately trained on the
relevant aspects of IFRS and the changes to accounting policies.
The Board of Directors and Audit Committee have been regularly updated throughout the Company’s
IFRS transition process, and are aware of the key aspects of IFRS affecting the Company.
Future accounting pronouncements
Certain pronouncements were issued by the IASB or the International Financial Reporting Interpretations
Committee (“IFRIC”) that are mandatory for future accounting periods. Many are not applicable or do not
have a significant impact to the Company and have been excluded from the table below. The following
have not yet been adopted and are being evaluated to determine their impact on the Company.
-19-
(i) IFRS 9 – Financial instruments (“IFRS 9”) was issued by the IASB in October 2010 and will replace IAS
39 - Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a single approach to
determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple
rules in IAS 39. Most of the requirements in IAS 39 for classification and measurement of financial
liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment
method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual
periods beginning on or after January 1, 2013 earlier application permitted.
(ii) IFRS 10 – Consolidated financial statements (“IFRS 10”) was issued by the IASB in May 2011. IFRS
10 is a new standard which identifies the concept of control as the determining factor in assessing
whether an entity should be included in the consolidated financial statements of the parent company.
Control is comprised of three elements: power over an investee; exposure to variable returns from an
investee; and the ability to use power to affect the reporting entity’s returns. IFRS 10 is effective for
annual periods beginning on or after January 1, 2013. Earlier adoption is permitted.
(iii) IFRS 11 – Joint arrangements (“IFRS 11”) was issued by the IASB in May 2011. IFRS 11 is a new
standard which focuses on classifying joint arrangements by their rights and obligations rather than their
legal form. Arrangements are classified into two groups: parties having rights to the assets and
obligations for the liabilities of an arrangement, and parties having rights to the net assets of an
arrangement. Entities in the former case account for assets, liabilities, revenues and expenses in
accordance with the arrangement, whereas entities in the latter case account for the arrangement using
the equity method. IFRS 11 is effective for annual periods beginning on or after January 1, 2013. Earlier
application is permitted.
(iv) IFRS 12 – Disclosure of interests in other entities (“IFRS 12”) was issued by the IASB in May 2011.
IFRS 12 is a new standard which provides disclosure requirements for entities reporting interests in other
entities, including joint arrangements, special purpose vehicles, and off balance sheet vehicles. IFRS 12
is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted.
(v) IFRS 13 – Fair value measurement (“IFRS 13”) was issued by the IASB in May 2011. IFRS 13 is a
new standard which provides a precise definition of fair value and a single source of fair value
measurement considerations for use across IFRSs. IFRS 13 is effective for annual periods beginning on
or after January 1, 2013. Earlier application is permitted.
(vi) In October 2011, the IASB issued IFRIC 20 - Stripping Costs in the Production Phase of a Surface
Mine. This interpretation requires the capitalization and depreciation of stripping costs in the production
phase if an entity can demonstrate that it is probable future economic benefits will be realized, the costs
can be reliably measured and the entity can identify the component of the ore body for which access has
been improved. Application of this interpretation is effective for annual periods beginning on or after
January 1, 2013, with earlier application permitted.
(vii) IAS 1 – Presentation of financial statements (“IAS 1”) was amended by the IASB in June 2011 in
order to align the presentation of items in other comprehensive income with US GAAP standards. Items in
other comprehensive income will be required to be presented in two categories: items that will be
reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement
of comprehensive income as one statement or two separate statements of profit and loss and other
comprehensive income remains unchanged. The amendments to IAS 1 are effective for annual periods
beginning on or after July 1, 2012.
Critical Accounting Estimates
The preparation of the unaudited consolidated interim financial statements requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities and contingent liabilities at the date of the unaudited consolidated interim
financial statements and reported amounts of revenues and expenses during the reporting period.
-20-
Estimates and assumptions are continually evaluated and are based on management's experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. However, actual outcomes can differ from these estimates.
Areas of judgment and estimation uncertainty that have the most significant effect on the amounts
recognized in the unaudited consolidated interim financial statements are as follows:
Impairment of assets
Events or changes in circumstances can give rise to significant impairment charges or reversals of
impairment in a particular year.
