Rehab Deed for mine sale delayed
By Dionisia Tabureguci
FIJI’s interim government has deliberately delayed the signing of the Deed of Rehabilitation for the sale of Emperor Gold Mine (EGM) in Vatukoula because of what it says are “new information” that it has begun to investigate.
As corporate announcements in Australia allude to the completion of the sale process between Emperor Mines Ltd (EML), the ASX-listed owner of EGM, and Westech Gold Pty Ltd, a private company in Australia headed by former EGM engineering consultant Brian Wesson, Fiji’s interim attorney general Aiyaz Sayed-Khaiyum has confirmed to Fiji Business magazine that “certain matters have come to light and which we are in the process of investigating and verifying”. Saiyed-Khaiyum chose not to elaborate on what these “certain matters” may be but gave indication that a decision may be reached by the end of the week (end of March).
“I can assure you that the decision made will be in the interest of the community in Vatukoula and also in the interest of the nation,” he said.
It is understood the signing was to have taken place on March 20, 2007 with all parties on standby but this did not eventuate because the AG had not given approval.
Ever since EML’s announcement in December last year that it will close down its Vatukoula mines, questions have been raised by industry experts and representatives of the affected Vatukoula community regarding various events that transpired afterwards, including the sale of the mine to Westech, an Australian incorporated company whose owners have been quoted as associating it more to power production than gold mining.
In particular, questions have been raised on the background and backers of Westech Gold Pty, given that it was only registered with the Australian Securities and Investment Commission in February this year.
“This should raise some serious questions about the authenticity of the whole deal,” said a concerned source, familiar with the operations at Vatukoula.
“Given that (Westech Gold) was only registered in the past month, the company cannot have any asset and I simply cannot believe that the Fiji government will allow the sale of the company (EGM) with $15 million in liabilities to a company with no asset. What nonsense is this?”
In a series of correspondence with Fiji Business magazine, the source has joined other industry observers in expressing reservation about the deal, which they view with deep suspicion as being created to allow Emperor Mines Ltd to get out of its financial, social and environmental obligations at Vatukoula.
Further criticisms were levelled at the nature of the transaction, which involved no actual purchase but simply a transfer of shares from Emperor’s companies that own the Fijian assets - along with the liabilities – to Westech Gold.
This disposal has in turn given much relief to EML’s major shareholder, South African owned Durban Rooderpoort Deep Ltd (DRD) who has been moving to improve upon its battered share price performance by cutting down its losses, contributed mainly by the estranged Vatukoula operation. DRD had also made known its plans to sell its interests in Porgera and Tolukuma gold mines in Papua New Guinea and to undertake a major restructure and share consolidation. The complete disappearance of Vatukoula and associated liabilities from its books has given the miner much room to move with its restructure plans and has also returned some investor confidence with its share price having recovered overnight on the Johannesburg Stock Exchange.
But what it has left behind in Fiji is a long list of unanswered questions and concerns about the new owner of the Vatukoula gold mine, the expertise that it seem to lack and the financial position that not many are aware of.
Another commentator to this magazine noted how the new owner expressed optimism in restarting Vatukoula, which he believes is already a dying operation.
“Restarting sunset mines is always difficult,” he said. “For such a mine, the finding of a new and higher grade orebody system is usually what is required to revive it from its natural death and this upside potential was not there when EML decided to sell Vatukoula. I doubt very much that there is an upside to EGM because of lack of viable resources to kick start mining operations and the 4million ounce resource infers total resource…what is more critical is how much of this total resource is categorised as being amenable to mining.”
Representatives of the gold mining community have also expressed their concerns. In an open letter to Fiji’s interim government last month, the representatives urged the interim administration to intervene in the ownership transfer of the Vatukoula gold mine.
The list of issues that EML has left behind and which workers reps are not sure how the new owner proposes to deal with, relate to: the recently redundant December 5th 2006 workers, the stranded 500 or so subcontractor employees, unresolved disputes like the 1991 strikers and workmen compensation issues, landowners and historical land claimants, environmental concerns both within and downstream communities, women, children and other groups affected by the Vatukoula mine closure.
“Government should assure the people of Vatukoula that all these obligations will be taken care of, by whom and when before it concludes negotiations with the two companies Emperor and Westech,” they said.
Footnote:
Who is Brian Wesson?
Brian Wesson is the owner of Westech International, the company that has been associated with the transfer of ownership of EML’s Fiji operation to Westech Gold Pty Ltd, a company that only got incorporated in February 2007.
Prior to moving into this major undertaking, Wesson was chief engineer at Vatukoula in 1993 where he spent 11 years. An electrical engineer with over 30 years experience in the resource and energy sectors, Wesson started his career with Rand Mines in South Africa in 1980 in the electrical department of the Harmony Gold Mine. He was transferred to East Rand Propriety Mines as sectional resident engineer in 1982 and was moved to Durban Rooderpoort Deep in 1989.
On September 19, 2006, Wesson was appointed a non-executive director of ElDore Mining Corporation Ltd, an Australian mineral exploration company that recently acquired Robust Mines Ltd in Fiji. Robust Mines Ltd has exploration properties in Waimanu in Colo-i-Suva, Buca (Dakuniba) and Vatukoula South West.
Wesson’s resignation from ElDore was announced on ASX on January 29, 2007. Wesson emerged again in mid-March when EML announced it was selling EGM to Westech International. The press reported Wesson and his wife Amelia as directors of Westech International.
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NOTE: This article was published in the Fiji Business Magazine as: "New information prompts govt to delay gold signing. AG Sayed-Khaiyum: 'We're in the process of investigating and verifying'", pp 5,6, April 2007 edition.
Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.
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