FIJI'S MINERAL SECTOR

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					FIJI'S MINERAL SECTOR

  Opportunities for Investors
            (Final draft)




      A document prepared by the Mineral Resources Department,
                           Ministry of Lands, Mining & Energy,
                                     for the Government of Fiji.


                                                28 January 1997
Fiji's Mineral Sector



                                                  Table of Contents

Message from the Minister ........................................................................................................ 4

FIJI - GENERAL FACTS ................................................................................................... 5

FIJI AS A PLACE TO LIVE ............................................................................................. 6
          Economic Overview....................................................................................................... 6
          Infrastructure .................................................................................................................. 6
          Working In Fiji............................................................................................................... 7
          People And Culture ........................................................................................................ 7

INVESTMENT POLICY .................................................................................................... 8
          Investment Policy Statement .......................................................................................... 8
          Treatment Of Foreign Investors ..................................................................................... 8
          Investment in the Mineral Sector ................................................................................... 9
          Investors Rights and Guarantees .................................................................................... 9

FIJI'S MINERAL POLICY .............................................................................................. 10
          The Principles Underlying Government's Mineral Policy ........................................... 10
          Fiscal Policy ................................................................................................................. 11
          Exploration and Mining Policy .................................................................................... 11
          Sustainable Development Policy ................................................................................. 12
          Land-Use Policies and Security of Tenure................................................................... 13
          Policies on Housing, Social and Regional Impacts ...................................................... 14
          Labour and Employment Policy................................................................................... 14
          Infrastructure Policy ..................................................................................................... 15

FIJI'S GEOLOGY ............................................................................................................... 16
          Regional Setting ........................................................................................................... 16
          Mineralisation .............................................................................................................. 17
                 Early arc stage .................................................................................................. 17
                 Mature arc stage ............................................................................................... 17
                 Early rifting stage ............................................................................................. 18
                 Late rifting stage .............................................................................................. 18
          Mines and Advanced Prospects ................................................................................... 19
                 Gold - Silver ..................................................................................................... 19
                 Porphyry Copper .............................................................................................. 21

EXPLORATION AND MINING ................................................................................... 22
          History Of Exploration And Mining In Fiji ................................................................. 22
          History Of Mining Legislation ..................................................................................... 22

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          Mining Today............................................................................................................... 23

LAND ISSUES .................................................................................................................... 24
          Land Ownership ........................................................................................................... 24
          Landowners Rights ...................................................................................................... 24
          Landowner Consents and Objections to Applications ................................................. 24
          Landowner Compensation ........................................................................................... 25
          Closed Areas and Protected Areas ............................................................................... 25

ENVIRONMENTAL POLICY ....................................................................................... 26
          Fiji's Sustainable Development Bill ............................................................................. 26
          Mineral Sector Specific Policies .................................................................................. 26

TAXATION AND INCENTIVES .................................................................................. 27
          General Investment Incentives ..................................................................................... 27
          Mineral Sector Taxes ................................................................................................... 27
          Fiji's Taxation Review ................................................................................................. 28

EXPLORATION AND MINING PROCEDURES .................................................... 29
          Administrative Control over Fiji's Mineral Resources ................................................ 29
          Role of Mineral Resources Department ....................................................................... 29
          Rights, Licences and Leases Issued ............................................................................. 29
          Reporting Requirements .............................................................................................. 30
          Transition from Exploration to Development .............................................................. 30

GETTING STARTED ....................................................................................................... 31
          Identifying a Mineral Prospect ..................................................................................... 31
          Getting a Licence ......................................................................................................... 32
          Establishing a Mining Company in Fiji ....................................................................... 32

KEY SECTOR CONTACTS ........................................................................................... 33
          Government Departments ............................................................................................ 33
          Taxation Matters .......................................................................................................... 33
          Project Facilitation Agencies ....................................................................................... 33
          Private Sector Groups .................................................................................................. 34
          Research Establishments .............................................................................................. 34
          Exploration and Mining Companies Currently Active in Fiji...................................... 35




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                             Message from the Minister
Fiji has long been recognised as an area of good geological potential. Emperor Mines Limited
(EML) recognised this potential back in 1932, when they established Fiji's first gold mine at
Vatukoula. EML have now been operating at Vatukoula for over 60 years. By the look of EML's
recent exploration results they may well be here for another 60 years. It is without doubt that Fiji
is minerally prospective. But why, we ask ourselves, do we not have the same level of investor
interest as exists in other Pacific Island Rim of Fire countries. A recent survey of investor
attitudes indicated that investors do not appear to know much about our country, our mineral
potential, our policies towards mineral sector investors, or even our mineral taxation package.

In line with our on-going 10 year commitment to deregulate the economy and promote private
sector investment in Fiji, we are pleased to launch this mineral sector promotional campaign. We
anticipate that this campaign will mark an exciting turnaround in our country's mining history.
Earlier this year Fiji committed itself to the principles contained in an Investment Policy
Statement, which defined the Fiji Government's goals as increasing levels of investment,
encouraging market-driven projects, rather than Government-driven ones, and facilitating rather
than regulating the private sector. Within the guidelines contained in this Investment Policy
Statement, the Ministry of Lands, Mining and Energy has drafted a Mineral Policy Statement.
That Statement, which follows, states very clearly how a mineral sector investor will be treated in
Fiji. We consider this as the first step towards increasing the level of mineral sector investor
interest in Fiji.

We hope that this document will help provide answers to many of your questions, and explain
clearly why you should invest in Fiji, the incentives that you will be offered, and the level of
service you will receive.




Hon. Rt. Timoci Vesikula
Minster for Lands, Mining & Energy




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                                  FIJI - GENERAL FACTS

 Land area                               18,000 square kilometres (around 300 islands)
 Sea area                                1,146,000 square kilometres
 Population                              778,000 (imputed from 1986 census)
 System of Government                    Parliamentary democracy based on the Westminster
                                         system with a 71-seat single-chamber Parliament. The
                                         President appoints the Prime Minister as determined by
                                         the 1990 Constitution.
 Capital                                 Suva (Population of 150,160)
 Main Cities                             Lautoka (41,515), Labasa, (17,580), Nadi (16,180)
 Official Language                       English
 Real Gross Domestic Product             FJ $1,796 million (1995)
 GDP per capita (1995)                   FJ$ 2,308 = US$ 1,614 approx
 Exchange Rate                           Linked to a basket of currencies of Fiji's 5 major trading
                                         partners

                                         FJ$1 = USD 0.6994}
                                         FJ$1 = AUD 0.9029}
                                         FJ$1 = NZD 1.0015}            (all rates as at 28/1/97)
                                         FJ$1 = GBP 0.4306}
                                         FJ$1 = YEN 82.71 }
 Inflation Rate(1995)                    3.0% (annual average )
 Major Merchandise Exports, FJ$ (1994)   Sugar 276m, garments 185m, gold 59m, fish 64m,
                                         timber products 53m
 Major Imports, FJ$ (1995)               Machinery and transport equipment 379m,
                                         manufactured goods 285m, food 167m, mineral funds
                                         137m.
 Major Trading Partners, % of total      Exports Australia 26%, UK 24%, US 13%
 (1994)
                                                 Japan 7%, New Zealand 5%
                                         Imports Australia 39%, New Zealand 16%,
                                                 US 7%, Japan 7%, Singapore 7%, UK 2%
 Exploration expenditures (1995)         FJ$ 3.7 million.



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                           FIJI AS A PLACE TO LIVE

Economic Overview

Fiji stands out amongst Pacific island economies in terms of the size of its natural resource
endowment and its level of economic and social development. It has a relatively well-educated
population, a well-developed entrepreneurial class, good physical infrastructure and it is the
commercial capital for much of the Pacific island economic activity, as well as being the focal
point for much of the South Pacific island trade. Its central geographical location also gives Fiji
favourable access to international markets.

Fiji is the one of the largest South Pacific island countries in population and land area. The
population is concentrated on the two largest islands, Viti Levu and Vanua Levu, with the
nation's capital, Suva, located on Viti Levu.

The Fiji economy is the most developed in the region. It has one of the highest average income
levels of the South Pacific island countries. Indeed, the high income level is reflected in
favourable social indicators, with most of the major indicators placing Fiji above the regional
average.

Following a slowdown in economic growth in the late 1980's the Fiji Government launched a far-
reaching economic reform programme that sought to deregulate the economy and promote the
development of internationally competitive industries and encourage private sector investment.
Infrastructure

The Fiji Government has adopted a development policy that focuses on increasing the level of
foreign and domestic investment in Fiji. As part of this policy, much emphasis is being placed on
infrastructure improvements, such as the development of new roads, the reticulation of electricity
and water, and improved domestic and international communication systems.

