Goldstone Resources

Mining



Box 2.11: Standard Fiscal Regime For Extraction of Minerals
Mining on a Large Scale:
Gold and Precious Metals, Diamonds and Precious Stones
- Royalty: 5% of production or of gross revenues
- Income Tax: 35%
- Depreciation: 20%
- Duty and Consumption Tax Concessions: Zero rating of duties and consumption tax on all equipment, process materials and spares to be used during and in the course of surveys, prospecting and mining
- No free equity to State, but the State shall have the right to nominate a member of the Board
- Withholding tax set at 6.25% of dividends
- Stability clause - for each mine developed, all conditions maintained for the duration of 15 years from the start of commercial production or the life of the deposit, whichever is shorter, then general rules for duties, income tax and withholding tax apply.

Bauxite and other Minerals (except sand and stone)
- Royalty: 1.5% of product or of gross revenues or of production costs leaving plant, whichever is greater
- All other conditions are the same as for gold
Medium and Small Scale
- Royalty: 5% of gross revenue for gold; 3% of gross revenue for diamonds
- Income tax: 2% of gross revenue, in lieu of Income Tax. If the permit holder is a corporation, corporation tax is payable at the rate of 35% of taxable income.
- Duty and Consumption exemptions on a range of items

Situated on the mineral rich Guyana Shield, Guyana has attracted international interest from the largest mining companies in the world. While the mining sector is primarily focused on gold, bauxite and diamonds, Guyana also contains deposits of semi-precious stones, laterite, manganese, kaolin, sand resources, radioactive minerals, copper, molybdenum, tungsten, iron, and nickel among others. Guyana produces high-value refractory-A grade bauxite, which is produced nowhere else except China. The mining and quarrying sector represents a critical component of Guyana’s economy, contributing to over 10 percent of GDP and accounting for approximately 40 percent of exports in 2005. In 2005, Guyana produced nearly 1.6 million metric tons of bauxite, 262,528 ounces of gold and 356,950 metric carats of diamonds.

As in other areas of the economy, the Government has looked to private industry—and international investors in particular—to expand opportunities for the bauxite sector. In 2005, the Government, in conjunction with the Canadian mining firm Cambior, established a new joint venture called Omai Bauxite Mines, Inc. for the purpose of privatizing the formerly state-held bauxite mining and processing operation, LINMINE. In this new venture, Cambior will hold a 70 percent stake with the Government assuming the remaining 30 percent share. Cambior invested US$22 million in its bauxite operations in 2005. The Government also privatized the Aroaima Mining Company (AMC), turning management control over to the Russian aluminum giant RUSAL. The Russian firm, along with the German shipping line Oldendorf, has taken over operations. Over US$80 million will be invested to upgrade the mining facilities and shipping operations. As a result of these recent investments, bauxite production is expected to rise by nearly 78 percent.

In 2005, gold production was significantly reduced as economical deposits at the Omai Gold mines were exhausted.

personal comment, The Golstone reports never gave us the qualty grade of the Bauxite....apparently the best in the world....grade A. The Russians and Canadians are upgrading their mines to the tune of $100m +...which implies that it`s a certainty that BHP will take up their option.