Investing in the Americas 2000 Hugh Desmond Hoyte, S.C. OR Miami Florida: 10-11 April 2000

Over the centuries since Columbus’ first encounter with the continent of South America, Guyana has been the subject of myth and fantasy which projected the image of a country immensely rich in mineral resources, particularly gold. The Elizabethan poet, George Chapman, gave full flight to his imagination when
he wrote:
Guiana whose rich feete are mines of gold Whose forehead knocks against the roof starres . . .

And the 17th century epic poet, John Milton, intoned majestically about

Yet unspoiled

Guiana, whose great citie Geryon’s sons call
El Dorado

Geryon’s sons were, of course, the Spaniards; and not only they, but adventurers from other European nations, pursued for decades a frenzied quest for the golden
city. Needless to say, successive expeditions failed to find it and its fabled treasures.

But yet, the fact remains that the country is lavishly endowed with mineral and other resources which can generate abundant wealth and realize the El Dorado
which the early explorers dreamed about – not as a gratuitous bounty but through the exploitation of their resources by a skilful mix of sound policies, strategic
investment and appropriate technology.

Situated as it is on the north-eastern shoulder of the continent, Guyana is endowed with extensive and diverse natural resources. These include a significant range of minerals, vast tropical hardwood forests, rich agricultural lands, expansive savannahs, and abundant marine resources. Its exotic fauna and flora, its numerous waterfalls and its scenic beauty generally offer unique opportunities for investing in eco-tourism;
and its many rivers are a potential source of hydropower.
The official language of the country is English which is universally spoken. Its legal system is based on the English Common Law, and its government on a parliamentary tradition. Its people are highly literate, intelligent and adaptable. The country does not suffer from hurricanes, cyclones, earthquakes and other such natural disasters.

Bounded on the east by Suriname, on the south by Brazil, the west by Brazil and Venezuela and the north by the Atlantic Ocean, Guyana is uniquely placed to
provide a bridge between the Caribbean and the countries of South America.

Its strategic location offers investors not merely the possibility of successfully exploiting its abundant resources, but also of establishing linkages and
alliances with partners in Latin America and the Caribbean and ever further a field.

Guyana benefits from special export and price regimes. It is a member of CARICOM and a signatory to the LOMÉ Convention (European Union), the Caribbean Basin Initiative (USA), CARIBCAN (Canada), and a partial scope agreement (Venezuela). Persons doing business in Guyana can have access to preferential markets provided by these arrangements.

Given the nature and extent of its resources, the opportunities for investing in Guyana are manifold.

Initially, I should like to draw special attention to the investment potential of our hydro-carbon endowment. Extensive seismic work has been done in the Guyana
basin, and on shore in the Takatu basin. All the seismic data, which are available from the Guyana Geology & Mines Commission, indicate the presence of petroleum both
offshore and onshore. Our country undoubtedly has large oil reserves, but there has not as yet been any sustained, comprehensive programme of drilling.

In 1980 a small Canadian company, struck oil in the Takatu Basin which adjoins Brazil. This oil was a very light crude. Unfortunately, the company did not have
the financial resources to mount a serious campaign -- and it was subsequently taken over by a large company which preferred to pursue its major interests in the Middle East.

But today, I wish to focus more specifically on the non-oil mineral sector, particularly gold. The country’s mineral endowment includes gold, diamonds, semi-precious stones, bauxite, manganese, copper, molybdenum, tungsten, quartz, kaolin and other clays, and a range of aggregates (such as stones and silica sand). Many of these showings and occurrences are undeveloped and have not been fully inventorised or

Guyana enjoys significant geological potential for the discovery of economically recoverable minerals particularly gold, diamonds and industrial minerals. This fact gives the mining sector a prominent role in any development plan for the country. It is a compelling reason for any government to place emphasis on the sector and for mining investors to commit major exploration and development dollars in the sector.

The country lies in the centre of the northern part of the Amazon Shield and shows striking similarities with the West African Shield. In both the north and south of the country there are significant greenstone belts that indicate the potential of an extensive range of minerals; but little has been done over the years to explore, inventorise and quantify most of these. As a report compiled by the Geology and Mines Commission noted: “The aura of gold has always been heavy over Guyana to a point where little else has been considered”.

Gold mining in Guyana is more than a century old. Yet the country has only been minimally explored by conventional scientific techniques. This segment of the Guyana Shield is said to be similar to the prolific Abitibi Belt of Canada, and the prognostication is for the ultimate discovery of many more million ounces
of commercial deposits.

Over the years, gold mining was confined to small-scale producers who mined placer deposits on the banks of rivers, using quite primitive methods. More recently,
there has been some improvement in technology since barges were introduced. The recovery of gold was therefore relatively small when compared to the vast
potential of the gold reserves in the country. It was not until 1993 that we had a really large scale activity when a Canadian company (Cambior) established a large mine (OMAI Gold Mines Ltd.) to exploit hard rock land mining. It was said that it was the largest open cast gold mine in the continent.

Currently, in excess of 435,000 oz. of gold are being produced annually in Guyana, 300,000 by the Omai mines and the rest by small operators.

With respect to some other minerals, we have a reserve base of high-quality bauxite that is well-nigh inexhaustible; but bauxite production has been faltering badly in recent years for lack of investment, expertise and adequate technology. The mining of gem-quality diamonds started in 1887. Since then some 4.5 million carats have been produced – all of this by small operators using primitive technology.

What we require to convert our gold, diamond, bauxite and other mineral endowment into real wealth is investment capital.