The Company assesses its cash generating units annually to determine whether any indication of
impairment exists. Where an indicator of impairment exists, an estimate of the recoverable amount is
made, which is the higher of the fair value less costs to sell and value in use. The determination of the
recoverable amount requires the use of estimates and assumptions such as long-term commodity prices,
discount rates, future capital requirements, exploration potential and future operating performance. Fair
value is determined as the amount that would be obtained from the sale of the asset in an arm’s length
transaction between knowledgeable and willing parties. Fair value for exploration and evaluation assets is
generally determined as the present value of estimated future cash flows arising from the continued use
of the asset, which includes estimates such as the cost of future expansion plans and eventual disposal,
using assumptions that an independent market participant may take into account. Cash flows are
discounted by an appropriate discount rate to determine the net present value.
Provisions for decommissioning and site restoration costs
Provision is made for environmental remediation costs when the related environmental disturbance
occurs, based on the net present value of estimated future costs. The ultimate cost of environmental
disturbance is uncertain and cost estimates can vary in response to many factors including changes to
the relevant legal requirements and the emergence of new restoration techniques. The expected timing
of expenditure can also change, for example, in response to changes in ore reserves or production rates
or economic conditions. As a result there could be significant adjustments to the provision for
decommissioning and site restoration, which would affect future financial results.
The Company assesses its provisions for decommissioning and site restoration costs using the
information available as at the yearend date, unless significant differences are identified in the interim
period. Significant estimates and assumptions are made in determining the provisions for
decommissioning and site restoration costs, as there are numerous factors that will affect the ultimate
liability amount. These factors include estimates of the extent and costs of rehabilitation activities,
technological changes, regulatory changes, cost increases and changes in discount rates. Those
uncertainties may result in future actual expenditures differing from the amounts provided. At January 31,
2012 and October 31, 2011, no provision for environmental disburses was required. The provision at the
consolidated balance sheet date represents management's best estimate of the present value of the
future rehabilitation costs required. Changes to estimated future costs are recognized in the consolidated
balance sheet by adjusting the rehabilitation asset and liability when required. If the revised mine assets
net of rehabilitation provisions exceeds the carrying value, that portion of the increase is charged directly
to expense.
Recovery of potential deferred tax assets
The Company has carried forward losses that have the potential to reduce tax payments in future years.
Judgment is required in determining whether deferred tax assets are recognized in the unaudited
consolidated interim financial statements. Deferred tax assets, including those arising from un-utilized tax
losses, require management to assess the likelihood that the Company will generate taxable earnings in
future periods in order to utilize recognized deferred tax assets. Estimates of future taxable income are
based on forecasted cash flows from operations and the application of existing tax laws in each
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jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the
ability of the Company to realize the net deferred tax assets recorded at the consolidated balance sheet
date could be impacted.
Additionally, future changes in tax laws in the jurisdictions in which the Company operates could limit the
ability of the Company to obtain tax deductions in future periods.
At January 31, 2012 and October 31, 2011, the Company has not recognized any deferred tax assets.
Contingencies
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur.
The assessment of contingencies inherently involves the exercise of significant judgment and estimates
of the outcome of future events.
Fair value of share based payments
Determining the fair value of certain share based payments involves estimates of interest rates, expected
life of options, expected forfeiture rate, share price volatility and the application of the Black-Scholes
option pricing model. The Black-Scholes option pricing model requires the input of highly subjective
assumptions that can materially affect the fair value estimate.
Outlook
The Company has as its main asset the Aurora Project, which is a development and advanced stage
project. In addition, the Company has the Aranka Properties, in particular, the Sulphur Rose, N-1, S-3 and
Wynamu prospect properties. As such, the outlook for the Company is strongly tied to successful
development of the Aurora Project and drilling the Aranka Properties.
Capital Management
The Company manages its capital with the following objectives:
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to ensure sufficient financial flexibility to achieve the ongoing business objectives including
funding of future growth opportunities, and pursuit of accretive acquisitions; and
to maximize shareholder return through enhancing the share value.
The Company monitors its capital structure and makes adjustments according to market conditions in an
effort to meet its objectives given the current outlook of the business and industry in general. The
Company may manage its capital structure by issuing new shares, repurchasing outstanding shares,
adjusting capital spending, or disposing of assets. The capital structure is reviewed by management and
the Board of Directors on an ongoing basis, and is believed to be appropriate given the relative size of the
Company.
The properties in which the Company currently has an interest are in the exploration or feasibility stage.
As such the Company is dependent on external financing to fund its activities. In order to carry out its
planned exploration programs and pay for administrative costs, the Company will attempt to spend its
existing working capital and raise additional amounts as needed.
