Guyana Journal | Barama Negotiating Mining Contracts

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Why was Barama Negotiating Mining Contracts on its Forestry Concession?
by Seelochan Beharry
Guyana Journal, April 2007

The Forestry business world knows that Barama Company Ltd (Parent Company - Samling Group) has a forestry concession of 1.69 million hectares (1/3 of the State Production forests) in the South American nation, Guyana. What is also acknowledged is that this concession was granted to Barama with some unbelievable deals totally in favour of Barama. These giveaways in effect created a mini-State within the State of Guyana. Apparently, Barama did not hesitate to use its influence as is documented below.

What is troubling is that Dr. Marcus Colchester (Guyana Fragile Frontier, 1997, page 90) reported that: “Also in August 1996 it was revealed (Caribbean Insight, August 1996) that Golden Star Resources had entered into an agreement with the Barama Company Ltd to explore for gold and diamonds in the whole of the logging company’s 1.7 million-hectare concession, and the following month a joint exploration between Broken Hill Properties Co. (BHP) and Golden Star Resources (GRS) was revealed.” This published report has serious implications, as will be evident later in this article.

Other published sources have also mentioned this deal. Here are some of the published information (taken from various sources) on the deal between Barama and the mining Companies.

Indo Caribbean World (July 17, 1996). Detailed Guyana News - Golden Star, Barama to sign mining exploration agreement reported: “Georgetown - Golden Star Resources and the logging company, Barama, are close to signing an agreement for gold and diamond exploration in the North West District…”

Forest Peoples Programme Information Update (19 February 1997): ‘Little progress in the recognition and demarcation of Indigenous lands in Guyana’ reported’: “Two mining companies, Golden Star Resources and Broken Hill Property (BHP) Co. recently entered into a deal with the Malaysian, Barama Timber Company to prospect for gold and diamonds in Barama's timber concession. Presumably one will cut timber while the other explores or mines for minerals….”

In the USA’s Country Commercial Guide Guyana, Fiscal Year 1999 it is reported: 4. ‘Mining Industry Equipment’…‘Another Canadian firm has been actively engaged in talks with the government about plans to open a similar operation. Golden Star has also recently signed an agreement with the Malaysian timber company, Barama, to begin prospecting for mineral extraction on some of Barama’s property. Barama holds timber concessions for 4.4 million acres, many of which are believed to harbor significant diamond deposits….”

The Toronto Stock Exchange (TSE): GSC News Release Nasd- Otc Bb: ‘GSRSF Golden Star and BHP enter into joint venture on the Cuyuni property in Guyana’(all currency amounts in United States dollars unless otherwise stated) Denver, Colorado – April 25, 2002 , reported: “Golden Star Resources Ltd. (“Golden Star” or the “Company”) is pleased to announce that Golden Star and BHP Minerals International Exploration Inc (“BHP”) have entered into a joint venture to acquire two prospecting licenses in the Cuyuni district in Guyana, which is located approximately 140 kilometers from the country’s capital, Georgetown (the “Cuyuni Property”). BHP is a member company of BHP Billiton Limited. BHP will have an 80% managing interest in the joint venture and will fund 100% of all project expenditures up to the completion of a bankable feasibility study. Golden Star will have a 20% interest in the joint venture and will be free carried until the completion of the bankable feasibility study.”

“The Cuyuni Property, which covers an area of 104 square kilometers, is prospective for copper and gold and is being acquired from Barama Company Limited (“Barama”). Under the agreement with Barama, BHP will pay to Barama (i) $65,000 upon the signing of the agreement, (ii) $10,000 upon the transfer of the prospecting licenses for the Cuyuni Property into the name of BHP, (iii) $25,000 per year on the anniversary of the signing of the agreement as an advance royalty payment, (iv) $250,000 for each mine site developed by BHP as a further advance royalty payment, (v) 1.0% of the capitalized exploration and development cost of each new mine site as a cash payment upon commencement of commercial production, and (vi) a net profits royalty of 5%. The advance royalty payments are deductible from the net profits royalty. In addition, BHP may spend up to $3.5 million on direct exploration activities within the first five years following the issue of the prospecting licenses….”