It is clear that most of this capital will have to come from abroad. For this to happen, we must have sound policies to attract and protect investment and give
investors the assurance of equitable treatment for their investments.

This is what any government led by me will ensure.

When I became President of the country in the mid-eighties, the mining sector expanded rapidly in the 1990’s as compared with times prior to that. This
was a direct response to a set of policy initiatives that my Party and I put in place. The country was then in a serious economic crisis, facing as it did a shortage
of foreign exchange and capital availability, and a absence of systematic and organized knowledge base of the resources and the technological processes
which permit their identification and conversion into useful tradable products.

We set about with a will to change all that – and we had significant successes.

In a document entitled, “Mineral Policy for Guyana”, OMAI Gold Mine Limited noted as follows:

Guyana mining law is of fairly recent vintage, having been passed by the Legislative Assembly in 1989 and proclaimed into force in 1991. In our view, the mining
law as presently cast provides a good framework for holding and administrating mineral titles and overseeing activities in the mining sector generally.

The document noted that there were a few areas where there could be improvement; and it has to be conceded that there is always some room for the improvement of
a mining regime. Unfortunately, after we demitted office in October, 1992, the new government did not show the same understanding of the mining sector and performance, morale and confidence declined.

Guyana is about to face national elections not later than 17th January, 2001. I believe that my Party, the People's National Congress, has more than an even chance of returning to government. One of our priorities, given theemphasis which we place on the mining sector to stimulate national development, will be to continue addressing improvements in the mining regime with a view to achieving the following objectives:

(1) The attraction of major investment from local and foreign sources.

(2) The promotion of exploration to identify, delineate, develop, extract and convey mineral resources from the ground into tradable, useful products.

(3) The guarantee of an adequate return to the investor for the use of his capital and entrepreneurship.

(4) The securing of an appropriate return to the State for the use of the national resources, coupled with a generation of income, foreign
exchange, employment, opportunity and increased welfare for our citizens at large.
There are two underlying assumptions in the objectives so stated: one, that there is a potential for the development of mineral resources in Guyana; and, two, that the conversion of Guyana’s mineral endowment into tradable products, necessary for
facilitating growth, development and employment, would best occur by attracting the requisite capital, skills and entrepreneurship. The policy prescription above explicitly recognizes the private sector as the vehicle of growth, with the State playing a facilitating and regulatory role.

During my time in government, we reviewed all of the fiscal provisions (taxes, royalties, duties, etc.) which affected the mining operations against the principle of equity, which involved, among other things, guaranteeing the investor the right to a fair return
on his investment.

These provisions were simplified to introduce greater transparency, and they were designed to reward enterprise and initiative. The tax rate was reduced to 35% on a base which allowed for a generous write-off of historic expenditures. Exploration
development in remote locations enjoyed special incentives as they could be set off against withholding taxes, apart from their normal expensing in the computation of taxable income. Historic barriers to the movement of the investment, such as duties,
quantitative quotas etc. were systematically removed.

In order to give added confidence to the investor, Guyana became a signatory to the International Centre for the Settlement of Disputes (ICSD). We therefore provided for the settlement of disputes in an international setting, in the unlikely event that they
should occur. This of course, is an addition to our judicial system, based on the English Common Law, which can be relied on to act fairly on established
legal principles.

I know that I am talking to you at a time in which there is significant distress in the mining community. More than three years of price depression and investor
withdrawal from the public market places for mineral-based equities must have taken its toll. But we can take heart from experience and knowledge that this is a cyclical activity that has been the rule rather than the exception.

The resource clock that has taken us through a crash and company liquidation, declining exploration, mergers, acquisitions and cash take-overs must now
be saying to us that this is the time to re-enter the market for the impending boom. Guyana with its rich endowment and an enlightened policy framework (which a government led by me would greatly strengthen) should be an attractive prospect.

In concluding this presentation, I would like to point out that because of its strategic geographic location, Guyana warrants investments in the development of the
necessary infrastructure, in order to become a prime gateway from transporting goods and services into and out of the northern land-locked regions of Brazil, and
the eastern areas of Venezuela.

Highways of approximately 300 miles and 200 miles in length would respectively link Brazil via Lethem in the south-west and Venezuela’s “La Horqueta” in the
north-west, to an Atlantic seaport in the mouths of Guyana’s Essequibo or Demerara rivers.

Alternative routes for roads to link the above mentioned areas to an Atlantic seaport through their own territories would necessitate traversing more difficult terrain for more than double the distances required for access routes through Guyana.

These areas in Venezuela and Brazil are ear-marked for major development of their respective mineral resources. In the case of Venezuela, for example, as stated in the ‘Latin Trade’ magazine of February 1998 “of the US$73.5 billion investment capital that will flow into the oil industry over the next 10 years, nearly two-thirds will flow into eastern Venezuela.

Ciudad Guayana, which is approximately 170 miles west of La Horqueta is also experiencing dazzling growth. It is the center of Venezuela’s heavy industry
and is a regional Headquarters for mining companies digging for gold and diamonds in the states of Bolivar and Amazonas.

The proposed highway linkages through Guyana would also provide north/south and east/west corridors to the city of Georgetown, and create the opportunities for accessing some of the major mineral, agricultural, forestry and eco-tourism areas in Guyana.

What I have been really saying to you today is that when you come to consider and make your investment decisions – whether in gold, other natural resources or
infrastructure – think hard about Guyana and its enormous potential. Your investment will be welcomed, safe, and most likely to be productive.