Way cleared for bauxite company sale to Bosai--- PM
Kaieteur News
February 13, 2007
An agreement has been reached to allow for Chinese firm Bosai Minerals to acquire 70 percent shares in Omai Bauxite Mining Inc. (OBMI) through a US$46 million share purchase agreement with IAMGOLD, a Canadian firm.
Prime Minister Samuel Hinds told Kaieteur News last night that an amicable agreement had been reached and that Government was retaining its 30 percent share holding in OBMI.
The Prime Minister said that details of the agreement will soon be made public.
He stated that the Government was awaiting confirmation from Bosai, since the 12-hour difference in time zones prevented the Government from contacting the Chinese during the day.
Two weeks ago, IAMGOLD urged an amicable resolution regarding the deal, since the Government had expressed some concern about the Block 37 property, with its large bauxite reserve, and which was integral to the deal with the Chinese firm.
President Bharrat Jagdeo, prior to his visit to Russia, had stated the administration's intention to ensure that any company granted the assets contained in Block 37 would not sit on the bauxite deposits or mine the reserves in a manner inimical to the interests of Guyana.
It is unclear under the new agreement, how Block 37 would have been utilised, if it was included in the approved arrangement.
On December 22, IAMGOLD notified the Government that it had entered into a conditional share and purchase agreement with Bosai, through which the Chinese-based company will acquire 70 percent interest and shares of OBMI.
The deal with Bosai is subject to the conditions of the shareholders' agreement between Cambior, the National Industrial and Commercial Investments Limited (NICIL) and OBMI.
NICIL represents the Government's 30 percent stake in OBMI.
NICIL is required, under the Shareholders Agreement, to either exercise its right of first refusal or elect to purchase the offered shares within 30 days of the receipt of notice of the conditional share purchase agreement, or to waive this right.
The Canadian firm had stated that it was looking forward to the Government, through NICIL, either waiving its right of first refusal and consenting to the purchase of OBMI by Bosai, or exercising that right by matching the offer received from Bosai.
However, Government's only bone of contention was the use of Block 37.
Government was considering the deal, both as a regulator and as a shareholder, and should have responded by January 22.
Instead, it sought more time to consider the proposal, and secured February 12 as the new deadline for a response.
OBMI has a valid Prospecting License (PL) to the property, and had warned that Block 37 was an integral part of the shareholders' agreement between Cambior -- which was later bought by IAMGOLD -- and NICIL, and is part of the share purchase agreement with Bosai.
In a press statement, OBMI said that it has complied with its obligations regarding Block 37, and noted that Cambior had relinquished to the Government its rights held for two other properties, at Bamia-Moblissa and Tiger Jump.
Opposition Leader Robert Corbin, during the debate on a Parliamentary Motion to discuss the sale, had warned of the implications of allowing Bosai, which has had to compete with calcined bauxite produced here by OBMI.
He warned that the Chinese could choose to minimise production here or shut down the operations entirely, to allow their bauxite to dominate the global market.
IAMGOLD, while still operating as Cambior, informed the Government in June last year, of its intention to dispose of its interest in OBMI because of the substantial losses it incurred.
OBMI had said that it had acquired a financially troubled operation at Linden, but subsequently invested some US$70 million in plant and working capital in its operation, which continues to incur operational losses.
It is estimated that when the sale to BOSAI is concluded, IAMGOLD will still record a loss in excess of US$30 million after the assumption and transfer of OBMI's outstanding debts.
OBMI said that the Government and NICIL were kept fully informed of the worldwide search conducted by the investment bank of BMO Capital Markets for an investor ready to continue mining operations.