By RACHNA LAL
Vatukoula Gold Mines’ full-year underlying losses (earnings before interest, taxes, depreciation and amortisation) have widened.
The mining company has reported this to have widened to £9 million (FJ$27.8 million) in the year ended August 31, 2013 from £1.5 million (FJ$4.6 million) the previous year.
The figures were attributed to lower gold prices and a lack of capital investment hampering production plans whereby gold output fell by 25 per cent.
Non-executive chairman, YB Ian He, said the continued downward pressure on the gold price had made developing and mining at the Vatukoula Gold Mines very difficult.
“Moreover, the delays in securing the capital investment have prevented the mine from embarking on its growth strategy which in turn lowered production below management expectations,” he said.
“The losses have increased compared to the same period the previous year.
“However, this was driven not by an increase in costs, but as a result of lower gold prices and lack of capital investment which hampered production.”
Downward pressure
The chairman in his report said they had seen a downward pressure on gold price during the financial year.
“This is despite evidence that shows a very positive increase in consumer demand and only a moderate increase in supply,” he said.
“However financial and investment demand has fallen which has been the primary driver for the negative price trend.
“As such, I believe in the short term the gold price is going to be dominated by unpredictable economic shocks and political shocks and an element of speculation amongst traders.”
Nevertheless, Mr He is confident of gold prices recovering in the future years as it has reached its bottom now describing gold to be cyclic in nature.
2014 plans and commitment
Mr He said 2014 would be a time of both change and consolidation for the group.
“There have been a number of changes at both Board and Group executive committee level and there will be new challenges involved in implementing the Group’s strategy,” he said.
“Subsequent to the year-end, Vatukoula Gold Mines agreed with Zhongrun to form a strategic review committee, which has been reviewing all aspects of the Vatukoula Gold Mine.
“It is anticipated that these findings will be made available to the Board during the second quarter of this year.
“The Group will however continue to grow and develop.
“We have a clear strategy: to deliver to our shareholders the full potential of the Vatukoula Gold Mine.
“We aim to achieve this by focusing on four key strategic priorities: expand, sustain, optimise and grow.”
The chairman firmly believes Vatukoula Gold Mines is poised for growth and future success.
