Besra Gold Inc, the investor of Phuoc Son Gold Co Ltd in Quang Nam province, which is suffering outstanding debts totaling US$19 million, said negotiations on debt payment are underway.

>> Indebted gold company’s leader promises debt payment >> Indebted gold mining company besieged by creditors

On Sunday Afternoon, talking with Tuoi Tre, Darin Lee, Chief Operating Officer of Canada-based Besra Gold Inc, formerly Olympus Pacific Minerals Inc., an international mining company, said Phuoc Son has resumed work today.

Besra has invested more than US$115 million in Phuoc Son Co Ltd, so the group must never give up the game in Vietnam, Darin said.

The group must continue its work to recover our investment, he added. Darin made the statement a day after hundreds of people, including traders and contractors, surrounded Phuoc Son on Thursday, requesting the company pay its outstanding debts. 

Confronting the situation, Pham Quang Ngu, Phuoc Son’s deputy general director, assured its creditors that the company will pay its debts totaling over VND220 billion (US$10.38 million), of which more than VND30 billion is trade payables and the rest is natural resource tax arrears.

When asked why Besra has fallen into heavy debt, Darin partly blamed the sharp reduction of world gold prices, which fell from $1,500 per ounce in January 1, 2013 to around $1,200 per ounce at present.

Meanwhile, increased tax rates and a change in tax calculation have also affected the company’s profit, Darin said.

In 2003, Phuoc Son paid natural resources taxes at a rate of 6 percent of profit. The rate increased to 9 percent a year later, but in January 2010, the tax was levied on sales, not on profit, at a rate of 15 percent.

Debts: $19 mln; assets: $115 mln

Darin said Phuoc Son is suffering a total debt of $19 million, including $6 million in natural resource tax, another $6 million in business debt, and $7 million in bank loans.

The business debt included VND17 billion ($802,000) from Quang An Material Exploitation and Works Construction Company in Kham Duc Town, Phuoc Son’s main contractor, and VND7 billion from small traders. Meanwhile, besides Phuoc Son, Besra has also invested in another gold company in Quang Nam, Bong Mieu Gold Co Ltd in Phu Ninh District. The total value of the two companies is $115 million at present, Darin said.

He also said Besra has reported to the Vietnamese Government regarding its assets in these two companies.

Negotiation underway

After the besiege that occurred on Thursday, we have worked with Quang An and small vendors regarding how Phuoc Son can make debt payments to them, Darin said.

Accordingly, Besra suggested they pay Quang An VND1.5 billion ($72,000) per month and VND1 billion for all venders per month, but all of the creditors did not agree.

Therefore, today, December 30, Phuoc Son will continue negotiating with its creditor about the debt payment, he said.

Regarding the tax debt, the group has proposed that the provincial government allow Phuoc Son to make payments by installments and local authorities are considering the proposal, Darin said.

When asked if Besra will stop mining gold at Phuoc Son if world gold prices continue to go down, Darin said Besra will close the mine in Phuoc Son if this is the case, and wait for world gold prices to recover. Such closure is a common practice, and currently about 20 gold mines in the world have been temporarily closed, Darin said.