Concerned Shareholders of Guyana Goldfields, Analysts, and Market Pan Company's 2018 Results and New Life of Mine Plan

• Market reacts to new life of mine plan with GUY share price falling to 52-week low
• Company continues to make excuses for poor performance and execution
• Concerned Shareholders continue to evaluate Company's resource model and will share results from independent third-party review in due course

TORONTO, March 29, 2019 /CNW/ - Guyana Goldfields Inc. (TSX: GUY) ("Guyana Goldfields" or the "Company") shareholders (the "Concerned Shareholders"), together owning not less than 5% of the issued and outstanding shares of the Company, are disappointed with the Company's 2018 financial results and their new life of mine plan for the Aurora Gold Mine ("Aurora") released earlier this week.

Not surprisingly, management's missed guidance and underperformance for 2018 is reflected in their financial report.  The disappointing revenues and earnings, as reported, heighten concerns about the board of directors' ability to provide appropriate oversight over the Company's operations team.

Additionally, the Concerned Shareholders are troubled by the new life of mine plan for Aurora issued by the Company — even though it only issued one last year — which provides for a shorter life, a lower grade, higher costs, and a dramatic 43% reduction in production. 

"This much gold just doesn't disappear.  Management has yet to provide a credible explanation of why there's been a catastrophic reduction in ounces from the resource model that they initiated and signed-off on just one year ago.  They were either misleading the market then or they are misleading the market now.  Either way it is clear change is needed," said Patrick Sheridan, one of the largest shareholders and former Executive Chairman and former director of the Company. "Over the past year, they've blamed everyone and everything including mine rates, former employees, contractors, and the resource model for their performance. This, again, confirms the need for an independent board and management team to review and address the poor performance at the Aurora Gold Mine.  If they are not prepared to be transparent, our independent review will hold them accountable."

As previously announced, the Concerned Shareholders have engaged a respected independent international consulting practice specializing in the resource sector to provide a third-party review and analysis of the Company's resource model and new life of mine plan.

Of concern is that the Company's 2018 mining reserve update, that was initiated and conducted under the review of CEO Scott Caldwell and the technical committee showed an increase of reserves of 500,000 ounces from 2017. Now, in 2019, the Company is claiming 1.7 million ounces of reserves have gone missing. 

The Concerned shareholders are also concerned about the out of control costs at Aurora which will have a very dramatic impact on the open pit reserves and life. For example, mining costs have been reported at $3.43/t (which they expect to reduce to $3.01/t through contract mining), yet the 2017 feasibility study had them estimated at $2.11/t—an overrun of 50%.  Similarly, general and administrative expenses have grown from an estimated $8.52/t to now almost $11/t.

The Company's performance, with respect to costs, will lead to a smaller pit, shorter mine life, and a need for the underground development to become part of the critical development path for the continued operation. Instead of tackling the excessive operating costs in almost all areas, the current board has clearly just accepted them and written off a significant proportion of the open pit reserves. 

The third-party review is expected be completed following the Company's timely disclosure of their related technical report.

Market, Analysts React to New Life of Mine Plan

In the two days, following the announcement of the new life of mine plan, the share price of Guyana Goldfields tumbled 14.4% to $1.13, a new 52 week low.

Analysts also reacted to the news with disappointment.

"We are disappointed by the significant loss in ore tonnes with no offsetting increase in grade. This could be partly a function of new and more conservative grade capping parameters, but the details of the mine plan were not provided beyond the summary level. This is the most frustrating aspect of the update."

-  ScotiaBank

"Cash Will Be Tight in 2020…The biggest impact of the much shorter open-pit mine life means development of the underground cannot be deferred and needs to begin this year. Depending on the gold price and the timing of spending over the next 12-18 months, the company may need to restructure its debt repayments or add to its debt capacity in order to be able to fully fund the underground development capital."

-  Cormark Securities

"We had expected the company to lower its 2019/20 production forecast relative to its 2018 plan, however, the revision to reserves was more severe than we anticipated."

-  TD Securities Inc.

