SEVERE weather has taken its toll on Besra’s gold operations in central Vietnam with output at Phuoc Son starting to increase following an extended period of limited production and output from Bong Mieu expected to resume from May 1 after being suspended late last year. In early April Besra said its daily Vietnam production from Phuoc Son was averaging 70 ounces.
Production at Phuoc Son was limited for an extended period due to severe weather events and circumstances arising from a disputed export tax assessment. Bong Mieu production was suspended following a series of severe weather incidents late in 2013. The company said in early April that road reconstruction was complete and dewatering was progressing well, pointing to a return to mining and production from May 1.
As a result of the severe weather the company has lodged an insurance claim of more than US$4 million for typhoon damage and the resulting loss of income.
The curtailed production has resulted in Besra being issued a notice to cure from Euro Pacific Capital on behalf of holders of its 9% unsecured convertible redeemable notes due on March 26, 2014. Pursuant to the notice to cure, Euro Pacific has noted Besra is in default for failure to pay the principal of Can$6,356,495.82 plus outstanding interest of Can$476,716.18 due on the notes and has given 30 days for the company to cure the default. Besra is working closely with Euro Pacific and is communicating regularly regarding efforts to cure the default.
The company continues to pursue a range of financing initiatives and has signed a consulting agreement with Oriental ES Capital Group Limited (OES), based in Hong Kong. Besra has engaged OES to assist with its operating companies’ structures and finances, and government relations, including capital-raising specifically to return Vietnam to full production. OES is also facilitating discussions with a number of parties about acquisition of an interest in Bau in Malaysia, which if successful would result in development proceeding at Jugan and provide funds to meet our obligations under the notes.
Besra is also having difficulties with illegal gold miners working in the Bong Mieu area. This has occurred since the operations were suspended at the end of 2013. Illegal miners gained access to the mines because the areas they are located in are vast and the number of guards at the project was reduced after the plant closed.
Authorities noted that besides local people, about 500 people from other provinces and cities came into the area to search for gold. Besra is working with local and provincial authorities to tighten security and prevent the illegal mining.