In light of the above, the Company will continue to assess new properties and seek to acquire an interest
in additional properties if it believes there is sufficient potential and if it has adequate financial resources
to do so.
The Company considers its capital to be equity, comprising share capital, stock options, contributed
surplus and accumulated deficit which at January 31, 2012 totalled $177,437 (October 31, 2011 -
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$178,097; November 1, 2010 - $149,892). The Company manages capital through its financial and
operational forecasting processes. The Company reviews its working capital and forecasts its future cash
flows based on operating expenditures, and other investing and financing activities. The forecast is
regularly updated based on exploration and development activities. Selected information is frequently
provided to the Board of Directors of the Company. The Board of Directors does not establish quantitative
return on capital criteria for management but rather relies on the expertise of the Company's management
team to sustain the future development of the business. The Company’s capital management objectives,
policies and processes have remained unchanged during the three months ended January 31, 2012.
Property and Financial Risk Factors
The Company’s activities expose it to a variety of financial risks: liquidity risk, market risk (including
interest rate, currency rate and price risk) and credit risk.
Risk management is carried out by the Company's management team with guidance from the Board of
Directors. The Board of Directors also provides regular guidance for overall risk management.
(a) Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial
obligations as they come due. The timeline to build the Aurora Property into a producing mine is
dependent on a positive revised Feasibility Study and adequate project financing. There can be no
assurance the planned financing activities of the Company will be successful in raising adequate capital.
The Company’s liquidity and operating results may be adversely affected if its access to the capital
market is hindered, whether as a result of a downturn in stock market conditions generally or as a result
of conditions specific to the Company. The Company generates cash flow primarily from its financing
activities and interest income earned on its cash and bank investment certificates. The Company has
cash of $17,775 (October 31, 2011 - $21,809; November 1, 2010 - $44,505) to settle current liabilities of
$2,547 (October 31, 2011 - $4,806; November 1, 2010 - $13,812). The Company regularly evaluates its
cash position to ensure preservation and security of capital as well as maintenance of liquidity. All of the
Company's financial liabilities are subject to normal trade terms.
(b) Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial
instruments will significantly fluctuate due to changes in market prices. The value of the financial
instruments can be affected by changes in interest rates, foreign exchange rates, and equity prices. In the
normal course of business, the Company is exposed to market risks as a result of its investments in
publicly traded companies. During periods of significant broader market volatility or volatility experienced
by the resource/commodity markets, the value of the Company’s investment portfolio can be vulnerable to
market fluctuations. Sensitivity to a plus or minus 10% change in the bid price of the Company’s
investments in public companies with all other variables held constant would not have a material impact
on the earnings (loss) and comprehensive income (loss) for the three months ended January 31, 2012.
Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial
instruments will fluctuate because of changes in foreign exchange rates. The Company's functional
currency is the United States dollar and major purchases are transacted in United States dollars. The
Company funds certain operations, exploration and administrative expenses in Guyana on a cash call
basis using United States dollars converted from its Canadian dollar bank accounts held in Canada. The
Company maintains Canadian and United States dollar bank accounts in Canada and Guyanese bank
accounts in Guyana. The Company is subject to gains and losses due to fluctuations in the Canadian and
Guyanese dollar against the United States dollar. Sensitivity to a plus or minus 10% change in all foreign
currencies (Guyanese and Canadian dollars) against the United States dollar with all other variables held
constant as at January 31, 2012, would affect earnings (loss) and comprehensive income (loss) by
approximately $1,324 (October 31, 2011 - $1,087).
Interest rate risk is the impact that changes in interest rates could have on the Company’s earnings and
assets. In the normal course of business, the Company is exposed to interest rate fluctuations as a result
of cash equivalents being invested in interest-bearing instruments. Interest rate risk is minimal as certain
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of the Company's interest-bearing instruments have fixed interest rates. Sensitivity to a plus or minus 1%
change in the interest rate with all other variables held constant as at January 31, 2012, would affect
earnings (loss) and comprehensive income (loss) by approximately $30 (October 31, 2011 - $30).
(c) Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations.
The Company's credit risk is primarily attributable to cash, bank investment certificates, restricted cash
and accounts receivable. The Company has no significant concentration of credit risk arising from
operations. Cash, bank investment certificates and restricted cash are held with financial institutions, from
which management believes the risk of loss to be minimal. Accounts receivable include accrued interest
and deposits held with consultants and other service providers; approximately $247 represents the
maximum credit exposure (October 31, 2011 - approximately $194; November 1, 2010 - approximately
$255). Accounts receivable are in good standing as of January 31, 2012. Management believes that the
credit risk concentration with respect to accounts receivable is minimal.
