April 30, 2012

The Australian: Chinese miner chases Fiji gold

BY: BARRY FITZGERALD From: The Australian April 26, 2012 12:00AM

CHINA has taken a shine to Fiji's Vatukoula goldmine on the nation's main island Viti Levu, giving Fiji's military dictator Frank Bainimarama a victory on the foreign investment front.

The move comes as anti-mining protests have prompted Australia's biggest listed gold producer, Newcrest, to go softly softly on what would be Fiji's biggest mining investment, the Namosi gold project.

The owner of the Vatukoula mine, London-listed Vatukoula Gold Mines, has struck a deal with Shenzhen stock exchange-traded Zhongrun Resources, under which the Chinese group can march to a dominant 17.6 per cent stake in the company for $19.3 million.

The planned share placements to Zhongrun would displace Canadian fund manager Sprott Asset management as VGM's biggest shareholder and comes as VGM seeks funding to increase production from a planned 65,000 ounces of gold this year to 100,000oz from a resource base of 4.2 million ounces.

The large resource base is despite the mine having been in near continuous production since 1935.

For much of that time it was owned and operated by Australia's Emperor Mines, which introduced Western Mining Corporation as a joint-venture partner in the 1980s.

After WMC quit the joint venture in 1991 the mine fell on hard times, and its ownership bounced from Australia/New Zealand to South Africa to London, with VGM, and, in part at least, China.

The underground operations were hit by recent floods in Fiji, although production targets for this year have been maintained.

Chinese interest in Vatukoula comes as Newcrest has adopted a slower approach to the development of its $1 billion-plus Namosi copper and gold project, 30km west of Fiji's capital Suva.

Commodore Bainimarama announced in January that he would be taking over responsibility for negotiations related to the Namosi project.

Newcrest manages and owns 69.94 per cent of the joint venture, one of the world's biggest undeveloped copper-gold deposits that is subject to an environmental impact assessment.

Newcrest has said previously that it expects to complete a feasibility study for the project by June, but it backed away from that target yesterday.

Newcrest managing director Greg Robinson confirmed that Namosi was in the pre-feasibility study stage, and said he was "still very positive" about the project."

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