Stabroek News (April 27, 2002) reported (in ‘Golden Star, Billiton eyeing gold, copper mining in Cuyuni US$3.5M could be spent in five years’): Golden Star Resources Ltd has entered into a joint venture to acquire two prospecting licences in the Cuyuni with BHP Minerals International Exploration Inc, which will plug US$3.5 million into exploration in the first five years. In a press release issued by Golden Star (See abovementioned statement) earlier this week, it was stated that the Cuyuni property, covering an area of 104 square kilometres, is believed to have copper and gold and is being acquired from Barama Company Ltd.…”

Dr. Keith Barron (in STRAIGHT TALK ON MINING, No.16, April 28, 2002.) in ‘There’s gold in them thar hills!” stated: “Golden Star Resources Ltd. and BHP Minerals International Exploration Inc. have announced a 20:80 joint venture over an area of 104 square kilometres in Northwestern Guyana. The “Cuyuni Property” as it is known, is being acquired from the Barama Company Ltd. for cash, a royalty interest, and other considerations. Golden Star closed their Georgetown office a few years ago, and BHP left Guyana back in 1999. They had formerly been joint venture partners….”

The almost identical abovementioned reports (from different sources – local and international) show that Barama was making, or attempting to make deals with the mining companies. Under Guyanese law, not even a Guyanese Company or any Guyanese individual (Amerindians included) is/are allowed to make large private deals with international mining companies. Mining deals must be approved by the relevant Government authorities – deals cannot be done independently without Government’s authorization and involvement. Yet in all the above reported deals, Barama apparently thought that it had the legal powers (or maybe Government’s approval) to negotiate separate deals openly with mining companies. The public must therefore ask who gave Barama the necessary permission to enter into such negotiations without Government’s authorization and involvement. If no permission were given then would this not be a violation of Guyanese Law by Barama? How could the State of Guyana not know what is going on before negotiations got that far? (The information was coming out since 1996.)

One would have thought that it should have been the Government of Guyana that would be negotiating mining rights. The interests of the state of Guyana were apparently not represented in the negotiations between Barama and the Mining Companies. Mercifully, for some reason(s) the deal was stopped. Maybe Barama and the Government officials can enlighten us as to what happened.

What the proposed agreement also showed is that Barama knew how to skillfully negotiate a contract favorable to itself unlike the one given to it by the Government of Guyana in1992. The Barama Company Ltd negotiators: (1) wanted all payment in US dollars; (2) initial signing bonus; (3) advance royalty payments; (4) payment for each mine set up on its concession; and (5) five percent on any profits. It is also obvious that if mining followed forestry, then there would be no need for any reforestation efforts or any need to observe the Guyana Forestry Commission (GFC) and/or Forestry Stewardship Council (FSC) forestry harvesting and environmental guidelines.

Barama’s actions were ignored by the Guyana Government and Business community. Instead the Barama Company was commended: “The foreign-owned Barama Company Limited (BCL) has, for the second time in three years, won the President's Award for the Export Achievement at the Guyana Manufacturers' Association (GMA) 2002 Annual Dinner.”

Too bad the Guyana negotiators (in their Barama deal) did not make a similar deal for their ‘green’ gold, viewing each tree as a mini gold mine. Barama’s proposed deal also reveals something about the Guyanese authorities (GFC, Guyana Geology and Mining Concession (GGMC), and Government, i.e., that they are sadly asleep at the switch. The FSC guidelines require Companies to be in compliance with local laws in order to get a FSC certification of good forestry management and practices.

Is attempted robbery still a criminal offense in Guyana? Was Barama ever penalized (charged, fined) for the alleged breaking or attempting to circumvent the laws of Guyana? If not, why were no charges ever laid? Is it a question of diplomatic immunity? Can any Guyanese get away with trying to claim and sell the country’s assets?

