Thursday, August 2, 2007


Written by Brad Gordon, Chief Executive Officer Emperor Mines LimitedThursday, August 02, 2007

I write with regard to an article published in The Fiji Times on 21/07, titled "It's time for the gold mine wheels to churn out justice", written by members of the Vatukoula community.
While I applaud the intention of the authors to encourage dialogue between stakeholders involved in the operation of the Vatukoula mine, there are a number of misapprehensions and errors in the article that deserve correction.
The first issue concerns the authors' assumption that Emperor Mines Limited, former owners of the Vatukoula Mine, "owe the people of Vatukoula a number of important obligations", including, according to the authors, "millions of dollars worth of redundancy payments still being owed to more than 2000 former employees".
The first error in this assertion is demonstrated by the simple fact that Emperor Mines Limited, an Australian company, did not employ workers at Vatukoula those workers were always employed by Emperor Gold Mining Company (EGM), the Fijian company that still owns the mine.
Further, with financial assistance from EML, the Fijian company had paid out all redundancies and final pays to redundant employees in full by early February this year, and provided far in excess of the statutory notice period for the majority of employees in some cases, nearly four times the period required by law.
The company made a great effort to ensure that wages continued to be paid during this time, as we felt it was important to help provide a safety net following the closure, and over $F9million was paid out in that period.
During the months following the announcement to cease mining, company management ensured there was no interruption to the company-provided hygiene, power and water services to the local community, at significant cost (approximately FJ$1million each month), and despite the political uncertainty in the country at the time.
This was one of the most personally difficult decisions I have had to make I spent seven years living and working at Vatukoula myself years that I count among the best of my working career to date.
My wife is Fijian, and together with our two sons, we maintain close relationships with friends and family "back home".
It is important to remember that when Emperor Mines made the decision to cease mining operations at Vatukoula, our intention was to undertake further exploration at the mine, in order to try and identify sources of gold that could be mined at a profit, allowing the reopening the mine.
The mine had not operated profitably for a number of years, and no company could sustain such losses indefinitely.
The reasons for the closure were communicated to members of the then Qarase Cabinet, in the days immediately before the coup, and company representatives even waited in Suva during the coup and the days following the takeover, in order to continue our discussions with whoever emerged as the Government.
Our proposal at that time was to work with a multi-stakeholder group to deal with the impact of the closure, and to find ways to ameliorate the impact of the closure on the local community.
We applied, through processes defined by law, for a waiver from the lease condition to continuously mine in order to undertake the proposed exploration project, and this remained our intention until the first week of January 2007, at which time, for reasons yet unknown to me, the new military administration occupied a number of key areas of the mine site and placed restrictions on the ability of management to manage and administrate the mine.
These actions impeded the legal right of the company to deal lawfully with its assets, and placed an increasing financial burden on the company.
The sad truth for those who would believe claims of misbehaviour or misappropriation by the company is that the management of the mine, led by the relatively newly appointed general manager Frazer Bourchier, acted with true integrity and transparency in all their dealings regarding the mine closure.
His leadership was some of the best ever experienced at the mine. Mr Bourchier conducted a review of the operation, and in particular its reserves of gold, at my request, as soon as he commenced his duties at the mine, and it is a testament to his professionalism that he responded the way that he did to the negative findings of that review. The mine could not, and would not, make a profit by following the then mining plan, and the only option was to cease mining, stop the financial drain, and undertake further exploration work.
However, following the actions of the military in January, our priority instead became the need to discuss outstanding issues with the interim administration, including, most importantly, the legal waiver we had applied for, the actions of the occupying forces at the mine site, and a return to ordinary lawful management of the mine by the company.
When the Interim Cabinet was eventually formed, it met to consider the matter, and decided that the company must meet certain conditions (ie, those announced following the Cabinet meeting) before it was able to do anything whether a sale OR continued exploration.
These views were articulated through the media, and through dialogue with management representatives.
This necessarily placed onerous restrictions on the options available to the company, as it constrained our ability to freely deal with and manage the assets in accordance with international and national law.
Further, the conditions would have cost the company approximately $54million over two years an unsustainable loss by any method of accounting!
This led, in turn, to the decision by EML to divest all of its Fijian operations a decision that we had to make to protect the interests of our shareholders.
In order to facilitate this, we met with representatives of the Interim Government, including Commodore Bainimarama, Minister for Lands Tevita Vuibau and Chief Secretary Parmesh Chand, with the intention of developing a social assistance package.
It is a reflection of the positive determination of these men, together with the efforts of Mr Bourchier and other company representatives, that an agreement was reached, resulting in a document called the Vatukoula Social Assistance Deed. The deed places a number of important obligations on the parties to the sale of EGM, including a significant cash contribution of $6million for a social assistance trust fund, the granting of large parts of the Vatukoula freehold estate to community ownership, and the granting of community facilities, such as schools, a clinic, police buildings and other structures to the local community.
All of these conditions are aimed solely at providing significant and equal assistance to the community, including former employees (among which I include the 1991 workers) and their families.
For the first time since the inception of the mine, the community would own and control their land and their town facilities, and there would be money available to assist with retraining, relocation or other purposes as determined by the community themselves.
Under the circumstances, the development of the deed was an extraordinary achievement, and shows what a determined group of individuals can achieve, even during the turmoil created by the political events at the time.
The Interim Cabinet approved the deed at a meeting in March, however, delays in considering other conditions regarding future operations at the mine (unrelated to the community assistance package), created an untenable financial situation for the company, and eventually, we were forced to complete the sale, or risk the liquidation of the Fijian operations, which would have likely meant the end of any social assistance, as liquidators would be required by law to serve the interest of trade and company creditors. The sale involved the legal transfer of all assets and liabilities to Westech, and on completion of the sale, Westech became responsible for trade debts, legal issues and all other outstanding liabilities of the mine. The assumption in the article of July 21 that the sale of these assets by Emperor Mines Limited in some way ignores or abrogates community needs is both false and misleading a great deal of effort and resources were put into developing the deed package, in direct response to community concerns.
It is my genuine hope that operational issues between the new owners of the mine, Westech, and the interim Government can be resolved quickly, as this will trigger the obligations of the deed, providing both immediate relief for the Vatukoula community and a mechanism by which all in the community can help determine the future of the town.
These are, without a doubt, extraordinary times, and the difficulties in reaching resolution on these matters have been significant, but, I believe, have resulted in a community assistance package that is fair, and that takes future needs of the community into account.