GGMC drags foot in collecting outstanding $2B from Mahdia Gold

Apr 20, 2016 News

Almost five years ago, Canadian-owned Mahdia Gold Corp. acquired a large portion of the Omai gold

Sacked Managing Director: Sheik Mohamed Zaakir

mine property, in Region Eight, following proposals from a number of investors to the Guyana Geology and Mines Commission (GGMC).
The property is believed to still hold a large deposit of gold with Mahdia Gold’s intention to capitalize. However, the company appears to be in trouble now, owing the Government of Guyana almost $2B (US$10M) for the acquisition of the property.
There are burning questions why the GGMC and previous administration under the People’s Progressive Party/Civic (PPP/C) failed to move in and collect the monies, or at the very least ensure that the company met its obligations.
Although Minister of Natural Resources, Raphael Trotman, was not immediately available for a comment yesterday, a GGMC official indicated that a report is being prepared for the minister on the Omai property and Mahdia Gold.
GGMC had written former Minister of Natural Resources, Robert Persaud, asking for advice on the monies owed by Mahdia Gold, but no action was taken.
Last week, the company sacked its Managing Director, Sheik Alan Zaakir, with Donald Gordon, the Interim Chief Executive Officer (CEO) and a Director of Mahdia Gold Corp, tendering his resignation.
Yesterday, Mahdia Gold published a notice in Kaieteur News, warning that Zaakir, its previous manager, is not authorized to conduct any business on its behalf.
The company also issued a statement naming Michael Smith as the new director and CEO. He is tasked with the day to day operations of the company, both in Canada and in Guyana.
A number of other appointments were also announced.

An overhead shot of the Omai site, Region Eight.

The new CEO in the statement yesterday said that the challenges facing Mahdia are manageable. “We know what work lies ahead, and we now have a very capable and motivated team prepared and able to do what is needed to regain our trading status.  With a world class asset, our goal is to secure and manage our cash flow from on-site partnering operations, while rebuilding the confidence once invested in the Company by the government and people of Guyana — as well as our valued shareholders.”
Mahdia Gold said that it will work closely with GGMC to ensure that obligations are met for the future.
“I pledge to all of our stakeholders that Mahdia’s new management will work to move the company forward, but also attend to stakeholder concerns of the past. We are working with regulators and Government Authorities in Canada and Guyana to uncover actions that caused the company, and the Omai mine, to fall into its current position. We continue to feel very encouraged by the prospects of bringing the Omai mine back to life again and are committed to ensuring the strongest team is working to represent our shareholders.”
As of August 2014, the company had owed over US$14M to the Government of Guyana and creditors.
A report from the company last week said that current management visited the Omai property in August 2014 and although the company had a physical office and a number of employees there was little activity observed.
“Reports from the property ceased such that no information was provided as to whether production was occurring and if so, if sufficient to cover expenses of production and provide any funds to the company.”
As a matter of fact, the company ceased trading on March 13, 2013 for failure to file the annual audited and first quarterly statement. The Cease Trade Order followed management cease trade on the CEO for approximately two months which delayed the full cease trade order and was provided under the expectation that the Guyana information would be received.
“The current board had no means to attend the property themselves but made regular requests for the Guyana Managing Director to provide reports; however the board remained to ensure the company maintained stability in its board for the purpose of renegotiating the payment terms which were in default.”
To restore the company’s trading status it will have to obtain the information from the Guyana operations for the fiscal years ended August 31, 2014, and 2015, along with the intervening quarterly periods as well as file to the most recent quarterly for fiscal 2016.
On completion, the company will have to complete a creditor reorganization, secure its ownership of its property, ensure all its continuous disclosure obligations are met, hold its shareholder meetings for the past two years, and ultimately seek a stock exchange listing if it can meet listing requirements.
Following the visit, the company said it has been approached by persons who are proposing to join the board and take control.
The inactivity of the Omai property would raise eyebrows as it has been a number of years now that Mahdia Gold has taken possession.
Omai Gold Mines was most recently held by Iamgold after acquisition from Cambior Resources. At the time it was built, in the early nineties, Omai was the largest gold mine in South America.
In a period spanning 13 years, Omai produced over 3.7 million ounces of gold during a period when the price of gold was approximately US$300 an ounce.
Mahdia Gold believed that historical data suggests that Omai still contains significant gold deposits.