An anonymous director reports

GUYANA GOLDFIELDS INC. REPORTS 2015 YEAR-END RESULTS; PRODUCING 35,901 OZ OF GOLD OF WHICH 28,850 OZ WERE SOLD GENERATING $31M IN REVENUE AND EARNINGS OF $0.13 PER SHARE

Guyana Goldfields Inc. has released its financial results for the 12 months ended Dec. 31, 2015. (All amounts are expressed in U.S. dollars unless otherwise stated.)

Highlights for 2015:

• Advancement of the Aurora gold project.
• Commercial production at the project was declared Jan. 1, 2016.
• Gold sales for 2015 were made substantially in November and December.

For the four-month precommercial production period ended Dec. 31, 2015, the project:

• Produced (poured) 35,901 ounces of gold (within 2015 guidance range of 30,000 to 50,000 ounces);
• Sold 28,850 ounces of gold at an average realized price of $1,079 per ounce, generating $31-million in gross precommercial production revenue;
• Incurred operating costs (including royalties) of approximately $23-million over the four-month ramp-up period, generating approximately $8-million in operating profit;
• All of the above revenues and operating costs during the 2015 precommercial production period were capitalized to development costs;
• Open-pit operations at Rory's Knoll mined 1,487,000 tonnes, of which 483,000 tonnes were ore and 1,004,000 tonnes were waste; saprolite ore was the predominant ore that was mined in the quarter; blasting commenced in November, 2015, with fresh rock being encountered; the initial Rory's Knoll open pit advanced to a depth of negative 25 metres at Dec. 31, 2015;
• Average tonnes processed were 4,271 tonnes per day in the fourth quarter, with the month of December, 2015, seeing 17 days of over 5,000 tpd milled, including a record day of 6,196 tpd;
• The average head grade during the fourth quarter was 3.32 grams per tonne of gold, with recoveries averaging 91.9 per cent;
• At Dec. 31, 2015, included in development costs was approximately $10-million in gold inventory composed of the following:
  • Run-of mine stockpile of 66,000 tonnes of ore grading 2.63 grams per tonne gold;
  • In-circuit inventory containing approximately 4,817 ounces of dore;
  • Finished goods inventory of 7,328 ounces of dore available for refining;
• The block model reconciliation at Dec. 31, 2015, comparing survey volumes of actual tonnes mined versus the reserve model showed a positive variance of 27-per-cent-more ounces of gold contained in the ore mined in 2015 than predicted by the ore reserve model; it is not determinable whether this positive reconciliation will continue in the future;
• Final adjustments to project construction and development costs during the fourth quarter brought overall total development costs to $282-million versus a development budget of $277-million (that included initial development costs of $249-million, and $28-million in financing costs, preoperating costs and working capital investment).

Overview of financial results

The Tranche 1 facility of the project loan facility of $160-million (see press release dated Sept. 3, 2014) was fully advanced at Sept. 30, 2015. At Dec. 31, 2015, the company made its first principal debt repayment of $4.34-million.

The company did not need to draw on its Tranche 2 $25-million cost overrun facility to finance the construction of the project. Consequently, the Tranche 2 facility expired on Nov. 30, 2015.

As of Dec. 31, 2015, the company had a total of $27-million in overall funds available in restricted bank accounts for the project. As the company did not require their use, the $23-million residing in the owner cost overrun bank account will be deposited into debt service and mine closure restricted bank accounts at project completion. The $4-million in the project's restricted completion bank account is expected to become available.

The extended commissioning and ramp-up period in the fourth quarter of 2015 resulted in a consolidated working capital deficiency of approximately $47-million (excluding restricted cash). The company expects that the working capital deficiency will be financed from the project's operating cash flows in 2016.

At Dec. 31, 2015, the company had a total of 26.4 million litres of diesel forward contracts at an average rate of 44 cents per litre, which will settle on a net basis, covering subsequent periods that end in the third and fourth quarters of 2017.

Net income for 2015 was $20.1-million (basic and diluted income per share of 13 cents). This compares with a net loss of $12.8-million in the prior year (nine-cent basic and diluted loss per share). Net income for 2015 resulted from the recognition in the fourth quarter of approximately $28.9-million in deferred tax assets relating to tax losses available to the project and a corresponding income tax recovery.

For the fourth quarter ended Dec. 31, 2015, net income was $25.3-million (basic and diluted income per share of 16 cents). The recognition of the $28.9-million deferred tax asset in the fourth quarter this year increased earnings over the prior-year-quarter net loss of $1.7-million (basic and diluted loss per share of one cent).

The company does not believe that the 2015 financial information is representative of expected results to be achieved in 2016, as optimal operating performance has not been achieved. Operating costs are higher in the four-month ramp-up period as Guyana Goldfields transitioned from development to commercial production. As such, the processing facility had not yet consistently attained its design capacity of milling 5,000 tonnes per day, and the company expects improvements to mining, processing, and general and administrative costs to be realized in 2016. In addition, gold sales were made substantially in November and December, 2015. Extensive costs were incurred in September and October for commissioning and start-up operations.

Recent developments

In fiscal 2016 through to March 8, 2016, the company produced 29,585 ounces of gold and sold 29,137 ounces for total proceeds of $34.3-million, reflecting an average realized price of $1,177 per ounce.

In January and February, 2016, the company entered into commitments for the purchase of new mining equipment and a used Twin Otter airplane for local employee mine transport between the Aurora mine site and Georgetown, Guyana. These commitments total approximately $6.4-million.

The company believes it remains on track to achieve its production guidance for 2016 of approximately 130,000 to 150,000 ounces of gold. All-in sustaining cost guidance (assuming a gold price of $1,000 per ounce) remains unchanged and is expected to be between $587 to $637 per ounce.

The company's focus remains on optimizing gold recovery, reducing reagent consumption rates, reducing freight and equipment rental costs, and other continuous improvement initiatives designed to further improve operating efficiencies and reduce costs.

A complete set of the company's audited consolidated financial statements and related notes for fiscal 2015 and management's discussion and analysis will be posted on the company's website and were filed on March 10, 2016, on SEDAR.

We seek Safe Harbor.