Olympus Pacific Minerals Inc. said it’s “cautiously” reviving plans to expand a Vietnam mining operation, on optimism that it can refine gold within the country and ensure it is not subject to a new export tax.
The Canadian- and Australian-listed miner said in December that it was delaying plans to invest $100 million in a Vietnam gold mine due to the 10 percent tax on unrefined gold. The company now plans about $25 million of investment this year.
“We’re more prepared now than we were before to go ahead with our investment plans, but rather than go full speed ahead we’ll go step by step,” Olympus Pacific Chief Executive David Seton said in a telephone interview. “Our plan is to increase production incrementally now.”
The $25 million will pay for mine development, plant upgrades and a tailings dam, with the first spending projected for the second quarter, according to chief financial officer John Seton, who is David Seton’s brother. That should allow a production increase next year to about 75,000 ounces of gold from a projected 45,000 ounces this year, he said.
The ability of Olympus Pacific to ship gold from Vietnam had provided a success story to contrast with the experiences of other foreign miners, such as Tiberon Minerals Ltd., which have failed to begin production. Olympus Pacific said last month it has found a Vietnamese refiner which should allow it to export without the tax.
Shares in Olympus Pacific, which is also exploring for gold in Malaysia, have more than doubled over the last year in Australia. The company hopes its Vietnam production may reach 150,000 ounces by 2015.
Olympus Pacific said in a Jan. 28 statement that it would continue with sampling to assess its local refiner’s ability to deliver the purity required for export without the 10 percent tax. In December, the company said it was hopeful of receiving an exemption.
“The finance ministry has come out pretty strongly and said it’s not going to revise the tax,” said David Seton. “We’ll keep lobbying, but for the short to medium-term, it’s best that we go down the refining route, and it looks like we can do it.”
U.K.-listed Triple Plate Junction Plc said in December that it had paid a deposit to extend its exploration license in northern Vietnam, and has plans to begin drilling by March on a gold and copper prospect.
“You’ve got to stay in there, and prove to the Vietnamese that you are doing something,” said Bill Howell, director of exploration for Triple Plate, who’s based in Ho Chi Minh City. “You have to serve a long probation here, but eventually you earn more respect if you stay the course, and once you do there are still opportunities.”