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Vatukoula Gold Mines makes first US$0.77m payment to Social Assistance Trust for concessions

Vatukoula Gold Mines (AIM: VGM) has finalised the Vatukoula trust deed and made the first payment of Fiji$1.5 million (US$0.77 million) to the trust account of the Social Assistance Trust, formalising a number of key concessions and exemptions to the company’s wholly owned subsidiary Vatukoula Gold Mines in Fiji.

The trust supports those members of the Vatukoula community who were previously employed at the mine at the time of the mine closure in December 2006, but who have not been re-employed or able to find subsequent employment.

Vatukoula Gold Mines will provide a total of F$6 million (US$ 3.23 million) over a period of five years. The first payment of F$1.5 million (US$ 0.77 million) has now been made by Vatukoula, and the Trust will receive the balance in equal instalments over four years on the anniversary of completion.

For its contribution to the trust, Vatukoula will receive an exemption on the payment of corporation tax and export tax for five years, a concession on the importation of automotive diesel oil and industrial diesel fuel for the mine operations and all vehicles for the operations at the gazetted rate. It will also benefit from an exemption on the payment of fiscal duties for all plant equipment machinery and motor vehicles and  other importations for the mine and the payment of Import Excise Duty for a period of 3 years from the 14th May 2009 and the acceleration of depreciation provisions.

“The concessions granted in relation to the Social Assistance Trust are having a favourable impact on the economics of the mine. Good progress continues to be made operationally at the mine and we look forward to reporting on our recent activity in the Quarterly report due later this month,” said chief executive officer of Vatukoula David Paxton.

Last month, Vatukoula reported a rise in revenues to £18.8 million in the full-year to August 31 2009 from £3.8 million a year earlier while it made an inaugural gross profit of £1.4 million compared with a loss of £0.6 million previously.

The company ascribed the results to the increase in production and a higher average gold price received of US$881 per ounce as well as major advances in the group's ongoing production ramp-up at the Vatukoula gold mine with gold produced totalling 33,757 ounces in the year, up from 12,847 ounces.

Disclosure: The author holds no positions in the company