The telegraph piece copied below. On page 5 here:
http://www.lyonsdown.co.uk/publications/2011/preciousmetals.pdf

Golden future for Fiji Fiji’s Vatukoula gold mine is back in business, say Iestyn Adams and André Morrall

December 5 2006 was a sombre day in Fiji’s otherwise colourful history.That day, Emperor Gold Mines Limited announced that its site at Vatukoula – the islands’ gold mining institution and second largest private sector employer – was no longer financially viable.

Emperor was apparently losing between $3m (£1.9m) and $5m (£3.2m) per month, the result of high operational costs and outdated production methods. After more than 70 years of continuous mining, it seemed Vatukoula was at the end of its productive life.

The devastating blow was felt far beyond the mine’s physical boundaries.Closure, it was claimed, would directly affect the livelihoods of10,000 people and take out 7% of Fiji’s national merchandise exports. So ingrained was Vatukoula in the culture of its closest town, Tavua –four generations of some families had worked at the mine – that many feared nothing short of social collapse.

It was classic old mine syndrome. More than seven million ounces of gold and two million ounces of silver had been extracted from Vatukoula ore since the mid 1930s. Historic production over 100,000 ounces of gold ayear, with Emperor still hitting that marker as recently as June 2005.

But as mines get older – as workings extend, deepen and become more complex – the cost of operation invariably rises. Heavy investment and continued geological exploration could, perhaps, have saved the mine,but neither had taken place for some years.

So, it appeared, ended an industrial success story that began in November 1932 when experienced Scottish prospector Bill Borthwick found abundant gold in the Vunisina Creek, not far from Tavua. The three major mines that developed at the site (Emperor, Loloma and Dolphin) were consolidated into a single operation, the Emperor Gold Mine, in the mid1950s. The area – which had been known as Matanagatam, the face of the snake – had already been renamed and from the 1930s was known as Vatukoula, the rock of gold.

In its first operational decade, Emperor produced 607,385 ounces ofgold, worth more than $8.7m (£5.5m) and by 1940, 40% of Fijian exports by value came from gold. This contribution to GDP began to decline, yet mining still made up 7% of the islands’ exports in the early part of this century.

Not long after the December 2006 closure announcement, a mine rescue plan was put into place for Vatukoula. Proposals were put forward to DRDGold Limited, the Australian holding company that owned Emperor Mines Limited, and to the government of Fiji.

In March 2007, the islands’ government agreed to a series of measures to create economic conditions favourable for reopening the mine. Royalties on ore extracted were reduced to 3% over a five-year period, import duties on the mine’s diesel oil requirements were waived for two years and export taxes were exempted for five years. Several other duties that usually would be levied in accordance with Fiji’s Income Tax Act were also waived.

Subsequently, AIM-listed exploration company River Diamonds Plc acquired full ownership over the mine. The company was well aware of the mine’s potential, especially as gold price rose, hitting $1,000 (£630) per ounce in early 2008.

“The acquisition of the Vatukoula mine provides River Diamonds with the opportunity to bring this historic gold mine back to profitability at a time of high prevailing gold prices,” the company’s chairman ColinOrr-Ewing said in March of that year.

Having reopened the mine in April 2008, River Diamonds changed its nameto Vatukoula Gold Mines Plc on August 20, trading on the AIM market as VGM.L. Dave Paxton came in as chief executive officer and an “A team” ofexperienced mine engineers arrived at the mine site, led by general manager Bert Leathley, to deal with the standing water that had accumulated inside the mine during its lengthy spell of inactivity.

With the mine back in production, 38,402 ounces of gold were produced inthe nine months ending May 31 2010. While production volumes are not yet up to the historic level of 100,000 ounces a year, Vatukoula is already producing at a rate of more than 60,000 ounces a year and managers expect output to reach 100,000 ounces later this year.

Four of the nine existing shafts are now in operation, including the Smith and Phillip shaft, from which ore is hoisted to the surface; the Cayzer shaft, a transport entrance for men and materials; and the Decline shaft, the access point for Vatukoula’s fleet of loaders,load-haul-dump vehicles and support trucks. Above ground, the 650,000 tonne a year processing facility has also been refurbished to meet modern mining requirements.

And looking to the future, the company is learning from mistakes of the past. Whereas Emperor had undertaken a bare minimum of geological exploration in its latter years, Vatukoula’s approach is ambitious and comprehensive.

Potential exists to expand beyond the present footprint. The 2010 exploration programme concentrated on 19,700 hectares adjacent to the mine, for which Vatukoula holds the relevant mining licences, and the 2011 campaign will examine eight target areas in a vast and largely untested zone.

Last year’s NI-43101 compliant classification of the Vatukoula ore body confirmed that the mine can be a long-term ongoing concern: proven and probable mineral reserves were stated at 1.9m tonnes of ore grading at10.9g/t, resulting in a gold reserve of 680,000 ounce. Known resources totalled 4.3m ounces of gold and it is expected that these resource figures will rise substantially once the exploration campaign is complete.

With mine refurbishment and drilling programmes under way, new mining and geological equipment on site and a workforce of motivated and experienced Fijian miners ready to restore the mine’s reputation as a major player in the global gold production sector, Vatukoula is destined to continue to create wealth for Fiji and for Vatukoula Gold Mines formany years to come.