Perseus approves of Africa taxes PDF Print E-mail
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Friday, 07 December 2012 09:50

Resource companies operating in West Africa have been angered by the rise in resource nationalism.

 

However, the head of Australia's Perseus Mining said governments should be able to get a decent take from projects.

Mark Calderwood told a Melbourne Mining Club lunch on Thursday that he wouldn't operate in West African countries if governments weren't getting their share.

Perseus posted a maiden full year net profit of $52.5 million in August amid strong gold prices.

It is now producing gold at its Edikan gold mine in Ghana, aiming for full production of 400,000 ounces a year.

The miner hopes to get its second goldmine, Sissingue in Ivory Coast, into production by 2014, as it continues negotiations with that nation's government which wants a greater share of profits.

"I think it's important that governments have got to have a reasonable take, otherwise socially it just doesn't work anywhere (including outside Africa) for that matter," Mr Calderwood said.

"But more so in those countries that are undeveloped.

"They will get less international funding. They have to because Europe is not going to give them so much anymore or the US."

A reasonable overall tax rate was between 45 to 55 cents in the dollar with figures above 55 per cent unreasonable and below 40 per cent unpalatable on the other side, he said.

Although the figures sounded high and there was no doubt West African governments did well out of mining, Mr Calderwood said high costs and royalties in Australia added on to existing taxes made the two regions competitive for mining costs.

West Africa's notoriously risky reputation was unfair Mr Calderwood said.

He said he did not know of a single case there of a company losing its mining licence that didn't deserve to lose - with the exception of Guinea.

Guinea infamously ordered Rio Tinto to relinquish part of the Simandou project in 2008, which is intended to become the largest iron ore mine and infrastructure project yet developed in Africa.

Mr Calderwood said he hoped to resolve issues with the Ivory Coast government by the end of this year, which other foreign mining companies also were dealing with.

"We want to build the thing," he said of the miner.

He said the negotiations over profit sharing related to the government assuming that cash costs were far lower than they would be.

However, investors have been unimpressed with the delay, sending Perseus's shares plunging by 24.5 per cent in the past two months.

Mr Calderwood said he did not think Perseus was vulnerable to a takeover, with major miners more inclined to sell assets than acquire more companies.

Africa hosts the largest number of Australian mining projects of any region outside Australia, around 40 per cent of all overseas projects with one in 20 Australian publicly listed companies having an investment there.

 

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