Fiji has two international airports: Nadi, which is Fiji's principal gateway, often regarded as the
"crossroads of the South Pacific" and Nausori airport near Suva. Ferries and domestic airlines
offer daily links to other major islands. Fiji also has 4 major ports, two located on Viti Levu, one
on Vanua Levu and one on Ovalau.

The fully-Government owned companies, Post Fiji Ltd., and Telecom Fiji Ltd provide all postal
and domestic telephone services. Mobile cellular telephone services are provided by Vodafone
(Fiji), and international telephone services are provided by Fiji International Telecommunications
Ltd (FINTEL). Telecom Fiji Ltd. also provides Internet connections, thereby making access to
the 'information super-highway' possible and affordable for local users.

Wherever existing infrastructure is not sufficent to meet the needs of a mineral sector investment
project, Government will seek, wherever possible to facilitate such construction, providing that it

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serves both mine and public purposes. To be considered for Government participation,
infrastructure projects must: be cost effective, have quantifiable social benefits, contribute to
rural or social development, and be within the general scope of public sector infrastructure
investment planning criteria. The nature of Government's involvement will vary according to the
type of infrastructure required, although, in general Government takes a flexible approach
towards infrastructure development and management.

Working In Fiji

One of Fiji's advantages is a relatively well educated population and a highly skilled labour force.
 Education coverage and standards are among the best in the region. The World Bank, in its
publication Fiji Education Sector Overview, Pacific Islands Education Study, 1995, noted that
approximately 90% of students complete six full years of education, and more than two thirds of
the labour force have some secondary education.

Proper authority, in the form of a permit, is required for all those wishing to work or reside in
Fiji. Work permits are issued to people holding non-immigrant visas by the Department of
Immigration. The Immigration Department which controls the localisation process, has adopted
a facilitatory approach towards mineral sector investors, recognising the specialised labour
requirements of that industry relative to other sectors. There are no strict localization targets or
rigid localization schedules in Fiji. However, experience has shown that Fiji workers are highly
trainable, flexible and motivated.

People And Culture

Fiji is home to 778,000 (1994 estimate) people of diverse ethnic origins. The population
comprises indigenous Fijians (50%), people of Indian origin (44.8%), European, Chinese and
others (5.2%). English is the official language, although the various ethnic groups speak their
own vernacular.

Project sponsors are urged to see that all construction and operating personnel undergo a social
orientation course about the people and customs of the mining region. Government, through the
Mineral Resources Department, and the Ministry of Fijian Affairs, will coordinate such courses.




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                               INVESTMENT POLICY

Investment Policy Statement

As part of Government's outward-looking growth policy an Investment Policy Statement (IPS)
has been drafted by the Ministry of Commerce, Industry, Trade and Public Enterprise. The IPS
clearly identifies Government's new direction in terms of investment policy principles, these are:

1.       To encourage increased investment in all areas of the economy from all sources.
2.       Investment should be market-driven as opposed to Government-directed, and any
         encouragement should be through facilitation rather than regulation.
3.       Where regulations are necessary for legal safeguards or social reasons, they should be
         administered in the most transparent method possible.

The IPS covers a wide range of areas of interest to investors, including: investment promotion
and facilitation, investment incentives, guarantees to investors, the investment approval process,
and Government's infrastructure development policy. The next step in this process which has
already begun, is to document rules for:

*        approval of overseas investment,
*        financing overseas investment,
*        local borrowing by overseas investors,
*        repatriation of capital and profits,
*        mergers and acquisitions,
*        employment of foreign personnel,
*        investment incentives and income tax concessions,
*        export incentives (VAT refund), and import duty concessions and
*        protection of domestically produced goods and services,
*        application process for approval of projects and award of concessions.

When completed, these rules will be available for all investors from the Fiji Trade and
Investment Board (their address is given on the sheet listing Key Sector Contacts).

Treatment Of Foreign Investors

Foreign inputs are expected to play a major role in Fiji's growth, and for this reason the
Government is determined to improve the investment climate in Fiji for foreign investors, as well
as for local entrepreneurs. In principle, the Government will encourage any project found
suitable for location in Fiji, provided it satisfies certain broad criteria, namely that the investment
will; contribute to Fiji's economic and social development; broaden Fiji's economic base; provide
opportunities for significant local equity participation, particularly in projects that involve the
utilisation of the country's natural resources, possibly through joint ventures; generate increased
exports; provide training and employment opportunities for local people; involve maximum

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processing of products in Fiji; and involve the enterprise in the provision of maximum common-
use facilities, such as labour and roads.

Specific requirements for foreign investors are: introduce adequate funds for proposed projects,
with a debt to equity ratio of no greater than 3:1; pay a fair price for assets acquired locally;
obtain approval to remit dividends and profits from the Reserve Bank of Fiji for tax clearance
and statistical purposes; obtain Exchange Control approval from the Reserve Bank of Fiji for any
investment in Fiji securities; obtain work permits for expatriates and, wherever possible, train
local employees to fill their positions. While there is no restriction on foreign investors acquiring
a controlling interest in locally owned existing businesses, there is a limited list of areas restricted
to local investors only, although this is being revised with a view to reduce restrictions. This list
is currently under review. Essentially, the restrictions/conditions for investment are designed to
ensure that only those investments which are economically and developmentally desirable for Fiji
proceed.

Investment in the Mineral Sector

Government believes that overseas investors are most attracted to those countries with an open
exploration administration system where the rights of investors to develop their discoveries (or
continue with promising exploration prospects) are clear. In Fiji the investor's right to continue
exploration/development programs is written in the Mining Act.

The guiding principle of Fiji's mineral investment policy is that Government assumes that the
grant of an exploration licence implies a right to proceed to eventual project development; this is
subject to the licence holder maintaining a vigorous geological and/or feasibility study program
approved by the Minister responsible for Mineral Resources.

Investors Rights and Guarantees

The Government of Fiji is aware of the risks that mineral exploration and development
companies take, and sees a role for itself in creating an investment climate in Fiji which offers
investors security. The 1990 Constitution of Fiji provides a first stage guarantee for investors, in
Section 9 against the compulsory acquisition of property (including mining tenements) except
(and only with an order authorised by the Supreme Court) in certain specified condition spelt out
in the Constitution.

In addition, Fiji is a signatory of the Multilateral Investment Guarantee Agency (MIGA). MIGA
is an independent agency of the World Bank mandated to help facilitate increased flows of
foreign direct investment to developing countries. Its core area of business is providing political
risk insurance to foreign investors; available risk coverage includes war and civil disturbance,
currency transfer/inconvertibility, expropriation and breach of contract. Plus Fiji is a member of
the International Chamber of Commerce, and the International Centre for Settlement of
Investment Disputes.


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                            FIJI'S MINERAL POLICY
Section 1 - The Principles Underlying Government's Mineral Policy

The Government of Fiji believes that well-managed mineral sector developments contribute
positively to national growth and social welfare improvements for all of Fiji's citizens; hence, the
Fiji Government actively supports mineral sector developments.

State ownership of Fiji’s unextracted mineral resources forms the foundation of Fiji's mineral
policy. However, the Government views Fiji's mineral endowment as part of the birthright of
every Fiji citizen; and it sees itself as a steward of this birthright. As the steward, the
Government has put in place the regulatory mechanisms to ensure that Fiji's mineral resources
will be developed in an environmentally sensitive and socially acceptable manner, and that there
is an equitable sharing of the financial and developmental benefits and costs of mining between
all stakeholders.

Government recognises that the private sector is the most able developer of Fiji's mineral
resources, and so, confers mineral exploration and development rights on private sector
developers. When conferring such rights, Government requires that mineral developers take into
account all the social, environmental, and economic costs and benefits of the development at the
project planning stage, and throughout the life of the project.

History clearly shows that mineral sector developments offer unique benefits as well as pose
special problems for communities adjacent to mineral deposits, and Government views the direct
participation of residents as an integral part of a successful long term relationship. Direct
participation can take the form of special small business opportunities, and direct involvement by
the local community with socially important aspects of mine planning, such as social
infrastructural development. This participation should begin early in the exploration phase and
continue through to mine closure. Essentially, mineral sector developers are encouraged to
develop a participatory and collaborative approach to mine planning and development.

As well as steward of Fiji's mineral resources, Government sees itself as a facilitator of
investment, and acknowledges that the best way returns to investors can be maximised, is
through the creation of a favourable investment environment. In this regard the Government has
implemented a number of macro-economic policies to encourage investors, such as the signing of
the Multilateral Investment Guarantee Agency (MIGA), the creation of an Investment Policy
Statement, and the development of numerous non-tax incentives. Government treats all
economically viable investment projects equally.