"Guyana Goldfields is currently in the penalty box with investors for downgrading its 2018 guidance twice throughout the year, and now completing a resource review and new LoM Plan with large declines in reserves, production, and valuation.

"…We are moving our rating and target to Under Review"

- Paradigm Capital

Learn More about the Concerned Shareholders and their Plan to Fix Guyana Goldfields

Shareholders are encouraged to visit FixGuyGold.com to learn more about the Concerned Shareholders and about their plan to stop the massive value destruction at Guyana Goldfields.

Patrick Sheridan, on behalf of the Concerned Shareholders, welcomes the opportunity to engage with fellow shareholders. Mr. Sheridan can be reached at 416-628-5904 or [email protected].

Advisors
Kingsdale Advisors is acting as strategic shareholder, communications and proxy advisor and Norton Rose Fulbright Canada LLP and Lenczner Slaght Royce Smith Griffin LLP are acting as legal advisors to the Concerned Shareholders of Guyana Goldfields Inc.

Additional Information

Information in Support of Public Broadcast Solicitation

The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable securities laws. Although the Concerned Shareholders have delivered the requisition, shareholders are not being asked at this time to execute a proxy in favour of the Concerned Shareholders' nominees (the "Nominees") or any other resolution set forth in the requisition. In connection with the meeting, the Concerned Shareholders may file a dissident information circular in due course in compliance with applicable securities laws.

Notwithstanding the foregoing, the Concerned Shareholders are voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") and section 150(1.2) of the Canada Business Corporations Act in accordance with Canadian corporate and securities laws applicable to public broadcast solicitations. In connection therewith, certain information regarding, among other things, the Nominees has been provided by the Concerned Shareholders in its press release dated January 10, 2019, (the "Nominee Announcement") under the section entitled "Information Concerning the Nominees". The Nominee Announcement has been filed by the Concerned Shareholders and is available for review on the Company's SEDAR profile at www.sedar.com. Since the Nominee Announcement, Nominees James White and Carmen Diges have each advised the Concerned Shareholders that each now beneficially own, control or direct (directly or indirectly) 35,000 and 80,000 common shares of Guyana Goldfields, respectively.

The information contained herein and any solicitation made by the Concerned Shareholders in advance of the meeting is, or will be, as applicable, made by the Concerned Shareholders and not by or on behalf of the management of Guyana Goldfields. All costs incurred for any solicitation will be borne by the Concerned Shareholders, provided that, subject to applicable law, the Concerned Shareholders may seek reimbursement from Guyana Goldfields of the Concerned Shareholders' out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with a successful reconstitution of Guyana Goldfields' board.

The Concerned Shareholders are not soliciting proxies in connection with the meeting at this time.  The Concerned Shareholders may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on behalf of the Concerned Shareholders. The Concerned Shareholders have retained Kingsdale Advisors ("Kingsdale") as its strategic shareholder, communications and proxy advisor. Kingsdale's responsibilities will principally include soliciting shareholders should the Concerned Shareholders commence a formal solicitation of proxies, providing strategic advice and advising the Concerned Shareholders with respect to the meeting and proxy protocol.  Any proxies solicited by or on behalf of the Concerned Shareholders, including by Kingsdale or any other agent, may be solicited pursuant to a dissident information circular or by way of public broadcast, including through press releases, speeches or publications and by any other manner permitted under Canadian corporate and securities laws.  Any such proxies may be revoked by instrument in writing executed by a shareholder or by his or her attorney authorized in writing or, if the shareholder is a body corporate, by an officer or attorney thereof duly authorized or by any other manner permitted by law.

The registered address of Guyana Goldfields is located at 141 Adelaide Street West, Suite 1608, Toronto, Ontario, M5H 3L5. A copy of this press release may be obtained on the Company's SEDAR profile at www.sedar.com.

SOURCE Concerned Shareholders of Guyana Goldfields Inc.

Media Contact: Kingsdale Advisors, Ian Robertson, Executive Vice President Communication Strategy, Office: 416-867-2333, Cell: 647-621-2646, [email protected]; Investor Contact: Patrick Sheridan, Office: 416-628-5904, [email protected]