OceanaGold seeks clarification of tax treatment by Phl gov’t

MANILA, Philippines - Australian miner OceanaGold Corp. announced yesterday that it has temporarily suspended the transport of copper-gold concentrates from its Didipio copper-gold mine in Nueva Vizcaya  as it clarifies  tax exemptions rules from the government.

The company  is currently discussing with various government agencies the interpretation of tax exemptions pertaining to the Didipio mine’s Financial Technical Assistance Agreement (FTAA).

The Didipio project is the first  mine to operate  in the Philippines under an FTAA.

“The Company wishes to advise that it is currently in discussions with various government departments over interpretations of tax exemptions pertaining to OceanaGold’s Financial and Technical Assistance Agreement (FTAA),” it said in a statement.

“Due to these clarifications on tax exemptions being sought, some of the trucks used for transporting concentrate are being held by local government agencies and thus transportation of copper-gold concentrate has been temporarily suspended. While these discussions take place, mining and processing operations continue,” it added.

Under the mining act, FTAA contractors are allowed to recover their pre-operating expenses for five years during which they shall be exempted from several taxes.

The law provides that beginning from the approval of the Declaration of Mining Project Feasibility up to the end of the recovery period, an FTAA contractor is exempt from corporate income tax, customs duties and fees on imported capital equipment, value-added tax on imported goods and services, withholding tax on interest payments on foreign loans and on dividends to foreign stockholders, and other national taxes, except excise tax on minerals.

After the recovery period, the contractor is required to pay all applicable taxes, fees, royalties and other related payments to the national and local governments.

OceanaGold said that despite this development, the ramp up of the process plant “continues to track well.”

To date, approximately 2,500 tons of copper-gold concentrate has been delivered to port and in excess of an additional 2,500 tons has been produced and is awaiting transport from the mine site.

OceanaGold is an Asia Pacific gold producer with projects located on the South Island of New Zealand and in the Philippines.

Its assets include New Zealand’s largest gold mining operation at the Macraes Goldfield in Otago which is made up of the Macraes Open Pit and the Frasers Underground mines.  On the west coast of the South Island, the company operates the Reefton Open Pit mine.

The company’s Didipio Project in northern Luzon, Philippines is expected to produce an average of 100,000 ounces of gold and 14,000 tons of copper per year on average over an estimated 16 year mine life.                    

OceanaGold expects to produce 285,000 to 325,000 ounces of gold and 15,000 to 18,000 tons of copper in fiscal year 2013 from the New Zealand and Philippine operations combined.