TORONTO (miningweekly.com) – Canadian gold miner Besra has welcomed a new decree by the Vietnam government that is expected to provide a much more reasonable method of calculating the royalty rate for gold producers operating in the country.
The decree, which was issued on February 12, allowed for much of the cost of production to be deducted before the 15% royalty on gold was applied. It amended and clarified the Law on Royalty and Decree 50 (Guiding Law on Royalty) that had been in place since July 2010.
“This new decree represents a major step forward for the gold mining industry in Vietnam and also provides some much-needed relief from what was the highest taxing mining jurisdiction in the world. Being able to deduct some of the costs of production is likely to represent a reduction in royalty of more than 50% in real terms, although we are still awaiting details of exactly how that is to be calculated and whether it applies to all royalties paid since July 2010,” Besra CEO John Seton said.
The new decree also brought the royalty calculation for international operators more in line with the levels of royalty paid by local miners.
According to Seton, in addition to the new decree, which would significantly reduce the company’s previously unsustainable tax burden, Besra was developing a tax-arrears payment plan for local authorities.
“Once agreed, this plan will enable the tax department to remove current sanctions, allowing us to reopen our Phuoc Son mine, re-employ our local workforce and revive production in Vietnam,” he noted.
Operations at Besra’s Vietnam projects were suspended in July last year as the direct result of “coercive measures” taken by the provincial Quang Nam tax department, it said.
At the time, the miner explained that the tax department deployed “intimidatory measures” that meant that the embattled company could not and would not continue to operate.
Besra reported that negotiations to have the “coercive measures” lifted had, with the assistance of the Canadian, Australian and New Zealand embassies, reached the office of the Prime Minister.
The company in October restarted production at the Bong Mieu site, in Central Vietnam.
Besra's ASX- and TSX-listed stock remained suspended pending the closing of $15-million in committed financing that would be used to remedy existing defaults with securities regulators, specifically by preparing and submitting the 2014 audited accounts and management’s discussion and analysis, payments to supplier creditors, financial creditors, project acquisition costs and general working capital.