Westech Gold has signed a deed with the government of the Republic of Fiji, that grants several key tax concessions to the Emperor (or Vatukoula) gold mine.

Westech bought the Vatukoula mine earlier this year from DRDGold's Australasian subsidiary Emperor Mines.

The main concessions granted by the deed include a reduction from 6% to 3% in royalty on ore extracted for five years, a two-year exemption on import duties on automotive diesel oil or industrial diesel oil for use at the mine, and a five-year exemption from export taxes.

Further concessions include a three-year exemption from fiscal duty on the import of all plant equipment, machinery and motor vehicles required to operate the mine, and eligibility to seek an exemption from paying withholding tax on overseas payments of interest on loans, consultants' fees and dividends to shareholders in accordance with Fiji's Income Tax Act.

"In addition, the deed confirms that the relevant special mining rights, special site rights and special prospecting rights remain valid and release Westech and its subsidiaries from all liabilities in respect to previous breaches of the Mining Act," River Diamonds, which has agreed to buy 12,5% of Westech's holding company, said in an emailed statement.

Westech, in return, has agreed to commit funds to the Vatukoula Rehabilitation Trust Fund which is aimed at the remediation of the environmental and social aspects of the local community around the Emperor gold mine.

River Diamonds said that the fund would be used for the creation and maintenance of social assistance, job creation and reskilling programmes for the former employees and the community of Vatukoula.

Its contribution will consist of about £460 000 by November, and a further four yearly contributions of about £350 000 each. Further, Westech said it would refund to the government the care-and-maintenance expenditure since May 2007 which amounts to some £1,7-million.

River Diamonds entered into an agreement to subscribe for 12,5% of the share capital of Viso Gero International (VGI) for a cash consideration of £2,5-million.

VGI will, by converting certain secured loans, own a 100% equity interest in the capital of Westech which, through its wholly owned direct and indirect subsidiaries, owns the mining rights and associated assets of the Emperor Gold Mine in Fiji, also known as the Vatukoula Gold Mine.

"We are happy to see progress being made, and the signing of the Deed with the Fijian government is a key step in bringing this mine back to production. The concessions granted will, we believe, enable the mine production to be fast-tracked," commented River Diamonds chairperson Colin Orr Ewing.

"River Diamonds will be looking to raise further funds by way of a placing in the near future and to supplement its ongoing working capital requirements," the company said in a statement.

Emperor Gold Mine has a Joint Ore Reserves Committee-approved underground delineated gold reserve of 2,34-million tons, grading 11,4 g/t for 858 000 oz, within a total resource of 16,2-million tons grading 9,1 g/t for 4,76-million ounces underground.

There are an additional 250 000 oz gold in mine tailings from 5,18-million tons grading 1,5g/t.