Besra shuts gold mines as debts mount

Besra shuts gold mines as debts mount

Besra Vietnam announced temporary suspension of its operations at Bong Mieu and Phuoc Son gold mines in the central province of Quang Nam.

The company said the decision was made due to coercive measures, including freezing of bank accounts and invalidating of invoice books, since April 2014 by the Quang Nam Tax Department.

Besra Vietnam said it had no other option but to suspend operations at its Bong Mieu mine from 18th July 2014 and Phuoc Son mine from 22nd July 2014 until it was free to operate without coercion.

As a result of the closures, over 1,000 employees have been suspended. Besra Vietnam has requested for support from local authorities at both Phuoc Son and Phu Ninh districts to coordinate with the company security force to protect both properties during the suspension whilst it continues to work with the provincial and national government towards a speedy resolution.

According to Quang Nam Tax Department, the agency had proceeded to block the company's account as it had failed to repay debts worth nearly VND300 billion (about US$14.3 million), deputy head of provincial tax agency, Le Mai Khac Hung told Bizhub on July 24.

Hung said the company had shown no inclination to repay a debt of VND120 billion ($5.7 million) in 2012, and once again delayed repayment in 2013-14.

"The local tax department proposed to block an account in 2012 when the company was in debt with VND120 billion ($5.7 million). We also offered a smooth solution with a payment schedule," Hung said, adding that the company was told to apply for payment extension.

"However, the repayment schedule was not adhered to every month. We have just agreed to the company's debt payment extension when it gradually refunds the amount proportional to the debt," he said, adding that the company has to pay back nearly VND300 billion ($14.3 million).

Hung said the company and tax department are welcome to negotiate on the debt repayment.

According to Besra, the company offered a deferred debt payment plan with VND2 billion ($95,238) per month and VND20.3 billion ($966,666) of insurance debt to the provincial Tax Department. But the plan was rejected by the tax department.

The deputy head of the provincial tax department said it sent rejection notices to the company's debt extension plan before taking stronger action.

"It's a huge debt. We will agree with the company's debt extension plan only if they confirm the payment schedules with appropriate amounts," Hung said.

"The company cannot prolong the debt payment schedule as long as it wants. This is because it has not paid thousands of labourers, contractors and traders as well as getting different natural resources tax and fee," he explained.

He said the department was forced to announce that all invoices of the company were worthless.

Last December, Phuoc Son Gold Company Ltd under Besra Gold Inc – a Canadian-Australian joint-venture corporation – had been forced to close its Phuoc Son mine under pressure to pay off debts worth billions of dong to hundreds of lenders.

Hundreds of people from Quang Nam and Da Nang used hammers and axes to break down the gate and camped out in front of the building, preventing vehicles from leaving or entering and forcing the company to shut down.

However, it then resumed operations soon after negotiations with its suppliers, district authorities and police.

Besra then confirmed it was pursuing its US$4.5 million property loss and business interruption insurance claim lodged with the Bao Minh Insurance Corporation in Vietnam.

In February, Besra's licence was renewed to export gold from Viet Nam, a source from the company has confirmed to Biz Hub.

The licence, issued by the State Bank of Viet Nam, permits the company to export gold from its operations in the central province of Quang Nam.

In April, Besra received a formal notification from the Ministry of Finance that export tax assessments totalling US$12 million against Bong Mieu Gold Mining Company and Phuoc Son Gold Company have been repealed.

Last year, the company owed approximately $19 million to contractors, the bank and the government, he said.

It was behind in payments of VND17 billion ($809,523) to the main contractor – Quang An construction company – and around VND7 billion ($333,333) to other contractors in Phuoc Son district, resulting from difficulties in finance and production, including falling gold prices, taxes and environmental fees.

The company has so far invested more than $115 million in the two mines.

bizhub