Gold price 'dance' makes Canadian tycoon 'fall off horse' in Vietnam

June 14, 2016 08:38

The Canadian Besra Group owns a series of gold mining companies in Vietnam, including Bong Mieu and Phuoc Son, which are continuously making losses.

The strong fluctuations in gold prices in 2010-2015, along with large financial borrowing costs, caused Besra Group, headquartered in Toronto, Canada, to suffer huge losses in Vietnam.

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Although present in Vietnam for a long time, Besra's heavy losses have only been revealed in recent years.

Total revenue from gold sales of Phuoc Son and Bong Mieu increased rapidly over the years. In 2009, revenue reached 16.4 million USD, in 2010 it increased sharply to 36 million USD, in 2011 revenue from gold peaked at 58.5 million USD. However, the profit level was quite unstable, in 2010 the net loss was over 4 million USD.

2011 is considered the most successful year for the Canadian tycoon since coming to Vietnam to mine gold. Specifically, Phuoc Son recorded a revenue exceeding 39 million USD, with an accumulated profit of about 10.2 million USD. Meanwhile, Bong Mieu continued to suffer an accumulated loss of up to 14 million USD, while its revenue only reached 19 million USD.

Besra's gold is mainly exported, so fluctuations in the world gold market will greatly affect the revenue and profit results of this unit. At the end of 2014, Quang Nam province began to collect nearly 400 billion VND in taxes owed since 2012. Besra explained that the delay in tax payment was due to the world gold price falling too low, causing production to suffer losses. In 2012, finished gold was sold for 1,700 USD per ounce, but in 2015 it was only about 1,100 USD.

In addition, large investments, costly exploration, unstable gold content in ore, increased resource taxes, etc. make production costs higher.

Despite promising to rescue its subsidiary in Vietnam, for a long time, the parent company has not invested capital to restore production. In fact, the Besra Gold Group in Canada is also facing difficulties with accumulated losses reaching 145 million USD, negative equity, so the rescue of Phuoc Son and Bong Mieu is still unclear.

According to VNE

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