Phu Bia seals power supply deal

Vientaiane Times, 29 Oct 2009

Phu Bia, a major mining company operating in Laos, has secured cheaper
than normal electricity to run its operations in Vientiane province
after entering into a power purchasing agreement with Electricite du
Laos (EDL).

The agreement between Phu Bia and the state-owned electricity supplier
was signed this week in Vientiane , with both parties expressing
satisfaction and confidence in the deal.

The agreement provides for Phu Bia to purchase power from E dL for a
period of 20 years, at internationally competitive prices.

Phu Bia will buy power in accordance with rates under the Large
Industrial Tariff as set by the government, according to a press
release from Phu Bia.

Phu Bia Mining Limited President Chanpheng Bounnaphol and EDL Managing
Director Khammany Inthirath represented the two companies in signing
the power purchasing agreement in front of management and staff.

Speaking during the signing ceremony, Mr Chanpheng said Phu Bia was
extremely pleased to be signing the agreement with EDL, describing the
successful agreement as a cornerstone for Phu Bia's long-term future
in Laos .

“Phu Bia looks forward to a long and fruitful relationship with EDL,
and to contributing to the Lao government's objective of becoming a
major supplier of power to mainland South East Asia ,” Mr Chanpheng
said.

Mr Khammany also expressed support for the agreement and expressed his
appreciation of Phu Bia's efforts to formalise the important
commercial relationship between the two companies.

Electricity is a major item in Phu Bia's purchase of goods and
services from Lao suppliers.

At present Phu Bia consumes about 30 megawatts of power, providing
revenues of over US$1 million per month to EDL.

Phu Bia's expansion plans mean that EDL stands to benefit further,
with the mine set to continue as EDL's largest customer for at least
the next five years, and most likely for the next decade or more.

Phu Bia is currently conducting feasibility studies on new gold and
silver deposits some 25 km from its existing mine site. The company
expects to spend US$150 million on the project and hopes to start
mining new sites in 2011.

The company is also exploring for copper in Phonsavanh district, Xieng
Khuang province.

In 2008, the company produced 24,929 tonnes of copper concentrate,
25,261 oz of gold concentrate, 20,961 oz of gold ore and 159,676 oz of
silver.

Phu Bia Mining Company is one of the major providers of revenue for
the Lao government. The company has paid about US$8 million in taxes
and royalties to the Lao government over the past eight months of
2009.

The company expects to pay another US$2 million at the end of this
year, which will bring the total of its obligations to US$10 million
for this year.

This figure was far in excess of the about US$4 million in taxes and
royalties the company paid to the government in 2008.

The company employs 1,535 full-time staff, including 1,300 Lao
nationals.