~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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Kiwis tap rich Vietnam vein

Kiwi miners have begun producing the first new gold from Vietnam since the country shrugged off its often bitter colonial past.

Mining company Olympus Pacific Minerals has started producing 18.7kg of gold a month from its Bong Mieu mine in the central highlands, and selling it to refineries in Switzerland. "That's not big by world terms. But it is hugely significant for us and for the Vietnamese government," said Olympus chairman David Seton.

Seton said Bong Mieu was a testing ground for a start to gold production from its nearby Phuoc Son mine, where mining will be seven times more profitable. "We will have a feasibility report on Phuoc Son next month and we confidently expect to start gold production there in 2008. That mine will produce a bucket-load of cash," said Seton. With no real gold mining in Vietnam using modern techniques, the government has been desperate to encourage foreign investors to explore largely untapped fields. It has introduced new mining laws based on Canadian and Australian legislation to calm foreign investment fears about doing business in that country.

But it has been a small group of New Zealand miners and investors who have led the charge in Vietnamese gold exploration. Olympus Pacific is a Toronto-listed mining venture, which is controlled by a New Zealand company called Zedex Minerals, the previously listed Iddison Vietnam of more than a decade ago. Zedex was on the unlisted securities market here until earlier this year when it decided to list on the Australian Stock Exchange. It has since raised $A5 million for its Vietnam gold projects and other investments elsewhere in Asia as well as Australia.

Seton said it had been very difficult to persuade investors to put money into Vietnam. "It took a lot of private money, mainly from family and friends," he said. "There's been a lot of boring slog work over the past decade, but now we are starting to see the exciting stuff," said Seton. While gold production at Bong Mieu is a first for Olympus-Zedex and the Vietnamese government, it is not likely to be the most profitable. Indeed, the Vietnamese government told Olympus if it got Bong Mieu to production, it would be given its licence for Phuoc Son, 70 kms to the north. That has proved the case.

Gold grade in the proven reserves of 18,700kg at Bong Mieu is between 2-2.5g per tonne. "That is at the bottom end of the scale. But with gold prices where they are it is still worth mining," said David Seton. But the grade of gold in the proven reserves of 8000kg at Phuoc Son was 13-14 gms per tonne. "Mining that will be hugely profitable - and especially so since we have done the hard yards in making the transition from gold explorer to producer," said David Seton. "Once you are in production phase, you can expand quickly after making a discovery."

Seton said he expected they would be producing 560kg of gold annually from Bong Mieu from next year. Besides its controlling stake in Olympus, Zedex has a 2% gross production royalty over Olympus's 80% share in gold production from Bong Mieu. Investor interest in gold mining by New Zealanders has traditionally been for the buffs. But that is starting to change with soaring gold prices.

Zedex has a shareholder register of around 650 investors, with Seton family interests figuring prominently. A third Seton brother, John, is chairman of Zedex. Listed Widespread Portfolios also has a 7.8% stake in Zedex. Zexex shares last traded on the AX at A17c. Four years ago after Zedex announced gold mineralisation finds near Phuoc Son, they traded at $1 on the unlisted market here.

By Garry Sheeran - Reuters - September 24, 2006.