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Why was Barama Negotiating Mining Contracts on its Forestry Concession?
by Seelochan Beharry
Guyana Journal, April 2007

The Forestry business world knows that Barama Company Ltd (Parent Company - Samling Group) has a forestry concession of 1.69 million hectares (1/3 of the State Production forests) in the South American nation, Guyana. What is also acknowledged is that this concession was granted to Barama with some unbelievable deals totally in favour of Barama. These giveaways in effect created a mini-State within the State of Guyana. Apparently, Barama did not hesitate to use its influence as is documented below.

What is troubling is that Dr. Marcus Colchester (Guyana Fragile Frontier, 1997, page 90) reported that: “Also in August 1996 it was revealed (Caribbean Insight, August 1996) that Golden Star Resources had entered into an agreement with the Barama Company Ltd to explore for gold and diamonds in the whole of the logging company’s 1.7 million-hectare concession, and the following month a joint exploration between Broken Hill Properties Co. (BHP) and Golden Star Resources (GRS) was revealed.” This published report has serious implications, as will be evident later in this article.

Other published sources have also mentioned this deal. Here are some of the published information (taken from various sources) on the deal between Barama and the mining Companies.

Indo Caribbean World (July 17, 1996). Detailed Guyana News - Golden Star, Barama to sign mining exploration agreement reported: “Georgetown - Golden Star Resources and the logging company, Barama, are close to signing an agreement for gold and diamond exploration in the North West District…”

Forest Peoples Programme Information Update (19 February 1997): ‘Little progress in the recognition and demarcation of Indigenous lands in Guyana’ reported’: “Two mining companies, Golden Star Resources and Broken Hill Property (BHP) Co. recently entered into a deal with the Malaysian, Barama Timber Company to prospect for gold and diamonds in Barama's timber concession. Presumably one will cut timber while the other explores or mines for minerals….”

In the USA’s Country Commercial Guide Guyana, Fiscal Year 1999 it is reported: 4. ‘Mining Industry Equipment’…‘Another Canadian firm has been actively engaged in talks with the government about plans to open a similar operation. Golden Star has also recently signed an agreement with the Malaysian timber company, Barama, to begin prospecting for mineral extraction on some of Barama’s property. Barama holds timber concessions for 4.4 million acres, many of which are believed to harbor significant diamond deposits….”

The Toronto Stock Exchange (TSE): GSC News Release Nasd- Otc Bb: ‘GSRSF Golden Star and BHP enter into joint venture on the Cuyuni property in Guyana’(all currency amounts in United States dollars unless otherwise stated) Denver, Colorado – April 25, 2002 , reported: “Golden Star Resources Ltd. (“Golden Star” or the “Company”) is pleased to announce that Golden Star and BHP Minerals International Exploration Inc (“BHP”) have entered into a joint venture to acquire two prospecting licenses in the Cuyuni district in Guyana, which is located approximately 140 kilometers from the country’s capital, Georgetown (the “Cuyuni Property”). BHP is a member company of BHP Billiton Limited. BHP will have an 80% managing interest in the joint venture and will fund 100% of all project expenditures up to the completion of a bankable feasibility study. Golden Star will have a 20% interest in the joint venture and will be free carried until the completion of the bankable feasibility study.”

“The Cuyuni Property, which covers an area of 104 square kilometers, is prospective for copper and gold and is being acquired from Barama Company Limited (“Barama”). Under the agreement with Barama, BHP will pay to Barama (i) $65,000 upon the signing of the agreement, (ii) $10,000 upon the transfer of the prospecting licenses for the Cuyuni Property into the name of BHP, (iii) $25,000 per year on the anniversary of the signing of the agreement as an advance royalty payment, (iv) $250,000 for each mine site developed by BHP as a further advance royalty payment, (v) 1.0% of the capitalized exploration and development cost of each new mine site as a cash payment upon commencement of commercial production, and (vi) a net profits royalty of 5%. The advance royalty payments are deductible from the net profits royalty. In addition, BHP may spend up to $3.5 million on direct exploration activities within the first five years following the issue of the prospecting licenses….”

