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Olympus Exceeds 2009 Productions Targets Positioned to Expand Production in 2010

Olympus Pacific Minerals Inc. (TSX: OYM) is producing and exporting gold from its Bong Mieu Gold Mine, located in central Vietnam, just a short drive from the major port city of Da Nang. While the company continues to develop its core properties, Bong Mieu and the high-grade Phuoc Son Gold Property, it also has a 1.6 million ounce gold resource at its advanced stage Bau project in Malaysia. What investors will notice most about Olympus Pacific in our interview with Chairman and CEO David Seton is that this is a company with a quickly growing resource and production base. As such, Olympus Pacific is well positioned to profit from the bull market in gold and an uncertain dollar.

Resource Intelligence: Let’s quickly recap the Zedex minerals acquisition. How long did that take you to put that together and what did it mean to the company?
David Seton: We have been working on the acquisition for in excess of two years now and started to get some serious traction in the second half of 2009. The main benefits of that were the simplifying of the corporate structure and the ability to access the Australian markets with the large numbers of Australian shareholders from the Zedex register.
Most important to the transaction was the Bau acquisition—the project in Malaysia that is 800 sq. km in area and just about fully licensed with no royalties and low taxes, with a very serious resource of somewhere between $20 and $30 million of past exploration and drilling and 1.6 million ounces of gold. We’re confident we’ll be able to increase the Bau resource significantly just from the existing data and double it quickly. Bau will likely be our third project that we bring into production once we complete the building of the second plant in Vietnam. We ultimately think Bau will add 200,000 ounces per annum to our production profile.
RI: Let’s talk about Bau, which is your newest acquisition but has huge potential for growth. 
DS: This year we’re looking to move into full feasibility at Bau.This is a huge project area of 800 sq. km that is already licenced and has historical mining all over the project area in underground and open pit operations. The most recent modern operation there was 1 million ounces taken from a large open pit mine.
RI: When can investors expect a feasibility report?
DS: I would expect feasibility would be completed probably in about 18 months time. But we’ll have preliminary results earlier than that.
RI: Since you acquired Zedex and its 50.05% portion of the Bau project. You have 1.6 million ounces gold, plus a lot of exploration targets. Do you have an exploration target size in mind at this point?
DS: We have identified geological targets in several other areas that we feel could contain another 4.4 to 4.75 million ounces of gold. Of course, only drilling can confirm that, but we’re confident that with further drilling much of this will be moved into JORC and 43-101 compliant status.
RI: In Vietnam, your Bong Mieu and Phuoc Son projects are quite closely situated. Can you tell me about that?
DS: They are approximately 100 km apart. Although the ore types do have differences we can’t process both ore types through our Bong Mieu facility.
We acquired Bong Mieu in 1996. At the time it had a 200,000 ounce gold resource that we increased to 900,000 ounces before putting it into production. Initially it was a demonstration plant producing just under 10,000 ounces per annum that we decided to put into production to generate cash during the financial crisis in 2008.
RI: Moving forward, what are your gold production targets?
DS: We achieved our initial goal of 40,000 ounces in the fourth quarter of 2009 and we have targeted maintaining that through to the end of 2010. We will be targeting 80,000 ounces in 2011. Then we’re anticipating incremental increases to take this up to 100,000 or 120,000 ounces before our third project comes on stream, which I believe will be Bau.
In the meantime, our gold sales have reached record levels, and we will continue in that vein this year. Sales at the end of 2009 totalled 24,200 ounces which was a 122% increase over the same period last year. We also set a record in the fourth quarter selling over 10,000 ounces, which is equivalent to annualized sales of 40,432 ounces.
Investors should know that Olympus is generating positive cash flow today from our gold sales. Last year our revenues were $24 million for the year, so that should enable us to fund a portion of the capital cost required to complete the construction of the processing plant at Phuoc Son. And of course all this is with a view to our increased production targets. 
Our target is to expand all three mines until we’re producing a total of 300,000 ounces per annum.
RI: That would be a huge revenue stream considering your present cost structure. How much of your company is owned by management? 
DS: The major institutional shareholders own approximately 30% between them and management holds another 15%.
RI: So this is a tightly held company with 45% in the hands of institutions and management. Is there something you can say about your management in terms of how specific individuals add to the team?
DS: This is a great team. It is very cohesive and it’s a proven management team that has come together since the Bong Mieu demonstration plant was built. We have successfully and collectively built two underground mines and refurbished the Bong Mieu plant.  Now we are in the process of building a second plant. So it’s a team that has cut its teeth on two operations in Vietnam and it has worked very successfully to turn the operation around and make it cash flow positive.
And now we’re perfectly positioned to expand and increase our production profile to a level where we believe we can output 300,000 ounces annually.
RI: Lets talk a little bit about operating in Vietnam and in Malaysia. What are the communities and the government like? 
DS: Vietnam is an excellent jurisdiction to work in: It’s very safe, reliable and secure. Financially, it’s very secure. In terms of investments it is rated very highly as a country to invest in. It is somewhat bureaucratic, but we’re able to work with that effectively.
As a family we’ve been here in excess of 20 years and as an operator we’ve been here since 1996 and we’ve always delivered on what we said we would, so I think we have a good track record with the government. If anyone can work in Vietnam, I think we can.
RI: What about infrastructure there, is that an issue or is it essentially sound?
DS: Infrastructure is very good. Our projects are a two-hour drive from the main city of Da Nang, which is the third largest city in Vietnam. It is next to an international port, we have cell phone coverage to both mine sites. There are even two internationally known golf courses here.
RI: Your community involvement is commendable, David. You recently completed a clean water project for the people in Tam La.
DS: It’s just one of the things we do for the community. We’ve introduced clean water to 400 families. This is a remote area in terms of the Vietnamese delivering services to the people. In the commune that we operate, all the families get good clean drinking water and access to medical services.
RI: So, Macquarie Bank originally financed the Bong Mieu plant, and you have repaid that. How many ounces can it produce annually?
DS: This facility was designed to produce 100 – 120,000 ounces annually, but at first stage we’ll be producing 60 – 65,000 ounces from it.
RI: How do you think investors should evaluate Olympus Pacific?
DS: They should look at the cash flow that we’re generating from our production. I think even on 40,000 ounces per annum we are probably two to three times undervalued. At 80,000 ounces by the end of next year we would be undervalued by double that amount. So just look at cash flow and production and there is extreme value here. In addition to that there is the huge increase we are going to get from resources from the four mining projects that we have. Investors should be evaluating our current resources of about 3.2 million ounces gold. Then add to that our goal to increase that resource by 1.5 million ounces this year through exploration.

Milestones:
  • Feasibility study completed  within 18 months 
  • Commission Phuoc Son 
  • Processing Plant by Q4 2010 
  • Produce 80,000 ounces 
  • annually by Q4 2011



Disclosure: No Positions