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Having officially acquired 100% of the Vatukoula mine in Fiji this week, River Diamonds (RVD:AIM) said it would begin processing a stockpile of ore during April estimated to contain $4 million of gold.

Vatukoula contains five million ounces of resource and reserves and was the longest continuously running gold mine in the Southern Hemisphere until operations stopped in December 2006 due to financing issues with the former owner, Emperor Mines.

River has restarted operations and is targeting 140,000-160,000 ounces of gold production a year. If gold prices remain high, River said it may sink new shafts to deeper levels and increase annual production to 500,000 ounces.

The company has inherited £46 million worth of assets, including new, unused equipment. Vatukoula will account for 10% of Fiji’s GDP and is the country’s third largest business, claims executive director David Lenigas.

The mine previously had up to 2,800 workers at one time but 30% absenteeism. River plans to have less than 1,000 employees to help keep production costs down to between $400 and $450 per ounce. It will pay the government 3% royalty on gold output, but River qualifies for a five-year export tax exemption as a new business in Fiji.

The company still hasn’t decided upon a new corporate name to reflect its shift in focus from diamonds to gold. Diamond assets in Sierra Leone have been classified as ‘non-core’ to the new-look business. ‘Everything (non-core) is for sale at a price, particularly our interests in Brazil,’ says Lenigas.

by: Dan Coatsworth