It is a great pity that the much awaited export of gold from Gold Ridge has yet to take off after the events of 2000. Now, Australia Solomon Island Gold Ltd (ASG) will be provided Political Risk Insurance provided they meet certain conditions.
At a time when the price of gold is hovering around the USD$900-USD$930 mark, the lack of finance and therefore exports on the part of ASG is an opportunity missed. According to the ASG website the mine indicates a resource base of 1.6 million ounces with an inferred category of 0.6 million ounces. At USD$900 per ounce the export of 1.6 million ounces alone would translate to approximately USD$1,440,000,000. In addition to the government's share of the latter, the government stands to earn further revenue from export tax on the gold exported. Doe the government wants its share of the millions of dollars to be earned from the export of gold. I bet it does, especially during this financial crisis. I'm afraid the government's wish will remain a dream at the moment because contrary to ASG's promise to start exporting from July 2009, that is a distant memory because it has now promised to start from 2011. By the time 2011 comes along, the price of gold will have dropped significantly and the total receipts from gold and government's share from the receipts will have reduced drastically.
I believe it is prudent on government's part to have a say in which company gets mining licenses in Solomon Islands. It should ensure that only companies with proven financial resources be given mining licenses to ensure that where gold or other minerals are found in sufficient quantity, that exports commence in a reasonable time.
Disclaimer: The views and opinions expressed in this letter are those of Charlie Kieu and do not necessarily reflect the official policy or position of Solomon Times Online.
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