VietNamNet Bridge - Concerns have been raised about the acquisition of Phuoc Son and Bong Mieu gold mining companies, especially as the two investors taking over the bankrupt businesses are familiar names.

Besra Gold Inc has announced its withdrawal from the two biggest gold mining projects in Vietnam – Bong Mieu and Phuoc Son in Quang Nam province. All the assets in the two companies will be sold to get money for debt payments.

Prior to that, in January, Canada’s Besra Gold Inc announced its suspended operations at the Phuoc Son gold mine in the central province of Quang Nam because it had run out of money.

The buyers of the two companies are Paul and David Seton, who were Besra executives.

Nguyen Van Ngai, economics dean of the HCMC Agriculture & Forestry University, pointed out that the companies were sold to former managers of the companies, who understand the operation and the losses incurred by Besra.

The former managers bought Phuoc Son and Bong Mieu because they believe they can make profit.

Concerns have been raised about the acquisition of Phuoc Son and Bong Mieu gold mining companies, especially as the two investors taking over the bankrupt businesses are familiar names.

Ngai said there are many unanswered questions. When such a large and powerful conglomerate like Besra fails, it is necessary to find out why: did the gold price decrease or were there high production costs, low gold reserves, low productivity or bad management?  And the biggest question is why a heavily indebted company can be sold.

“As I said, the buyers understand the problems of the companies, and therefore, it is a mystery why they bought such bad companies. Maybe because the buyers have found the solutions to the companies’ problems?” he said. “Or it is just a ‘game’ played by foreign investors?”

“Maybe the investor deliberately takes a loss and sells the companies, eliminates all Vietnamese shareholders and tries to hold 100 percent control over the companies?” 

Le Cao Doan from the Vietnam Economics Institute has also raised similar questions, saying that it is difficult to explain why the former managers of Besra accepted taking over unprofitable companies with big debts.

Doan went on to say that he can see two big problems. First, it is unusual that a gold miner, which just exploits natural resources and sells, repeatedly reports losses. Second, everyone understands that mineral exploitation field is difficult to restructure.

"I’m sure they (the buyers) can see other benefits in the takeover deals – not benefits in digging and selling gold,” Doan said, adding that the reports all say the reserves are modest and exploitation has to be implemented in unfavorable conditions.

RELATED NEWS

Phuoc Son Gold sees business registration certificate revoked

Viet A becomes tax guarantor of Phuoc Son Gold

Mai Chi