Sunday, May 31, 2015

Geopolitics and Mining; Guyana Edition

When I first became interested in the mining sector I was focused, almost solely, on a projects technical merit, how many oz Au, at what grade, vein system etc. I looked at drill results, pre-feas studies and just about every other piece of technical data that a company released. When I first became interested in the mining sector... I was only considered whether "Project X" could become a producing and profitable mine at some point in the future.

As I have followed the industry over the years Geopolitics became important. I was really into RoxGold in Burkino Faso, which was touted as being as safe as they come in Africa; then they burnt down Parliament. Costa Rica was the jewel on Central America, then they shut down a few Canadian Companies for environmental concerns.

Just two examples, but I learned that most of the world is a volatile place, where things can change quickly and without much warning, especially when your interest in a country stems from the investment you made in a Junior miner and not any actual interest in a countries political climate per se.

Now as anyone who occasionally browses this blog is surely aware of, I follow a sketchy little company called Mahdia Gold (read here for back story). These guys were the guys who were going to re-open the old Omai mine, process the tailings left behind, and further quantify the historical drill results they inherited to NI 43-101 standards. Of course, none of this ever happened, but I have covered this whole ordeal in depth.

Al Zaakir, the companies head honcho, was able to maintain the property, doing very little, re-negotiating payment deadlines, pushing unpaid wage scandals to the side. He was the target of a lawsuit, paid himself excessive amounts of money for his position, took a multitude of stock options but continued fairly untouched, in spite of the fact that even the companies legal obligations to the Guyana Geology and Mines Commission (GGMC) were continuously unmet.

The reason for this is simple; Political connections. Guyanese politics have been dominated, for 23 years, by the Progressive Peoples Party (PPP). The PPP's official stance was to transcend race. class, education, etc but in reality, the party is supported by, and operates for, the Indo-Guyanese (Guyanese people with either Indian or Asian descent....yes this country is located in South America). The PPP held power from 1992 too 2015; 23 years. In this time, the other demographics, mostly people of African descent, routinely complained of being marginalized. In the 23 year rule of the PPP Indo-Guyanese prospered over those Guyanese of African descent. Al Zaakir was Indo-Guyanese.

This year, an conglomeration of  six parties called the Partnership for National Unity and Alliance for Change, led by David Granger (a man with an interesting history in his own right) unseated the the PPP by roughly 5000 votes.

The political landscape has changed in Guyana. Everynow I stroll the wasteland that is Bullboards and read the MGD board. Those with the last shred of hope are giving up as they begin to realize the importance that this change in party has on the Omai project. I doubt the new party will allow it to be a marketing piece used to line the pockets of a few well connected Indo-Guyanese any longer. Mahdias form 7 is still not out and, past their payment dates, I think it is finally the end in this sad, drawn out saga.

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