(d) Fair value
As at January 31, 2012, the fair value of short-term investment totalling $1,987 (October 31, 2011 $2,417; November 1, 2010 - $1,015) are measured based on level 1 of the fair value hierarchy (October
31, 2011 - same; November 1, 2010 - same).
As at January 31, 2012, the carrying value and fair value amounts of the Company's financial instruments
were approximately equivalent.
Multilateral Instrument 52-109 Disclosure
The Company’s CEO and CFO are responsible for the design and effectiveness of disclosure controls
and procedures (“DC&P”) and the design of Internal Controls over Financial Reporting (“ICFR”) to provide
reasonable assurance that material information related to the Company, including its consolidated
subsidiaries, is made known to the Company’s certifying officers. The Company’s controls are based on
the COSO framework. The Company’s CEO and the CFO have evaluated the design and effectiveness of
the Company’s DC&P as of January 31, 2012, and has concluded that these controls and procedures are
effective in providing reasonable assurance that material information relating to the Company is made
known to them by others within the Company. The CEO and CFO have also evaluated the design and
effectiveness of the Company’s ICFR as of January 31, 2012, and concluded that these controls and
procedures are effective in providing reasonable assurance that financial information is recorded,
processed, summarized and reported in a timely manner.
During the current period there have been no changes in the Company’s DC&P or ICFR that materially
affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
Outstanding Share Data
At the date of this MD&A, the issued and outstanding Common Shares totalled 84,091,425. Options
outstanding amounted to 7,754,958 at the date of this MD&A.
Risk Factors
An investment in the securities of the Company is highly speculative and involves numerous and
significant risks. Such investment should be undertaken only by investors whose financial resources are
sufficient to enable them to assume such risks and who have no need for immediate liquidity in their
investment. Prospective investors should carefully consider the risk factors that have affected, and which
in the future are reasonably expected to affect, the Company and its financial position. Please refer to the
section entitled "Risk factors" in the Company's annual MD&A dated January 26, 2012 (the “Annual
MD&A”), available on SEDAR at www.sedar.com.
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In addition to the risks outlined in the Company’s Annual MD&A, Guyana Goldfields has identified the
extreme volatility occurring in the financial markets as at the date hereof as a significant risk for the
Company. As a result of the market turmoil, investors are moving away from assets they perceive as risky
to those they perceive as safe and less risky. Companies like Guyana Goldfields are considered risk
assets and as mentioned above are highly speculative. The volatility in the markets and investor
sentiment may make it difficult for Guyana Goldfields to access the capital markets in order to raise the
capital it will need to fund its current level of expenditures.
The Company is also required to perform various obligations and commitments for the Aurora Project
under the Mineral Agreement and Mineral Licence signed November 18, 2011. Please refer to the
section entitled “Commitments”. Failure to comply with applicable requirements under the agreements
may result in default proceedings against the Company, followed by the enactment of a prescribed
dispute resolution process, which could result in the termination of the agreements. There could be no
assurance that the Company would be successful in arbitrating any default notice and in maintaining the
Mineral Agreement and Mining Licence for the Aurora Project.
Subsequent events
The Company announced on February 24, 2012 details of its Feasibility Study on the Aurora Project. The
supporting National Instrument 43-101 Technical Report is available at www.sedar.com and on the
Company’s web site. The Feasibility Study requires the application of mining standards, actual vendor
quotations for the capital and operating costs parameters, and detailed analysis of the related testing and
engineering for the construction of the Aurora Project gold mine, capable of being developed at a
sufficient return to justify the capital and managerial resources that must be committed. The Feasibility
Study identified 4.6 million ounces of contained gold in the proven and probable reserve category from a
combined open pit and underground mining scenario over a twenty two year life of mine. The Company
has commenced the process of executing a revised Feasibility Study which is designed to identify
significant opportunities to improve the financial return on the construction and operation of the Aurora
Project gold mine. Upon completion of the revised Feasibility Study later this year, the Board of Directors
of the Company is expected to approve the development of the project.
