Lao Cai Gold JSC released its Q1 finance report showing that it had net revenue of VND11.2 billion, a sharp decrease compared with the same period last year, and a loss of VND2 billion.

By the end of 2017, the company’s accumulative loss had reached VND60 billion. In 2018, the company made a profit of VND17 billion, which means an accumulative loss of VND43 billion by the end of Q1.

Lao Cai Gold JSC was established in late 2017 by five founders with the initial charter capital of VND45 billion which has increased to VND105 billion. Vinacomin, the nation’s largest coal miner, was the biggest shareholder of the gold company, but it divested all the shares earlier this year.

Lao Cai is not the only unprofitable gold company. The Quang Nam provincial authorities reported many problems when shutting down the Bong Mieu mine.

The Bong Mieu Gold Exploitation Co Ltd in the province declared bankruptcy in late 2018. Since the company’s deposit was VND6.4 billion only, the local authorities want to use money from other sources, totaling VND13 billion, for the mine closure.

Auditors pointed out that the total payable accounts of the company is VND1.265 trillion, while the total assets of the company is VND302 billion, the accumulative loss has reached VND1 trillion, or VND966 billion higher than stockholder equity.

Bong Mieu owes VND108 billion in tax, which the provincial taxation agency doesn’t think is recoverable. The company also owes VND900 billion to over 100 creditors.

In a similar case, Phuoc Son, which began exploiting Dak Sa mine in 2014, declared insolvency. After undergoing restructuring and pledging to pay tax debts worth hundreds of billion of dong, Phuoc Son resumed operation in August 2016. However, in December 2016, it once again halted operation because of ‘problems in capital sources’.

Both Phuoc Son and Bong Mieu belong to Besra, a Canadian group. After exploiting 6.9 tons of gold from Bong Mieu and Dak Sa, the two biggest mines in Vietnam in the last 12 years, Besra left with unpaid debts.

However, experts question the amount of huge debts reported by gold companies.

“Only the gold miners know if they make a profit or take a loss,” commented Tran Thanh Hai, chair of the Gold Trading & Investment Company. “The gold production cost is always an unknown.”

Nguyen Anh Phong from the HCMC Economics & Law School also said the figures declared by miners cannot be checked, while the forecasts about gold concentration and mine reserves remain unreliable, which makes it impossible to calculate the exact production cost.

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Thanh Lich