Guyana Goldfields Inc. Signs Memorandum of Understanding for the Mineral Agreement with the Government of Guyana; Mining License to be Issued Within 45 Days

TORONTO, October 5, 2011 -

Guyana Goldfields Inc. (TSX: GUY) (”GGI” or “the Company”) is pleased to announce that it has signed a Memorandum of Understanding (”MOU”) for the Mineral Agreement (”MA”) and Mining License with the Government of Guyana for the 100% owned Aurora Gold Project located in Guyana, South America.

The MOU sets out the key terms of the MA, also known as a Fiscal or Stability Agreement, which is a comprehensive agreement that outlines the fiscal terms and conditions for the development and mining of the Aurora Gold Project. Significant among the terms of the MOU are:

• Mining royalty of 5% on gold sales at a price of gold of US $1,000/oz or less
• Mining royalty of 8% on gold sales at a price of gold over US $1,000/oz
• Corporate income tax rate of 30%
• A Mineral Agreement and Mining License and all relevant permits and approvals to be issued within 45 days of signing the MOU.

The MA is the final step in obtaining the Mining License since the Company has already received its Environmental Permit in September 2010.  The Mineral Agreement signals the commitment of the Government of Guyana and the Company to the development of the Aurora Gold Project. This watershed agreement is an important milestone for GGI as it will allow the advancement of the mine development project under a clear and stable fiscal and royalty regime.

Mr. Patrick Sheridan Jr., CEO states, “We are pleased to have concluded extensive negotiations with the Guyanese Government on the fiscal terms included in the Memorandum of Understanding for this historic Mineral Agreement and look forward to obtaining our Mining License in order to build and operate the Aurora Gold Project. We have agreed upon fair and reasonable terms for the future success of the Aurora mine.”

This landmark agreement, which strikes a fair and reasonable balance of taxation and royalties for gold mining, reaffirms GGI’s view that Guyana is “open for business”.

Honourable Sam Hinds, Prime Minister and Minister of Mines in Guyana states, “The Government welcomes and fully supports all investment, foreign and local, in the mining sector and are pleased that we have come to a fiscal agreement in order for the long-awaited development of the Aurora Project to begin. We look forward to working alongside GGI as they move towards production.”

Up until now, Guyana Goldfields has conducted off-site infrastructure construction work in preparation for the development and construction of the Aurora Gold Project. Upon obtaining the Mining License, the Company plans to initiate the construction of the on-site infrastructures including a new camp, airstrip, river dyke and completing road access to the site, which will be followed by the construction of the mining facilities.

Guyana Goldfields will be hosting a conference call for anyone wishing to address questions to management regarding the terms of the Memorandum of Understanding for the Mineral Agreement and Mining License.

Conference Call Details:

Date of Call: Wednesday, October 5, 2011
Time of Call: 11:00am EST
Conference ID: 15229257

    Dial-In Numbers:
    North America Toll-Free:   +1-888-231-8191
    International:             +1-647-427-7450

For anyone not able to participate in the conference call, an audio webcast will be available for 90 days through the following link:

English: www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3685000

French: www.cnw.ca/fr/webcast/viewEvent.cgi?eventID=3685000

About Guyana Goldfields Inc.

Guyana Goldfields Inc. is a Canadian based mineral exploration company, primarily focused on the exploration and development of gold deposits in Guyana, South America where the Company has operated since 1996.  The Company is currently undertaking drilling and studies to advance and develop the Aurora Gold Project in Guyana with a current measured and indicated resource of 5.71 million ounces gold (47,040 million tonnes at a grade of 3.83 g/t) and a Feasibility Study expected for completion in December 2011.

At the Aranka Properties, currently in advanced staged exploration, drilling of highly prospective targets is ongoing. The Company discovered a gold deposit at Sulphur Rose containing an initial inferred resource of 460,400 oz and plans to release an updated resource estimate in November 2011.  As at the date hereof, the Company has approximately CDN $46 million in cash and short-term bank guaranteed investment certificates and no debt; there are approximately 83 million shares issued and outstanding.

Forward Looking Statements - Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Guyana, including, but not limited to the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with the uncertainty of resource and reserve estimates, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

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For further information:

Guyana Goldfields Inc., 
Claude Lemasson,
President & COO, Director
Tel: +1-416-628-5936 Ext. 5930
E-mail: clemasson@guygold.com

Jacqueline Wagenaar,
Vice-President, Corporate Communications
Tel: +1-416-628-5936 Ext. 2295,
Fax: +1-416-628-5935,
E-mail: jwagenaar@guygold.com,
Website: www.guygold.com

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