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Gold JV reopens after talks with suppliers, authorities

Update: January, 03/2014 - 08:46

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QUANG NAM (VNS) — A joint venture gold company in central Quang Nam Province's Phuoc Son District resumed operations over the weekend.

It had been forced to close under pressure to pay off debts to hundreds of lenders, according to Phuoc Son District People's Committee Chairman Pham The Quyen .

Phuoc Son Gold Company Ltd under Besra Gold Inc – a Canadian-Australian joint-venture corporation – had failed to pay debts worth billions of dong to lenders ranging from contractors to local traders.

Some creditors from Da Nang actually travelled to the company premises to demand their money last Thursday.

They used hammers and axes to break down the gate and camped out in front of the building, preventing vehicles from leaving or entering and forcing the company to shut down on the same day.

Local policemen were dispatched to the scene to maintain security and advised the creditors to settle the issue in accordance with the law, according to the director of the district's police station, Colonel Dao Quang.

Besra Gold Inc's Chief Operations Officer Darin Lee confirmed to Viet Nam News in a letter that it had completed negotiations with its suppliers, district authorities and police, and returned to operation on December 27.

He said that the company is committed to its operations in Viet Nam, where it had invested more than US$115 million in Bong Mieu and Phuoc Son (Besra Viet Nam) in Quang Nam Province.

The company owed approximately $19 million to contractors, the bank and the government, he said.

It was behind in payments of VND17 billion to the main contractor – Quang An construction company – and around VND7 billion to other contractors in Phuoc Son district, Lee said.

He also said the company has been discussing payment solutions with contractors as well as the tax office and banks.

Chairman of Phuoc Son district's People's Committee Pham The Quyen told Viet Nam News that they would hold discussions on how to move forward.

"We plan to hold a working session with the company regarding payment next week after the Christmas holiday break. We have also asked the company to pay its debt to local contractors before the Tet holiday," Quyen said during a phone interview yesterday.

Deputy General Director of Phuoc Son Gold Company Ltd Pham Quang Ngu said the debt would be paid off gradually.

"We have to cut wages for managers and workers and adopt a wide range of cost-cutting measures to deal with the debt," he said in a statement.

Besra Gold Inc's Lee explained that the company's debts, particularly from Phuoc Son, resulted from difficulties in finance and production, including falling gold prices, taxes and environmental fees

"Gold prices have fallen by 30 per cent since last November, while the royalty tax has increased," Lee explained.

"The royalty tax was calculated on net profits in 2003 while a rate of 15 per cent was calculated on gross sales in 2010."

"Our plan is to cut costs and increase efficiency rather than shut down. In the past eight months we have cut our costs by 25 per cent, but the price of gold has fallen even further," according to Lee.

However, Lee said that Besra Inc would recoup its investment capital of $115 million because its mining investment certificate was still valid for another 20 years.

According to reports, Besra Viet Nam's gold production from its two plants reached 60,187 ounces in 2013. — VNS

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