Besra Gold : enters agreement to dispose of Vietnam assets

Auckland, New Zealand: 03 April 2017 - Besra Gold Inc announces that it has entered into an agreement to sell all of its existing interests in Vietnam to a new corporate entity to be established by former in-country senior management, Paul and David Seton, for assumption of existing trade creditor, tax and remediation liabilities totalling over USD25million. The Vietnamese assets comprise the Bong Mieu and Phuoc Son mines in Quang Nam province, Vietnam and Besra Vietnam Limited, the in-country operating company.

Under the terms of the sale agreement, negotiated by a committee of independent directors, Besra will retain the rights to 50% of any sale proceeds over USD5million of the Vietnamese projects for the first 18 months after the agreement is finalised, and 25% for sale proceeds in excess of USD5million for a further 18 months. Besra is also entitled to 50% of any net settlement from a claim or claims over USD5million in the first 18 months and 25% of any settlement over USD5million for a further 30 months.

Disposition of the Vietnamese assets was a condition of the financing which was concluded on 17 November 2016. To comply with this condition, the independent directors undertook a strategic review of the Company's business in South East Asia aimed at maximising the value of the Company for Besra's shareholders. The directors concluded that despite:

• effective reduction of royalties in Vietnam;
• sporadic recommencement of operations at Bong Mieu;
• a restructuring of Phuoc Son's ownership providing potentially improved access to capital and greater political protection; and
• planned recommencement of operations at Phuoc Son;

external liabilities of approximately USD25million would drag on the Company's balance sheet and as neither plant is currently in production and Bong Mieu's Investment Certificate expired, free cash flow is at least three years away.

Concurrent to the strategic review, the Company appointed Saigon Asset Management to undertake a valuation of the Vietnamese assets, and to undertake a search for potential buyers.

Jon Morda, an independent director of Besra, said, 'During negotiations to secure refinancing of the Company, our investors had come to a very firm conclusion that they were not interested in taking on the Vietnamese assets with associated creditor and tax liabilities, risks, and the clear market antipathy to Vietnam. The significant unresolved licensing issues and remediation liabilities with the operations there and difficult regulatory environment were beyond the investors' risk tolerance threshold. As Vietnam is likely to continue to present ongoing challenges to regular production under a sensible and predictable fiscal regime, a decision was taken by the committee of independent directors, to divest the Vietnamese assets.'

The agreement will be put to shareholders for approval at a meeting to be held on 23 May 2017. Completion of the agreement will establish Besra as a gold exploration and development company with a focus on the highly prospective gold field situated at Bau in East Malaysia which benefits from:

• 3.3 Moz measured, indicated and inferred consisting of:
  • 1,124,900 ounces (measured + indicated) and;
  • 2,181,600 ounces (inferred);
• completed feasibility study on Stage I production;
• considerable ounce and grade upside;
• zero royalty on gold;
• favourable taxation rates; and
• within a jurisdiction with a robust legal system and bureaucracy.

Operations have recommenced at Bau with a new metallurgy laboratory being installed and a met-focussed drilling programme underway which will also provide resource and geological information, in advance of a more substantial resource drilling programme later in the year.