Stabroek News (April 27, 2002) reported (in ‘Golden Star, Billiton eyeing gold, copper mining in Cuyuni US$3.5M could be spent in five years’): Golden Star Resources Ltd has entered into a joint venture to acquire two prospecting licences in the Cuyuni with BHP Minerals International Exploration Inc, which will plug US$3.5 million into exploration in the first five years. In a press release issued by Golden Star (See abovementioned statement) earlier this week, it was stated that the Cuyuni property, covering an area of 104 square kilometres, is believed to have copper and gold and is being acquired from Barama Company Ltd.…”

Dr. Keith Barron (in STRAIGHT TALK ON MINING, No.16, April 28, 2002.) in ‘There’s gold in them thar hills!” stated: “Golden Star Resources Ltd. and BHP Minerals International Exploration Inc. have announced a 20:80 joint venture over an area of 104 square kilometres in Northwestern Guyana. The “Cuyuni Property” as it is known, is being acquired from the Barama Company Ltd. for cash, a royalty interest, and other considerations. Golden Star closed their Georgetown office a few years ago, and BHP left Guyana back in 1999. They had formerly been joint venture partners….”

The almost identical abovementioned reports (from different sources – local and international) show that Barama was making, or attempting to make deals with the mining companies. Under Guyanese law, not even a Guyanese Company or any Guyanese individual (Amerindians included) is/are allowed to make large private deals with international mining companies. Mining deals must be approved by the relevant Government authorities – deals cannot be done independently without Government’s authorization and involvement. Yet in all the above reported deals, Barama apparently thought that it had the legal powers (or maybe Government’s approval) to negotiate separate deals openly with mining companies. The public must therefore ask who gave Barama the necessary permission to enter into such negotiations without Government’s authorization and involvement. If no permission were given then would this not be a violation of Guyanese Law by Barama? How could the State of Guyana not know what is going on before negotiations got that far? (The information was coming out since 1996.)

One would have thought that it should have been the Government of Guyana that would be negotiating mining rights. The interests of the state of Guyana were apparently not represented in the negotiations between Barama and the Mining Companies. Mercifully, for some reason(s) the deal was stopped. Maybe Barama and the Government officials can enlighten us as to what happened.

What the proposed agreement also showed is that Barama knew how to skillfully negotiate a contract favorable to itself unlike the one given to it by the Government of Guyana in1992. The Barama Company Ltd negotiators: (1) wanted all payment in US dollars; (2) initial signing bonus; (3) advance royalty payments; (4) payment for each mine set up on its concession; and (5) five percent on any profits. It is also obvious that if mining followed forestry, then there would be no need for any reforestation efforts or any need to observe the Guyana Forestry Commission (GFC) and/or Forestry Stewardship Council (FSC) forestry harvesting and environmental guidelines.

Barama’s actions were ignored by the Guyana Government and Business community. Instead the Barama Company was commended: “The foreign-owned Barama Company Limited (BCL) has, for the second time in three years, won the President's Award for the Export Achievement at the Guyana Manufacturers' Association (GMA) 2002 Annual Dinner.”

Too bad the Guyana negotiators (in their Barama deal) did not make a similar deal for their ‘green’ gold, viewing each tree as a mini gold mine. Barama’s proposed deal also reveals something about the Guyanese authorities (GFC, Guyana Geology and Mining Concession (GGMC), and Government, i.e., that they are sadly asleep at the switch. The FSC guidelines require Companies to be in compliance with local laws in order to get a FSC certification of good forestry management and practices.

Is attempted robbery still a criminal offense in Guyana? Was Barama ever penalized (charged, fined) for the alleged breaking or attempting to circumvent the laws of Guyana? If not, why were no charges ever laid? Is it a question of diplomatic immunity? Can any Guyanese get away with trying to claim and sell the country’s assets?