Investors pile back into Guyana Goldfields on new feasibility

Guyana Goldfields (TSX: GUY) vaulted 15.8% on Thursday on almost double usual trading volumes, after raising $24.4 million in a private placement and announcing a revised feasibility study for its Aurora gold project in Guyana.

At the close the miner was trading up 15.8% at $3.52 on the Toronto big board, a penny under its highest for the day. The mining sector was generally positive with the TSX S&P Global Mining index up a solid 3.4% on the day.

Guyana Goldfields is now worth $295 million on the TSX after gaining just under 24% over the last three trading days. The counter is still showing massive losses for 2012 – its value has halved year to date.

In a statement the company, active in the South American country since 1996, said the new study could significantly improve the project’s economics with a new focus on surface mining to approximately 750m vertical depth. The new study would ditch the vertical shaft and refrigeration plant.

The current plan shows estimated initial capital costs for surface and open pit operations at Aurora of $525 million with production kicking off late 2014.

The new study is expected to be completed in the fourth quarter. Aurora has a current measured and indicated resource of 5.71 million ounces gold (47.040 million tonnes at a grade of 3.83 g/t).

Guyana Goldfields was granted a licence in November. It’s the South American nation’s only large-scale licensed gold mine development project.

Apart from the $24 million raised from The Baupost Group which will now hold an aggregate of 16,928,669 common shares (or approximately 18.3% of the shares in issue), Guyana Goldfields CEO and founder Patrick Sheridan. Jr. also pumped $1.45 million of his own money into the company.

Click here for a detailed press release.