Government also accepts that mining is an unusually high risk industry and private investment
tends to be attracted to those areas with good geological potential, transparent fiscal policies, and
political stability. Hence Government is in the process of introducing a low-rate, competitive,
transparent fiscal policy that should enable investors to achieve returns commensurate with the
risks that they face.

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Section 2 - Fiscal Policy

Fiji takes the position that the major inducement to attract mineral sector investors is the
opportunity to obtain a return on investment commensurate with the risks faced. In developing
the fiscal framework, the Fiji Government has sought to create an internationally competitive
package of interrelated measures, which achieves the dual goals of investment promotion and
equitable returns to the people of Fiji under a variety of market circumstances. This fiscal
framework reflects an attempt to reconcile the national taxation policy with the special needs and
characteristics of the mining sector.

The Fiji Government’s approach to taxation of mining projects is that the total package of fiscal
arrangements enable enterprises to operate in a commercially sustainable manner. The
established fiscal framework is considered to provide an environment in which Fiji’s mineral
resources can be commercially exploited, without major derogations. Minor variations in the
timing and incidence of forms of tax may be negotiated to fit the individual commercial
characteristics of a particular mineral deposit and associated market conditions.

Foreign mining investors often bring a variety of home-country tax liabilities to their Fiji
operations, however, the Fiji Government is reluctant to forego fiscal revenues which will
subsequently be taxed by authorities in the investor's home country.

Beyond the basic standard fiscal package, the Fiji Government is only willing to discuss the need
for incentives for particular projects after the project sponsor has demonstrated that the project
has the potential to be economically viable. Requests for such assistance should be submitted at
the conclusion of a comprehensive feasibility study. In offering incentives, Government's general
approach will be to assist development through interim or transitional relief in the early stages of
project development/operation, rather than granting life-of-mine concessions.

Mineral tax policy does not exist independently from the general tax system applied to other
sectors of the economy. Nevertheless, there are special features of mineral development which
must be specifically addressed, namely: the capital (and debt) intensiveness of mining ventures;
the cyclical nature of metal markets; and the long and costly period of pre-operational
expenditures on exploration and feasibility studies. These issues have been considered in
framing the tax package, and so, this package has been conceived as a whole and should not be
seen as a collection of separable parts.

Section 3 - Exploration and Mining Policy

In Fiji, all unextracted minerals belong to the State. Nonetheless, Government recognises that the
private sector is the most able developer of Fiji's mineral resources, and hence, allows the private
sector complete and open access to develop Fiji's mineral resources. Government does not
require equity participation, or any other form of direct involvement in mineral development
projects.



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Fiji's exploration and mining administration system is open and unbiased. The guiding principle
is that exploration and mining rights are given to any candidate, who by merit, can show
Government that they have the capability to carry out an agreed upon work programme. In the
case of multiple applicants for a tenement, rights are allocated to the first qualified applicant.
This system supports and protects the rights of all investors, both local and foreign, to prospect,
explore and mine their mineral discoveries. Investors rights to mineral tenements, and their
security of title are enshrined in Fiji's Mining Act and Regulations (Cap. 146). Mineral
Resources Department (MRD) is the Government agency responsible for administering this
statute.

Licence holders who exercise due diligence in carrying out, and comply with the proposed
activities detailed in their Prospecting Licence, including maintaining a vigorous exploration
programme, and accurate, timely comprehensive reporting in accordance with the Mining Act,
are guaranteed continuity of title, implying a right to proceed to project development. Over time,
Licence holders are expected to relinquish a portion of their prospecting area.

While the Fiji Government is very keen to encourage legitimate prospectors and mineral
explorers in Fiji, it does not want to see prospective land tied up by companies that are only
interested in speculative ventures. MRD will actively discourage any company attempting to
engage in such speculative ventures.

Prospecting Licence holders have a right to progress from prospecting to mining if they have
complied with the licence conditions and they have proven that a minable resource exists.
Permits to Mine can be issued for a maximum of 2 years, and are renewable annually. Mining
Leases and Special Mining Leases can be issued for 5 to 21 years. All leases are renewable at the
end of the initial licence period. The period of the renewal depends on the size of the proven
resource.

Section 4 - Sustainable Development Policy

Government's main aim for the mineral sector is to ensure that developments proceed in a
sustainable manner. Sustainable mineral sector projects are those that effectively incorporate
community participation during the corporate decision-making process, that ensure an equitable
distribution of the benefits arising from mine developments, and that, having carefully assessed
the socio-environmental impacts, minimise these impacts.

Government sets environmental policies at two levels; the Department of the Environment
coordinates the formulation and implementation of national policies, while MRD, as the main
regulating agency for the mineral sector, sets complementary mineral sector policies.

For the purposes of the on-going monitoring/compliance programs, Fiji adopts a pragmatic policy
towards compliance with acceptable socio-environmental standards and pollution abatement
technology. Government places more emphasis on mining companies complying with agreed
emission levels, than with the methods of abatement to achieve compliance. This then provides


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investors the flexibility to choose measures which will reduce pollution levels in the most cost
effective manner, subject to Government approval.

Government promotes a self-regulatory approach to environmental monitoring. While the
Government formulates and sets socio-environmental standards, it undertakes to work with the
mining industry to develop codes of practice that will enable the mining industry to meet or
exceed such standards.

Government recognises and enforces the polluter-pays-principle. The developer will be liable to
pay compensation to any person or community whose lifestyle or income is adversely affected by
the socio-environmental impacts of the mine. In addition, the developer is responsible for all
costs associated with mitigation and rehabilitation activities as required, from initial exploration
to post-closure of mining activity.

Government requires that mining companies take precautionary measures to prevent or minimise
negative socio-environmental impacts of mining. In instances where there is a significant risk of
serious or irreversible damage, or an element of scientific or technical uncertainty exists
regarding elements of mine development, Government then expects that precautionary
abatement/mitigation measures be taken. Where such measures are required they will be
expected to address the worst case scenario.

Section 5 - Land-Use Policies and Security of Tenure

In addition to the Mining Lease, developers are required to obtain a Land Lease to gain legal title
to the land (land in Fiji is divided into 3 types, Native Land: 83% of all land in Fiji, Crown Land:
9%, and Freehold Land: 8%) on which they intend to mine. The Mining Lease and Land Lease
(or Titles) confer on the developer the right to undertake specified activities in a defined area as
stated in the leases.

Government acknowledges that security of land tenure is a critical issue for mineral sector
investors. Hence Government is totally committed to enforcing investors land rights which are
enshrined in both the 1990 Constitution and the Land Transfer Act (Cap. 131). The Land Lease
itself is a legally binding document that guarantees security of land tenure.

However, developers should be aware that in the long run, good communications with
landowners are most likely to minimise land disputes during exploration and mining operations.
In island communities where land is in short supply, land problems are often associated with
landowner dissatisfaction over the terms of compensation payments for land acquisition, surface
land disturbance, and the loss of traditional land use. Without special compensatory policies,
landowner grievances can become a significant impediment to harmonious long term mine
operations. Prior to mine construction, mining companies must obtain formal agreement with the
area residents, through the appropriate channels, regarding compensation payable for loss of
tenure and damage to surface improvements.



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All compensation negotiations must be channelled through the appropriate official agencies in
consultation with MRD. The agencies (Native Lands Trust Board and the Government's Lands
Department) which assist mining companies with land compensation negotiations have as their
main aim promoting projects which maximise benefits to the current and future land owners of
the proposed development area without jeopardizing project viability.

Unextracted minerals belong to the State, however, mining Royalty payments are paid to
Government but then distributed to landowners. Developers must recognise that the Royalty
payment, for the right to extract minerals, and the compensation payments, for landowner loss of
tenure and damage to land and improvements thereon are separate. Clear guidelines on how to
assess each are provided in the Mining Act, the Native Land Trust Act (Cap. 134) and the Crown
Acquisition of Lands Act (Cap. 135).

Where land is required for a mine, and cannot be acquired through a voluntary agreement with
land owners, an established procedure for compulsory acquisition exists.

Section 6 - Policies on Housing, Social and Regional Impacts

In many developing countries medium and large scale mineral developments are often
accompanied by significant social and cultural impacts. Government sees the creation of a
workable social adjustment strategy as arising from a partnership in which investors, government
and local groups participate. The terms of this partnership need to be clearly defined from the
outset, and should be designed to minimize social/cultural impacts, and ensure that dislocations
occur in a gradual and well-planned manner.

