Olympus Pacific Raises Vietnam Gold Production for Second Year

Olympus Pacific Minerals Inc., the first Western miner to produce in Vietnam since a series of failed attempts in the industry in the 1990s, said it increased its gold output in the country for a second year in 2008.

The Canadian company produced 11,191 ounces of gold last year, up from 9,737 ounces in 2007 and from 4,757 ounces in 2006, according to a summary of operations dated March 30 and released through the Toronto Stock Exchange. Olympus Pacific first began producing gold in Vietnam in late 2005.

Olympus Pacific is a test case for the presence of foreign companies in Vietnam’s mining industry. Other companies with potential projects in the country include the U.K.’s Triple Plate Junction Plc (TPJ) and New Zealand’s Zedex Minerals Ltd., which said this year that it’s targeting a find of as many as 5 million ounces of gold.

“The company has expanded from one mine to three,” Olympus Pacific said. The higher output last year resulted from “increasing throughput, grades, and recoveries.”

Olympus Pacific’s production in Vietnam comes from the Bong Mieu and Phuoc Son properties in the central coastal province of Quang Nam, with Bong Mieu accounting for the bulk of production to date.

“We’ve expanded our plant capacity, and by the end of May we should be producing 2,500 ounces per month,” said Olympus Pacific Chief Executive David Seton, in a telephone interview today. “April is really the first full month we’ll have all our mines operating. A 30,000- to 50,000-ounce annual production profile is easily obtainable.”

Higher-Grade

The Phuoc Son deposit is higher-grade, according to a report released this week by Vietnam Resource Investments (Holdings) Ltd. (VIETRES), which has a stake in Olympus Pacific.

“Phuoc Son is really the future of the company,” said David Woodhouse, a Hanoi-based director of Vietnam Resource Investments. “It is comforting that they’ve been able to start Bong Mieu as the first and only commercially foreign-operated gold mine in the country, but it’s almost more of a pilot project.”

Phuoc Son has proven or probable reserves of 233,150 ounces of contained gold at an average grade of 7.8 grams per ton, according to the Olympus Pacific summary.

Attempts to begin commercial production from Phuoc Son have been hampered by estimates of higher capital costs and by more difficult banking conditions, Woodhouse said. The industry in Vietnam has also been hurt over the past year by changes such as higher export taxes and royalties, he said.

Vietnam’s mining laws are “in a state of flux” and subject to continuous reviews, Olympus Pacific said, in this week’s release. “Vietnamese tax laws are open to interpretation and, in respect to mining locations, there are no clear precedents.”

Olympus Pacific shares climbed 23.5 percent yesterday, the biggest gain since Feb. 11, to 21 Canadian cents, the highest close since July 2008.

To contact the reporter on this story: Jason Folkmanis in Ho Chi Minh City at folkmanis@bloomberg.net

To contact the editor responsible for this story: Tony Jordan at tjordan3@bloomberg.net.

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