Toronto, December 6, 2010 – Olympus Pacific Minerals Inc. (TSX & ASX: OYM, OTCBB: OLYMF, and Frankfurt: OP6) (the "Company" or "Olympus") reports that the Vietnam Ministry of Finance ("MOF") has released a circular declaring a 10% export tax on gold doré effective January 1, 2011. Refined gold is exempt from the new tax.
Company discussions with the MOF lead us to believe the new tax is to accommodate Vietnam's internal demand for gold and limit export of the metal by itinerant miners.
Olympus is making representations to the MOF regarding the imposition of this new tax and will be applying for an exemption.
Olympus believes placing the tax on its production will not achieve the result sought by the new tax as no refiners are yet available in Vietnam for the Company's gold to be refined. As distinct from itinerant miners, Olympus' joint ventures are leading exporters of gold doré and earn valuable foreign currency for Vietnam generating important royalty and taxation (corporate and personal) revenue for the government. The tax and royalty generation and gold production would likely reduce if the tax were applied to the projects.
Possible Effect on Production
Shareholders should be aware that if the company does not receive an exemption from the tax, revenues will be affected and there may be a reduction in capital spent on future mine development in Vietnam. This would likely reduce future production levels from operations from those earlier informed.
Ball Mill Failure
We also advise that one of the company's two balls mills at its Bong Mieu plant has had bearing failure and will be out of operation for approximatively 21 days. This will reduce gold production capacity at the plant during the month of December by 20%.
Bau Exploration
At the Company's expanding Bau Gold Project in East Malaysia, the Company has recently reached agreement with SGS laboratories who will establish an independent sample preparation facility and gold assay laboratory on-site. Construction of the facility is expected to be complete by late February, at which time current diamond drilling operations are expected to benefit from assay turnaround times of less than 48 hours.This agreement reflects the company's confidence in the short term development potential of the Bau Gold Project.
To date, 5,680 metres of drilling has been completed in 29 holes. During 2011, a further 20,000 metres of diamond drilling is planned within complementary exploration and feasibility study drilling programmes. The phase one drilling results is expected to be available for release early in the new year.
Olympus is a diversified gold company focused on Malaysia and Vietnam, with two operating mines and three advanced exploration properties locally employing 1,200 people. The Company is positioned to expand existing gold production capacity in the 2011 second Quarter, through the commissioning of a new gold processing plant at its Phuoc Son mine in Vietnam. The Company also expects to increase its attributed gold resources during 2011, mainly through exploration development of the Bau Gold Project, which has demonstrably large upside resource potential.
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