Government believes that addressing the social impacts of a major mining project is the joint
responsibility of the government and the project sponsor. Mining companies are encouraged to
take a direct interest in community relations and to undertake social initiatives in their own
interests. While Government will undertake aggressive social adjustment programs, it also
believes that direct participation and input by the mining company must be forthcoming to ensure
the success of such programmes.

Section 7 - Labour and Employment Policy

Even though the number of jobs created by mining is likely to be modest, labour and employment
policies in the mining sector are very important to the Fiji Government. On the positive side,
Government sees the mining sector as attracting relatively well paid, high-skill positions which
can be directly transferable to other sectors of the economy. On the negative side, if mines use
their ability to pay high wages to attract skilled workers away from other sectors, inflationary
wage pressures can quickly emerge. In Government's view the key to maximizing benefits and
minimizing wage pressures is for mining companies to pursue an aggressive program of skill
training designed to maximise the participation of local citizens. These complementary programs
of skill training and job localisation form the core of Government's labour policy for the mining
sector.


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While Fiji has a free collective bargaining system, mining companies are expected to adhere
closely to national wage policy and to practice wage restraint. An effective dispute settlement
procedure is established in Fiji and is incorporated into comprehensive labour legislation. Fiji's
labour laws are found in the following Acts: Employment Act (Cap. 92), Workmen's
Compensation Act (Cap. 94) Trade Unions Act (Cap. 96), the Trade Unions (Recognition) Act
(Cap. 96A), the Trade Disputes Act (Cap. 97), and the Wages Councils Act (Cap. 98). All are
administered by the Department of Labour.

Section 8 - Infrastructure Policy

Government understands that a major mining project requires substantial infrastructural
investment. This investment may, in many cases, be critical to the financial viability of the
project. While Government does not normally finance specialized infrastructure, Fiji is willing to
participate in multi-use infrastructure projects where major benefits accrue to the public-at-large.
 The conditions of such assistance will be judged on a case-by-case basis.

All mineral project infrastructure is expected to comply with existing technical specifications, of
similar infrastructure already in use in Fiji, as determined by the relevant Regulations.
Regulations governing the various areas of infrastructure include: Electricity Act (Cap. 180),
Housing Act (Cap. 267), Ports Authority of Fiji Act (Cap. 181), Roads Act (Cap. 175), Sewerage
Act (Cap. 111), Telecommunications Act (Cap. 173), Water Supply Act (Cap. 89). Each Act is
administered by the relevant authority. Wherever possible, mine infrastructure should be
compatible with existing infrastructure and should be maintainable through normal supplier
networks within Fiji. Where project infrastructure transits areas outside the immediate mining
lease area, access should be available to the general public on the basis of national policy.

All infrastructure planning should take place in full consultation with the appropriate technical
authorities within the Fiji Government. Government believes that close liaison between
Government and the mining company for infrastructure developments will ensure compatibility
with existing infrastructure and provide the mine developer with a realistic appraisal of local
conditions.




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                                   FIJI'S GEOLOGY
Regional Setting

Fiji lies at the midpoint of the opposing Tonga-Kermadec and New Hebrides convergence zones,
separated from these actual convergence zones by two extensional back-arc basins, the North Fiji
Basin to the west and the Lau Basin to the east, and a series of transform faults including the Fiji
Fracture Zone and the Matthew-Hunter Ridge. Most reconstructions of the past configuration of
this part of the Pacific indicate, however, that Fiji was not so long ago an integral part of the
Pacific "Rim of Fire", the complex plate boundary between the Pacific and the Indo-Australia
Plates. This boundary is well recognised as the locus of several major world-class porphyry
copper-gold and epithermal gold systems.

Before the Late Miocene, roughly 8 million years (Ma) ago, the Pacific crust was subducted from
the east along this plate boundary, with Fiji forming part of an extended Outer Melanesian island
arc system, the Vityaz arc, that incorporated the Solomon Islands, New Hebrides, Fiji and Tonga
island arcs. Remnants of this subduction zone are preserved as part of the Vityaz Trench, whilst
Eocene-Miocene cores of the ancient arc system form part of the geological basement in Tonga
('Eua), Fiji (Viti Levu) and Vanuatu.

Subduction along the Vityaz arc-trench system was partially blocked through the arrival of a
thick sequence of oceanic crust (Ontong Java Plateau) at the portions of the trench along the
Solomon Islands and northern New Hebrides. Subduction was effectively immobilized and later
reversed in the areas to the north and west of the Fiji arc. Shortly after this reversal, back-arc
spreading began to the west of Fiji, forming the North Fiji Basin, with clockwise rotation of the
New Hebrides Arc to the southwest, away from Fiji, and anticlockwise rotation of the Fiji
Platform.

Further breakup of the arc occurred in more recent times (about 5.5 Ma) with the initiation of
intra-arc extension behind the Tonga Trench. This caused the opening of the Lau Basin,
separating the remnant Lau Ridge from the active Tofua Arc in Tonga.

Much of the younger (Late Miocene to Pliocene) structural and volcanic features of the Fiji
Platform can be related to transformation of the older arc to its present-day configuration through
creation of the North Fiji and Lau Basins. This period also saw major changes in volcanism
throughout the group, with initial eruption of voluminous shoshonitic volcanics in northern Viti
Levu (5.5 to 3.0 Ma) followed by later alkalic volcanism more akin to oceanic basalts.

In terms of crustal development, the geological evolution of Fiji can be viewed as having had
four main stages:

    (a) Early arc stage (35-12 Ma);
    (b) Mature arc stage (12-7 Ma);
    (c) Early arc rifting stage (7-3 Ma); and

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    (d) Late arc rifting stage (3 Ma onwards).

These stages reflect the growth of Fiji as an island arc, its maturity and final arc breakup, with the
early periods (up to 7 Ma) dominated by subduction-related geology, and geochemical signature
changing to a later regime more related to extension, with relatively diminished amounts of
subduction component.

Mineralisation

Fiji's location along the boundary between the Pacific and Indo-Australia Plates implies that it
has major potential for porphyry copper-gold and epithermal gold mineralization. This plate
boundary hosts major epithermal gold deposits and copper-gold porphyry systems in northern and
eastern PNG at Lihir (Ladolam Deposit), Porgera, Ok Tedi and Misima, in the Solomon Islands,
at Gold Ridge, and at Emperor and Mt Kasi in Fiji. Several similar epithermal gold deposits
have been found on the Coromandel Peninsula, in New Zealand's North Island. Bougainville
(North Solomons Arc) and Namosi (Fiji) are two major porphyry-copper deposits.

Mineralisation styles in Fiji can be broadly correlated to the various phases of arc evolution.

Early arc stage

In the Fiji archipelago, early Tertiary rocks are found only on Viti Levu and in the Mamanuca,
Narokorokoyawa and Yasawa islands, where there is a succession of volcanic rocks and their
sedimentary derivatives with minor intercalations of carbonate rock. The succession ranges in
age from Late Eocene to Oligocene. This stage is characterised by a geochemically primitive
low-K tholeiitic series of volcanics trending towards slightly more evolved types including low to
medium-K calc-alkaline types within Wainimala Group rocks exposed in the Yasawa and
Mamanuca islands. Mineralisation is restricted in the most part to the Wainimala Group and
comprises:

(a) important massive sulphide occurrences at Colo-i-Suva, Wainaleka and the Wainivesi district
    of southern, southeastern and eastern Viti Levu; and
(b) manganese mineralisation in SW Viti Levu hosted within volcanics and associated
    sediments, particularly in the Sigatoka and Nadi Basins.

Mature arc stage
The mature stage of arc development is dominated by plutonic rocks, the Colo Plutonic Suite
comprising primarily low-K tholeiitic gabbros, tonalites and trondjhemites. The later part of the
Late Miocene was a period of intense orogenic activity in Fiji during which folding and faulting
of the Wainimala and Tuva Group rocks occurred. The cores of some folds contain elongate
plutonic bodies assigned to the Colo Plutonic Suite. Mineralisation within this stage is
widespread and comprises:

(a) numerous vein systems carrying base and precious metals occurring close to, and probably

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    related to the Colo plutonics, particularly in SW Viti Levu (Momi and Kubuna areas);
(b) disseminated mineralisation within the roof zones of the various Colo plutonic stocks and the
    various Wainimala host rocks, pyrite and minor base-metal mineralisation being widespread
    throughout the Wainimala-Colo volcano-plutonic belt; and
(c) skarn-type mineralisation associated with various plutonic stocks, consisting of small but
    relatively high-grade deposits distributed throughout the plutonic belt.