On April 5, 2012, 1,775,000 stock options with an exercise price of $3.01 per share and expiry date of
April 5, 2017 were granted to various service providers. These stock options shall vest as follows: (i) as to
25% immediately on the date of grant; (ii) as to 25% on the six month anniversary of the date of grant; (iii)
as to 25% on the twelve month anniversary of the date of grant; and (iv) as to 25% on the eighteen month
anniversary of the date of grant.
On April 11, 2012, the Company announced a non-brokered private placement pursuant to which the
Company proposes to issue 8,391,069 common shares at a price of $2.91 per share for aggregate gross
proceeds of approximately $24,418,010. The Baupost Group, L.L.C., an institutional investor, has agreed
to purchase 7,891,069 common shares in the private placement for approximately $22,963,010 in
aggregate proceeds. Upon closing of the private placement, The Baupost Group will hold approximately
18.3% of the Company’s common shares and will have the right to appoint an independent director to the
Company’s Board of Directors. In addition, Patrick Sheridan Jr., the Chief Executive Officer and Interim
President & Chief Operating Officer of GGI, has agreed to purchase 500,000 common shares in the
private placement for $1,455,000 in aggregate proceeds. The offering is scheduled to close on or about
April 24, 2012, and is subject to a number of conditions, including, without limitation, receipt of all
regulatory approvals, including the approval of the Toronto Stock Exchange, and completion of definitive
documentation. The shares issued upon the closing of the private placement will be subject to a 4-month
hold period. The net proceeds of the private placement are expected to be used towards the Company’s
execution of its 2012 strategic plan and to continue exploration of the Company's portfolio of gold
exploration properties in Guyana, South America.
Forward-Looking Statements and Additional Information
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Except for statements of historical fact relating to the Company, certain information contained in this
MD&A constitutes “forward-looking information” under Canadian securities legislation. Forward-looking
information includes, but is not limited to, statements with respect to the potential of the Company’s
properties; the future price of gold; results of the revised Feasibility Study for the Aurora Project; success
of exploration activities; cost and timing of future exploration and development; the estimation of mineral
resources; conclusions of economic evaluations; requirements for additional capital and other statements
relating to the financial and business prospects of the Company. Generally, forward-looking information
can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not
expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not
anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions,
events or results “may”, “could”, ”would”, “might” or “will be taken”, “occur” or “be achieved”. Forwardlooking information is inherently subject to known and unknown risks, uncertainties and other factors that
may cause the actual results, level of activity, performance or achievements of the Company to be
materially different from those expressed or implied by such forward-looking information, including but not
limited to risks related to:
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the Company’s goal of creating shareholder value by concentrating on the acquisition and
development of properties that have the potential to contain economic gold deposits;
the content of the Feasibility Study regarding the Aurora Project;
future plans for the Aurora Project and other property interests held by the Company or which
may be acquired on a going forward basis, if at all;
any of the results of the revised Feasibility Study for the Aurora Project;
management’s outlook regarding future trends;
the Company’s ability to meet its working capital needs at the current level in the short term; and
governmental regulation and environmental liability.
Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of
management made in light of its experience and its perception of trends, current conditions and expected
developments, as well as other factors that management believes to be relevant and reasonable in the
circumstances at the date that such statements are made, and are inherently subject to known and
unknown risks, uncertainties and other factors that may cause the actual results, level of activity,
performance or achievements of the Company to be materially different from those expressed or implied
by such forward-looking information, including but not limited to risks related to: unexpected events and
delays during permitting; the possibility that future exploration results will not be consistent with the
Company’s expectations; successful execution of the revised Feasibility Study; timing and availability of
external financing on acceptable terms and in light of the current decline in global liquidity and credit
availability; failure by the Company to adhere to the Mineral Agreement and Mineral Licence; uncertainty
of mineral resources; future prices of gold; currency exchange rates; government regulation of mining
operations; failure of equipment or processes to operate as anticipated; risks inherent in gold exploration
and development including environmental hazards, industrial accidents, unusual or unexpected
geological formations; and uncertain political and economic environments. Although management of the
Company has attempted to identify important factors that could cause actual results to differ materially
from those contained in forward-looking information, there may be other factors that cause results not to
be as anticipated, estimated or intended. There can be no assurance that such statements will prove to
be accurate, as actual results and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on forward-looking information. The
Company does not undertake to update any forward-looking information, except in accordance with
applicable securities laws.
Additional information relating to the Company, including its Annual Information Form for the most
recently completed fiscal year, is available on SEDAR at www.sedar.com.
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