Besra has welcomed a new decree by the Government of Vietnam that will provide for a much more reasonable method of calculating the royalty rate for gold producers in the country by allowing for much of the cost of production to be deducted before the 15% royalty on gold is applied.
The decree was issued on February 12, 2015, and amends and clarifies the Law on Royalty and Decree 50 (Guiding Law on Royalty) that has been in place since 1 July 2010.
Besra’s CEO John Seton says, “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.”
The new decree brings royalty calculation for international operators more into line with the levels of royalty paid by local miners.
According to John Seton, “In addition to the new decree, which will significantly reduce our previously unsustainable tax burden, Besra is 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.”
Meantime, Besra has been advised by the Ontario Securities Commission (OSC) that the company’s application for a variation in the terms of the cease trade order (CTO) has been approved. The revised order, issued by the OSC on March 4, 2015, permits the company to proceed with the proposed Can$15 million financing with Mr George Molyviatis.
The company has received funds of Can$175,000 taking the total to date to Can$744,162.92 and is now expecting an additional Can$200,000 with the remainder of tranche one closing shortly thereafter.
Funds will be utilized to remedy existing defaults with the OSC, specifically the preparation and submission of the 2014 audited accounts and management’s discussion and analysis, payments to supplier creditors, financial creditors, project acquisition costs and general working capital.