Early rifting stage
The initial part of this stage is marked by eruption of voluminous tholeiitic to calc-alkaline rocks,
particularly in SE Viti Levu (Namosi Andesite), and the later part of the stage by the extensive
development of varied volcanism on Vanua Levu. In northern Viti Levu the later parts of this
stage, c 5.5-3.0 Ma, saw extensive eruptions of shoshonitic volcanics (Ba and Koroimavua
Volcanic Groups). Mineralisation is similarly extensive and varied in nature and intimately
related to the various volcano-intrusive centres. They include the following types:

(a)    major porphyry-type copper deposits associated with the Namosi Andesite at Namosi - the
       Waisoi, Wainabama and Waivaka deposits - together with their associated skarns and
       peripheral epithermal vein systems;
(b)    massive sulphide mineralisation associated with acid volcanics of the Udu Volcanic Group
       at Nukudamu, Wainikoro, Mouta and Coqeloa in NE Vanua Levu;
(c)    epithermal gold deposits within the Ba-Koroimavua volcanic centres of northern Viti Levu
       at Vatukoula, Vuda, upper Sabeto Valley, Tuvatu and Rakiraki; and
(d)    important epithermal gold mineralisation related to tholeiitic volcanism of the Natewa
       Group on Vanua Levu, particularly in the Yanawai District (Mt Kasi), and at Koroinasolo,
       Waimotu, Dakuniba, and Savudrodro.

Late rifting stage
Volcanism of this stage had an oceanic character, with eruption of ocean-island basalts on
Taveuni and in SW Vanua Levu (Bua) and parts of Lomaiviti and Lau. High-K calc-alkaline
andesites were erupted on Kadavu. Mineralisation is minor and is dominated by residual and
placer type deposits. Deposits are represented by:

      (a) epithermal vein-type deposits within the high-K andesites on Kadavu;
      (b) surficial residual bauxite deposits developed on erosion surfaces at Drasa (Lautoka) and
          Wainunu (Bua); and
      (c) placer-type deposits at Waimanu (gold) and in the Sigatoka sand dunes and the Ba Delta
          (magnetite).

Mines and Advanced Prospects: Gold-silver

Tavua Goldfield The Tavua Goldfield is situated in northern Viti Levu within and along the
margins of the caldera of the Tavua Volcano. Payable quantities of gold were discovered in
Lololevu Creek, at the site of the present mine complex in 1932. Emperor Gold Mining Co.

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Limited (EGM), an Australian-listed company, has been mining and exploring for gold in the
Vatukoula area, in the Tavua Goldfield for more than 60 years.

The rocks of Tavua Volcano were derived from a potassium-rich magma of the shoshonite
association with an apparently relatively simple evolution from an absarokite (olivine-basalt)
parent magma to shoshonite, banakite (trachyandesite) and monzonite derivatives.

Mineralisation at Vatukoula is located within a large fractured block created where prominent
northwest-striking shears intersect the north-striking caldera fault zone. The major lodes cover
an area of 2 km2, and are mostly within 600 m of the surface. Lodes occur in three main
structural settings:

    i) steeply dipping northwest-striking shears;
    ii) flat-dipping (10-40) fractures (flatmakes); and
    iii) shatter blocks between shears.

Most of the gold and silver occurs in tellurides and there are also significant quantities of gold in
pyrite.

From the commencement of mining in 1933 to June 1994, the goldfield produced about 4.69
million ounces from 15.6 Mt of ore. In June 1994, the proven and probable underground ore
reserves at the mine were estimated at 1.81 Mt at 7.07 g/t Au (411 000 ounces). Total
underground geological ore resources (measured, indicated and inferred) were estimated at
7.45 Mt at 7.37 g/t Au (1 765 000 ounces). In addition, a previously built tailings dam contains
an additional 257 000 ounces of gold with a proven and probable reserve classification. Hence
the gold contained in known reserves and resources totals over two millions ounces. It should be
noted that recent exploration successes in 1996 have led the company to substantially expand
their ore-resource estimates by an additional 119 000 ounces.

Yanawai District - Mt. Kasi Major mineralisation occurs within a northwesterly trending
structural feature termed the Kasi Corridor. Within the zone there are strongly altered, usually
silicified rocks, and in addition to the mine area, several other major prospects have been located.
 The primary ore-bearing minerals identified include native gold, pyrite, enargite (luzonite),
tennantite, goldfieldite, chalcopyrite, tellurides and cassiterite. Secondary minerals include
covellite, chalcocite and neodigenite. All the recent writers on Mt Kasi have considered it to be
epithermal, and because of the abundance of sulphide minerals (up to 20% in silicified rock) it
has been classed as being a high-sulphidation (enargite-gold) type.

Following extensive diamond drilling in 1992, the latest revised hardrock resource estimate is
1 240 000 t at 3.0 g/t Au, using a cut-off grade of 1 g/t Au. The measured, indicated and inferred
 eluvial resources total 838 000 t at 1.9 g/t Au, using a cut-off grade of 0.5 g/t Au. The best
grades are at shallow level, weathering has produced a significant eluvial gold resource
comprising an undifferentiated combination of slumped ore, colluvium and weathered bedrock.



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Mining commenced early in 1996, initially to mine and treat the eluvial resources followed by
open-cut mining of the hardrock resource. The first gold bar was poured on 15 April 1996. Mt
Kasi Ltd, the developer, a wholly owned subsidiary of Pacific Islands Gold NL (PIGNL), holds a
mining lease for the site, as well as two prospecting licences for adjacent areas.

Upper Sabeto Valley - Tuvatu Prospect Tuvatu is one of several gold prospects known from
the Sabeto area of northwestern Viti Levu. Other well-known gold and gold-copper prospects
close by are at Vuda, Navilawa (Kingston Mine and Banana Creek) and Nawainiu Creek, all
associated with known or presumed centres of volcanic activity and/or volcanic core complexes
within the shoshonitic Koroimavua Volcanic Group of latest Miocene to earliest Pliocene age.
Advanced exploration including extensive drilling at Tuvatu has located numerous auriferous
veins and flatmake structures associated with late stage epithermal mineralising events within
augite-biotite monzonite of the Navilawa Stock. Initial studies indicated oxide proven resources
of 11 350 t at 9.9 g/t; oxide indicated and proven resources of 25 600 t averaging 8.2 g/t.
Extensive exploration and drilling activity at Tuvatu is continuing and is managed by Emperor
Mines Limited under an option agreement with Geopacific Ltd. EML also manages exploration
at the nearby Vuda Prospect under a similar arrangement with a local company.

Advanced Prospects: Porphyry Copper

Namosi District The mineralised area of the Namosi district lies about 30 km NW of Suva,
centred upon the upper reaches of the Waidina River and tributaries, particularly within the
Waisoi and Waivaka drainage areas. The major porphyry-copper prospects are located at Waisoi,
Waivaka, Wainabama and Wainiwi, and a number of polymetallic vein and skarn systems are
also developed peripheral to the main prospects.

Mineralisation in the area has been known since the early 1930s but a detailed search for
porphyry-copper deposits only commenced in 1968. Between 1968 and the early 1980s, over
50 000 m of drilling was completed and feasibility studies indicated a combined estimate of 590
Mt of ore at 0.47% copper at the two main prospects at Waisoi. The project was unfortunately
declared uneconomic. Placer Pacific Ltd commenced re-investigation of the prospect in 1991.

The project is still at a preliminary stage and further geological investigations need to be
undertaken to complete the exploration stage and to define the mineable reserves and possible
surrounding deposits. The Waisoi mineralisation is considered mammoth by world standards,
although of low grade. Estimates suggest that the geological resource in the Waisoi East and
Waisoi West deposits is close to 950 million tonnes at 0.43% Cu, 0.14 g/t Au, with a cut-off
grade of 0.3% copper equivalent, while ore reserves have been calculated at approximately 1.1
billion tonnes at 0.4% Cu and 0.13% Au.

For more information about any of these projects please contact the companies directly or the
Director of Mines at MRD; the addresses are listed in the section entitled Key Sector Contacts.




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                        EXPLORATION AND MINING

History Of Exploration And Mining In Fiji

Since the first reporting of gold in 1868 along the Navua River in the main island of Viti Levu,
fossicking and prospecting by lone prospectors and small syndicates, has led to a number of
important finds.

Gold was first exported from Fiji in 1932, from the mining operation at Mt Kasi, located in
Yanawai, on Vanua Levu, the second largest island. Mining at Mt Kasi from 1932 to 1946
extracted ore principally from a large open cut with associated underground workings. Estimates
of ore produced during the mining period vary slightly and an acceptable estimate would be
265 000 t of ore grading 7 g/t Au.

