Gold Ridge Mining Limited [GRML] and the Solomon Islands Government [SIG] through the Ministry of Finance and Treasury yesterday signed a memorandum of understanding relating to taxation issues affecting GRML from the 7th March 1997 agreement.
This was announced in a statement issued by GRML Media Unit yesterday.
Gold Ridge Mining Limited on Guadalcanal is the country’s first and only hard Rock gold mine project.
The mine has been shut down and sold to landowners in 2015 by Australian miner St Barbara.
The Landowners company GCIL then partnered with Wanguo International Mining Group and AXF Resources of Australia. The three shareholders currently operate the Gold Ridge Mining Limited in Central Guadalcanal.
GRML had planned to commence peak recommissioning of the Mine in the late 2019/early 2020, however due to Covid-19, the peak recommissioning was delayed and commenced in September 2020.
Trial production is expected in the fourth quarter of 2021.
Signing the MOU on behalf of the Govt was the Minister of Finance and Treasury Harry Kuma and Walton Naezon, Director of GRML.
The brief ceremony was witnessed by the Permanent Secretary (PS) of Finance McKinnie Dentana, PS of MMERE Dr Chris Vehe, Director of Mines Nicholas Biliki, Govt officials from both Ministries and two other GRML Directors, Ben Afuga and Allen Wang, who is also the GRML Deputy General Manager.
In his brief address Minister Kuma said: “GRML is an important project whereby the Govt is waiting for it to come to production, therefore it is important to get it operational.
“The govt is looking forward to see some turn out that may be able to be realized from the company despite of the risks ahead, not only on natural disaster but global movement of prices and other economic empowerment as well, and that’s the reason the Gov’t supports the tax incentives”, Minister Kuma said.
Minister Kuma also praised GRML for pushing things to this stage despite of the current difficult situation.
“Even beside COVID-19 and all its impacts I praise GRML for pushing things up to this stage.
“We all aware mining is capital intensive and production will take some time as well”, he added.
The minister admitted this is not the first time the Govt has done this for GRML.
“As usual the Govt offered this to other previous mining companies operating the Gold Ridge Mine as well.”
The minister acknowledged the good work done by both parties in negotiating and preparing the MOU for signing.
In response GRML Walton Naezon said: “On behalf of the local partner GCIL and founder of the JV project, we are very thankful to the Government and Honorable Prime Minister who was very supportive since the beginning of the GRML recommissioning project.
“He stood firm and actually gave the project financier a lot of confidence, PM always assured the investors when we brought them here from the beginning of 2017. He was always consistent with his support and with full of assurance.
“And without the PM’s vision and kind words to the investors, I don’t think we will be here for signing this MOU”, Naezon said.
Naezon thanked the Finance Minister, PS and his team, the Ministry of Mines, Minister, PS, Director and officials.
“As you know it took almost 2 years to negotiate this agreement, longer period than expected due to many reasons, but thank you for getting the taxation MOU done.
“This is indeed a good relief for the operation’, Naezon said.
According to a World Bank study, the mining sector has a number of unique characteristics that distinguish it from other sectors of the economy.
“The life of mining projects is finite and it is a high risk, capital incentive industry faced with long lead times to production. The sector is a price-taker faced with cyclical prices and demand. Fiscal regimes should apply taxes in a way that recognize the large initial upfront investments and long production lead times that characterize the sector.
The Gold Ridge Mine project’s initial financing requirement is around $140million.
The project investment to date is over SBD$400 million.
Based on evidence of the previous episode of gold mining [2011-2014], the reopening of production of the Gold Ridge Mine is expected to contribute directly and indirectly to annual GDP of at least 10-11%.