Also in 1932, economic quantities of gold were discovered near Tavua in Viti Levu. This
discovery led to the commissioning of the Vatukoula gold mines, which, after Emperor Gold
Mining Company Limited bought out the rest of the small operators within the Tavua Caldera,
later became known as Emperor Gold Mines.

Although there were numerous other gold discoveries in later years, the Mt. Kasi and Emperor
discoveries remained the most prominent due to the quantity of gold they produced. The Mt Kasi
mine closed in 1946, having produced 1,803 kg of gold from 266,200 tonnes of ore.

History Of Mining Legislation

The history of mining legislation in Fiji dates back to 1908 when the first Mining Ordinance was
enacted to facilitate and regulate mineral sector developments. The first Mining Ordinance
granted prospectors and miners the security of tenure and exclusive exploration and exploitation
rights that they sought, while simultaneously protecting the proprietary rights of the landowners,
protecting the interests of the public, and ensuring that mineral lands were not tied up in the
hands of speculators.

Between 1908 and 1965 the Mining Ordinance had been updated and expanded in scope 5 times.
 The changes made in 1965 transferred the administrative control over mineral resources from the
former statutory Mining Board to the Department of Mines (now Mineral Resources Department)
under the administrative control of the Director of Mines. The Mining Act currently in use was
produced in 1978, with revisions to the Regulations made in 1985, although Mineral Resources
Department is once again in the process of revising the regulations to ensure compatibility with
more recent Government policies.

The primary aim of Fiji's mining legislation is to facilitate and regulate the exploitation of Fiji's
mineral resources by controlling the activities of prospectors and miners to ensure that, Fiji's
mineral resources are exploited in an efficient manner, in the best interests of the community as a

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whole. Secondly, the mining legislation aims to establish and preserve a suitable climate for
mineral exploitation by affording prospectors and miners security of tenure for sufficient periods
as to enable them adequately to explore and exploit the areas held by them. Thirdly, it aims to
provide that adequate compensation be paid to landowners whose land, from which their
livelihood is derived, is adversely affected by mining or prospecting operations.

Mining Today

Emperor Gold Mines: EML's mining operations are conducted through its locally incorporated
companies; Emperor Gold Mining Company Limited, Jubilee Mining Limited, and Koula Mining
Limited which through various joint venture arrangements hold 3 Special Mining Leases as well
as several prospecting licences. At the end of 1995, a total of 155,276 kg of gold had been
produced from 17.3 million tonnes of ore. During 1995 alone, 3,376kg of gold, and 1,574kg
silver were exported from the Emperor gold mines.

Emperors existing mines are currently processing around 600,000 tpa from the Tavua Caldera
mining leases. The operations comprise 2 shaft accesses (Philip and Smith shafts), and a decline
(Emperor Decline). These accesses permit the exploitation of the multitude of ore bodies within
the mining leases area.

Following a recent exhaustive 2-year exploration programme, the Emperor group has
substantially expanded the ore resource estimate by 119,000 ounces of gold, and identified a new
orebody 'R1'. As a result, Emperors near-term plans are to expand throughput over the next few
years; increasing the current production rate from 600,000 to 1,000,000 ore tonnes treated per
annum, upgrade treatment facilities and access the R1 orebody. As part of this expansion
programme the Emperor group are also planning to commission mines at the Tuvatu and Vuda
prospects over the next 5 years. EML are actively seeking new investors for Joint Ventures in the
proposed new mines.

Mt. Kasi Gold Mine: The second operation is the recently commissioned Mt kasi gold project,
operated by Pacific Islands Gold NL, listed on the Australian Stock Exchange. Mineable
reserves at the Mt Kasi Prospect, in April 1995, were 153,000 ounces gold. However, recent
exploration has increased the size of these reserves considerably. Mt. Kasi Ltd are scheduled to
produce 500,000 tpa, yielding approximately 35,000 oz gold annually over the expected 5-7 year
life of the mine, although the increase in mines reserves is expected to increase the life of the
operation. The operation will predominately be an open-cut operation.




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                                     LAND ISSUES
Land Ownership

One of the main benefits of investing in Fiji over other countries in the South Pacific region, is
that there is an easily identifiable, clear land ownership register, an official agency which deals
with all native-land use issues, as well as a well-established native land management and
administration system. Land in Fiji is divided into 3 main categories. Native Land, Government
(State) Land, and Freehold Land. There is no differentiation between them under the Mining
Act, all are subject to the State's right of ownership of the minerals. The ownership of all
unextracted minerals in the ground, of every description, including crude oil, is vested in the
State (the Republic of Fiji) as per Section 3.-(1) of the Mining Act.

Native Land is owned by indigenous Fijians and comprises 83% of the total land area in Fiji.
Native Land is reserved for the exclusive use of its owners, but can be leased with the owners
consent for fixed periods and for particular purposes. Each lease category has different terms and
conditions. Leases may be sold, transferred and varied, subject to the consent of the Native
Lands Trust Board (NLTB). Leasing costs comprise yearly rental payments plus a separate lease
or premium cost. The NLTB is the statutory body which manages and administers land of this
type entrusted to it by landowners. Since most land in Fiji is Native Land, most mineral
developments will be situated on it and investors will be able to deal directly with the NLTB.

About 7% of all land in Fiji is controlled by the Government (State Land) and, like Native Land,
may not be sold. Freehold Land accounts for the remaining 10% of the total land area. Of the 2
mines currently in operation in Fiji, the one owned by Emperor Mines Limited is on Freehold
Land, the other, owned by Pacific Islands Gold NL, is situated on Native Land.

Landowners Rights

The Prospector's Right holder or mining tenement holder is required to give the owner or
occupier of the land notice of their intention to enter their land to prospect or to commence
mining operations. In the event that the land is Native Land, the prospector must send copies of
such notice to the NLTB and to the Commissioner of the Division in which the land is situated.
The Commissioner will advise the prospector on how to proceed with landowner relations.

Landowner Consents and Objections to Applications

In the event that a landowner or occupier complains about the activities of a Prospecting Licence
holder within their land area, the complaint is submitted to the Director of Mines who can then
instruct the tenement holder to comply with any directions given, or if necessary instruct the
prospector to desist from prospecting on such land until amicable relations are restored.

Landowner Compensation

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Compensation payments comprise 2 elements. One element is compensation payable to
landowners for permanent damage done to the land. The other element is compensation to the
holder of the surface rights to that land, i.e. the occupant/land occupier, lease holder. Neither
type of compensation should not be linked to the value of the mineral in the land. It should be
noted that landowner compensation is a separate issue to Mining Royalties, as stated in the
Mining Act.

Compensation payable depends on the type of licence that has been issued. Under a Prospector's
Right or Prospecting Licence the level of compensation is most often negotiated in an informal
manner, and compensation is paid directly to the landowner. Under a Mining Lease, a Special
Mining Lease, a Special Site Right, or a Road Access Licence, compensation levels are
determined through negotiations with the landowners and the NLTB. In the recent past, NLTB
policy has been to build compensation into the value of the surface rental.

To ensure the compliance to the Mining Act and Regulations as well as the Special Conditions
attached to the Lease or Licence, including, compensation and rent, prospectors and miners are
required to lodge a deposit either in cash or by way of a bond with the Director of Mines to cover
all amounts likely to be payable by way of compensation for surface damage.

Closed Areas and Protected Areas

The Minister is empowered by the Mining Act to declare protected areas, and close specific areas
or prohibit or restrict prospecting for any mineral throughout Fiji. The Mining Act describes the
classes of land closed to prospecting or mining, and permits the Director of Mines, with
Ministerial approval, to make special dispensation in certain cases to allow prospecting or mining
in these areas, under certain conditions.

The aim of closed and protected areas is to preserve specific minerals or specific areas from
development for the purposes of either reserving them for future or specific development or in
some cases to avoid disturbance of the occupational rights of the owners or occupies of the land
concerned.

Investors may apply for limited exclusive prospecting and mining rights over such minerals or
areas. These exclusive rights are designed to enable the regulation and control of the mineral
development to ensure a degree of conservation whilst permitting limited development. More
usually, these limited exclusive rights are used to enable the development of national resource
endowments while making provision for wide scale prospecting operations subject to conditions
on the future development of mineral reserves discovered during the prospecting stage. As a
matter of policy, such lands closed or restricted by the Minister are generally available to
prospecting, subject to the imposition of special conditions.




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                         ENVIRONMENTAL POLICY

Fiji's Sustainable Development Bill

Protection of the environment will be enshrined in the proposed environmental legislation - Fiji's
Sustainable Development Bill. This is currently being compiled by the Department of the
Environment. It is expected that this Bill will formalise existing policies and principles.

Mineral Sector Specific Policies

Government recognises the economic contribution of mineral sector developments to national
growth, but also accepts that mineral sector developments have socio-environmental impacts.

The Department of the Environment (as the national environmental policy formulating body) has
established an environmental impact assessment process which provides a framework for the
assessment of all socio-environmental impacts of mining projects. Developers are required to
submit all information/assessments as required by this process to the Mineral Resources
Department (as the primary regulating agency for the mineral sector).

Developers are expected to identify anticipated impacts and suggest methods of compliance with
acceptable international standards for mine-related environmental releases. They are also
expected to provide technical justification for their choice of environmental monitoring program,
and for environmentally-sensitive mine-design decisions.

The mining industry, in consultation with Government, will formulate an environmental code of
practice for its members, and will set acceptable environmental standards. In addition, the
industry will be required to devise a self-regulatory mechanism to ensure that its members adhere
to the codes of practice.

Developers are required to post a refundable bankers guarantee, as surety of best practice. The
amount of the bond will be determined by the Mineral Resources Department according to the
element of risk associated with the project.

The developer will pay compensation to any person or community whose well-being,
environment, or income is adversely affected by the mining project. The level of compensation
will be determined by Government in consultation with the mine developer and the person or
community entitled to compensation, after considering the degree of impact. Compensation is
linked to the degree of impact, not to the value of the mineral

Wherever possible, mines are expected to rehabilitate progressively during their operation.
Government believes that, ultimately, this will reduce the total costs of rehabilitation. In line
with Government's adoption of the precautionary principle, and to ensure that sufficient funds are
available to complete rehabilitation at mine closure, the mining project developer will be

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expected to make contributions to a Mine Closure and Rehabilitation Fund. Government accepts
that for certain projects, the mine area can never be restored to its original state.




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                        TAXATION AND INCENTIVES
Government's primary aim is to establish a facilitatory investment environment to encourage
export-oriented investment. Consequently, Government expenditure has been redirected towards
infrastructure and productive areas required by industry. The taxation and incentives structures
are also being reformed to offer more internationally competitive tax regimes to investors. Some
changes have already been made and numerous others are planned for the forthcoming years.

General Investment Incentives

A system of tax incentives for exporters, who export more than 80% of their output, including a
Tax Free Factory Scheme, operates. A number of double taxation agreements have also been
established, whereby exemptions or tax concessions granted by the Fiji Government are not
negated by the imposition of tax in the country of residence of the investor. Such agreements
have been signed with Australia, Japan, New Zealand, the UK, South Korea, Malaysia and
others. In addition, general incentives are offered to all companies who chose to apply for them.
These include customs duty concessions, VAT refunds, withholding tax concessions, accelerated
depreciation, carry forward of losses, among others.

Mineral Sector Taxes

Mineral sector investors wishing to invest in Fiji can apply for industry-specific tax concessions
and exemptions from the Government of Fiji under the auspices of the Income Tax Act (Cap.
201) and the Customs Tariffs Act, 1986. The major elements of the fiscal package include the
following:

Royalty Tax - Royalties are levied on the Free-On-Board (FOB) value. The rates are: 3% on
bauxite or iron ore, and 5% on all other minerals. Under certain circumstances, mining
companies with marginal projects, that are bordering on viable, can apply for a reduced rate for
the initial debt repayment period, if it can be proved necessary to achieve mine viability.

Export tax - Export tax is payable at a rate of 3% of FOB value of gold and other metallic
minerals. Government policy is to ensure that the sum of Royalty plus export tax does not
exceed 5% of FOB value.

Customs Duties - Government proposes to introduce a low standard import duty that will be
levied according to the Customs Tariffs Act. Where that duty is payable on primary or
intermediate inputs into commodities or products that are exported, the duty will be refunded.
Until this policy is implemented, mining companies will continue to pay import duties (fiscal
duty) at varying rates on most goods required for a mining venture.

Import duty of 5% is payable on imports of initial capital equipment including specialised
equipment and machinery; specialised spares for heavy equipment and machinery; and chemicals
used in the mining process. For imports of fuel for power generation the rate is 10 cents per litre.

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Investors can apply to the Comptroller of Customs for customs duty concessions, such as:
remission or reduction in duty paid for goods imported into Fiji (including imported machinery
and equipment, parts and materials) which will be of benefit to the country or if they will be used
to promote economic development or develop Fiji's industry.

VAT - VAT is payable at 10%. For businesses which export more than 80% of their product, the
VAT of 10% is usually fully refundable.

Company Income Tax - As part of its Company Taxation Review, Government proposes to
reduce the rates of company income tax applicable to all companies. Until then, existing
company income tax rates of 35% for resident companies, and 45% for non-resident companies
apply.

Under the existing Income Tax Act, there are a number of concessions for which mine developers
may apply: a mining venture can apply for reduced tax rates or for a total tax holiday, for a
period determined by the Minister, if the development is likely to be expedient to the economic
development of Fiji; a taxpayer with a valid mining tenement may deduct from total income, (i.e.
income generated from all sources) all amounts expended on prospecting for minerals in Fiji, at
the Commissioner's discretion; where profits have been derived from the sale of a mineral, or
from a right in or a right to work such minerals, the taxpayer may deduct an amount equal to the
cost of those minerals, or that right in determining total income.

Depreciation - a mining company incurring capital expenditure within Fiji in the acquisition of a
mining lease or in the development of mines for the extraction, treatment, refinement and sale of
minerals may, as an alternative to normal depreciation, apply for accelerated depreciation on
buildings, plant and machinery in any 5 out of 8 years .

Dividend, Interest, Know-How and Royalty Withholding Taxes - All Withholding Taxes are
assessed in accordance with Fiji's general tax laws, however concessionary withholding tax rates
of 10-20% for interest, dividends, and royalties, are available for treaty countries. Taxpayers may
apply to the Minister of Finance for reduction or exemption from dividend, interest or royalty
withholding taxes where such reduction/exemption is considered to benefit Fiji's economy.

Fiji's Company Taxation Review

In 1996, the Fiji Government completed a company taxation review which aimed to ensure that
Fiji's company taxes are low, stable, transparent, in as many cases as possible non-discretionary,
and internationally competitive. The review stemmed from a concerted effort by Government to
improve the company taxation and incentives system in Fiji. The current process of reform is
backed by the International Monetary Fund, and will be implemented between 1997 and 1999.

The new changes will be announced in the November 1997 Budget.




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             EXPLORATION AND MINING PROCEDURES
Administrative Control over Fiji's Mineral Resources

The administrative control over mineral resources is the responsibility of the Director of Mineral
Resources Department in the capacity as the Director of Mines, although subject to overall policy
control by the Minister responsible for mineral resources. The Mining Act provides for the State
to retain the rights of access to all "minerals" defined under the Mining Act, and it is this right
which can be granted to individuals through the issue of Prospector's Rights or Mining Leases.

The administrative control over quarry workings lies with the Minister responsible for mineral
resources. The Quarries Act (Cap. 147) provides for the regulation of quarry workings by Mines
Inspectors appointed under the Mining Act.

Role of Mineral Resources Department

Mineral Resources Department encourages, facilitates and regulates the exploration and
development of Fiji's mineral resources. MRD is the administrator and enforcer of the Mining
Act, the Quarries Act, and the Explosives Act. When applying the Regulations in these Acts, the
Director of Mines main aim is to ensure that good practices are employed in relation to health
and safety of workers and in relation to the protection of the environment.

The Mines Inspectors enforce the Mining Act and Regulations (Cap. 146), the Quarries Act (Cap.
147), and the Explosives Act (Cap. 189), and act as the regulatory body for the mining industry.

Rights, Licences and Leases Issued

The Director of Mines, grants Prospector's Rights, and with the consent of the Minister, the
Director also grants Prospecting Licences, Special Prospecting Licences, Permits to Mine,
Mining Leases, Special Mining Leases, Special Site Rights, and Road Access Licences.
Applications for any Right, Licence or Lease are considered on their own merit. The criteria for
assessing merit are: the expertise and capability of the applicant to undertake the geological
programme, any past record that the prospecting company has in mineral exploration, and the
financial standing of the company in terms of its financial ability to undertake the proposed work
programme. Priority of consideration is obtained when the necessary forms, duly completed,
have been lodged at and accepted by MRD.

A Prospector's Right allows the holder to prospect for minerals on any land open to prospecting
in Fiji for a one year period. Prospector's can reapply for Prospector's Rights annually.
Prospecting Licences and Special Prospecting Licences are usually issued for between one and
five years. The terms and conditions of (Special) Prospecting Licences can be varied subsequent
to an agreement between the licence holder and the Director of Mines. In arriving at this
agreement, the Director considers certain criteria including: the appropriateness of the geological
program outlined in the application; the minimum expenditure proposed in the application.

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Extensions to Prospecting Licences are normally available, providing any stated licence
conditions have been met. Extensions of Prospecting Licences are normally made on a one year
basis, although longer periods may be given. Extensions are subject to the same conditions as
apply to initial applications, however, in the case of an extension, it is expected that minimum
exploration expenditure will significantly increase with each successive extension.

In "mature areas", where extensive prior work has been undertaken, or where a well known
geological target is the subject of interest, applicants may apply for an initial Prospecting Licence
of 2 - 3 years. In considering the grant of exploration rights over a "mature area" the Minister
gives due regard to two factors: the Licence holders capacity/capability to undertake the
proposed pre-feasibility/feasibility program, and, the likelihood that the grant will lead to a
development decision on the prospect.

While the Government of Fiji is very keen to encourage prospectors and mineral explorers in Fiji,
it does not want to see prospective land tied up by companies interested in speculating on the
value of the prospect and selling the tenement to make a quick profit.

Reporting Requirements

All Prospecting Licences, Permits to Mine, and Mining Leases are subject to established
reporting requirements. Information and data regarding areas currently under licence are
confidential to the MRD, although once prospecting or mining rights have been abandoned or
relinquished, these data become the property of Government and become publicly available
through MRD.

Transition from Exploration to Development

Progression from prospecting to mining follows the issuance of a (Special) Mining Lease as
prescribed under the Mining Act, and in conformance with the various special terms and
conditions agreed upon between the Director of Mines and the Licence holder. The issuance of
the Lease is subject to two conditions. First, the submission of a comprehensive Feasibility
Study which demonstrates the commercial viability of the project. The Feasibility Study will be
accompanied by a detailed Financing Plan for the development and by an approved
Environmental Impact Assessment document, detailing an acceptable environmental impact
assessment process. Second, the completion of a Development Agreement outlining the broad
principles, responsibilities, and obligations of all parties to the development. This Agreement
would normally be prepared through consultation with the Licence holder, the Fiji Government,
and representatives of the people of the development region. In general, new mining projects are
handled as Executive Agreements between Government and the Licence holder.




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                                    GETTING STARTED
Identifying a Mineral Prospect

Fiji has the attraction of having a well-organised, complete set of all geological records and
exploration data pertaining to Fiji, dating back to the 1800's. All companies prospecting,
exploring or mining in Fiji are required to submit all data collected to MRD upon termination,
surrender, or part-surrender of a Licence or Lease. All relevant reports are immediately placed on
open-file in the MRD library, where they form part of the MRD Exploration Report series. In
addition, mining-company open-file reports are indexed in the MRD Bibliography1, according to
licence number, and are catalogued by subject and location. All are available to the public for
reference in the MRD library. MRD is now trying to digitise this data, much is now also
available on computer file. Further specific information or advice can be obtained from MRD
upon request.

MRD has also been actively involved in mapping most areas of Fiji on a scale of 1:50 000,
although certain areas, such as the Lau group and Rotuma, have been mapped in more detail. All
of MRD's maps have been published and are available to the public on open file for consulting or
copying.

MRD also maintains are stock of other sources of information on the geology of Fiji, which
provides potential investors with all the necessary information for an initial assessment of the
prospectivity of Fiji. The following can be sent to interested prospectors on request:

1. the most recent edition of MRD's quarterly publication, the Exploration & Mineral Digest;
2. an annual review of exploration and mining in Fiji (for the previous calendar year) as
   published in Mining Annual Review by the Mining Journal, London;
3. Asia Money, special supplement on Fiji, in the September 1993 issue;
4. Metallic Mineral Deposits of Fiji, Memoir 4, 1995 edition, produced by MRD (ISBN 982-
   211-022-7); this provides an up-to-date geological review (i.e. to end of 1994) of all metallic
   mineral deposits and occurrences in Fiji;
5. Bibliography of the Geology of Fiji (12 Volumes available);
6. Bibliography of all company reports released on open file since 1983, this lists reports and
   provides a keyword index for each SPL, as well as summarises work done on some of the
   SPLs.

The Exploration & Mineral Digest is sold for FJ$12.00 an issue, or FJ$48.00 for a yearly
subscription. The 196-page MRD Memoir 4 is sold for FJ$20.00, all other information is sent
complimentary. The Bibliography of company reports is nearly complete, but is only available as
a draft at present; however, a computer disk copy can be made available at a nominal cost.


         1
                  MRD has published 9 Volumes of its Bibliography, these are for sale at MRD. Volumes 10, 11 are
                  in the process of being published and MRD has just started compiling Volume 12.

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In addition, a database catalogue was created at MRD to assist scientists in their geological-
related work, by providing detailed information in an organised digital data format. This
database catalogue contains, among other things, information in dBase format on mineral
exploration geophysical surveys and mine tenements.

Getting a Licence

When a mining company or prospector is ready to begin groundwork, then they need to apply to
the Director of Mines at MRD for a licence. MRD issues and monitors eight types of leases and
licences (see section on Exploration and Mining Procedures). MRD staff are able to assist with
enquiries regarding any of these licences, to provide more information as to rights granted and
obligations under each licence, as well as to detail information required at each stage of the
approval process.

Establishing a Mining Company in Fiji

In the event that preliminary prospecting activity has identified a potential area worthy of further
exploration, the next step for an investor is to establish a mining company in Fiji (unless the
investor chooses to operate as a branch of a parent company registered overseas). When a project
reaches this stage, it is recommended, at this juncture, that the licence holder either utilises the
business services of one of the many accounting and financial management firms in Suva to
establish the mining company, or, the licence holder can follow the following procedures:

1. Submit a project proposal to the Fiji Trade & Investment Board to acquire in principle, tax
   and customs concessions, Reserve Bank of Fiji approvals and Immigration approvals.
2. Reserve a company name.
3. Once the project is approved, liase with RBF, Immigration Department, Customs
   Department, and Inland Revenue Department for registration purposes.
4. Register the company. Register the Memorandum and Articles of Association, and comply
   with Fiji National Provident Fund, and Fiji National Training Council, requirements.
5. Identify the tenement in which your company has an interest.
6. Apply to the Director of Mines at MRD for a waiver of pegging, or peg the area (see the
   section enclosed entitled Exploration and Mining: Rules and Regulations).
7. Advise the Director of Mines of the name of the person who will hold the Prospector's Right,
   or Prospecting Licence, ideally this person should be a Fiji citizen.
8. Advise the Director of Mines of the name of the Accredited Agent, who holds their Power of
   Attorney in Fiji, and the name of an Authorised Officer, as per the requirements in the
   Mining Act.
9. Apply to the Director of Mines for a (Special) Prospecting Licence.

In most cases the Director of Mines should be able to assist with providing contacts in other
Departments, or can advise as to whom should be contacted at each step in the application
process.


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Fiji's Mineral Sector



                           KEY SECTOR CONTACTS
Government Departments

Investors interested in obtaining information about Fiji's mineral potential should contact the
Director of Mines within the Mineral Resources Department, which is located on Mead Road,
Nabua, near Suva. The mailing address is Director of Mines, Mineral Resources Department,
Private Mail Bag, GPO, Suva, Fiji Islands. The telephone contact number is (679) 381 611, and
the fax number is (679) 370 039. Alternatively, more information can be obtained from MRD's
web site at http://www.mrd.gov.fj/index.html

Taxation Matters

The Commissioner of Inland Revenue can be contacted for enquiries about specific taxation
issues. Inland Revenue Department is located in several buildings around Suva; the
Commissioner's office is in Waisomo House, Gordon St., Suva. The telephone contact number is
(679) 312 800, the fax number is (679) 304 936. The mailing address is: The Commissioner of
Inland Revenue, Private Mail Bag, Suva, Fiji Islands.

For queries regarding customs duties, the Comptroller of Customs should be contacted. Customs
Department can be reached by telephone on (679) 302 322, or by fax on (679) 302 864. The
mailing address is Comptroller of Customs, P O Box 175, Suva, Fiji Islands.

In addition to these two sources, some of the major accountancy firms around the Suva area
produce booklets on investing in Fiji, and provide information on taxation of foreign and local
companies. Foreign investors may find these booklets especially useful.

Project Facilitation Agencies

There are a number of other primary sources of information for investors, all of which aim to
facilitate investment in Fiji. One such source is the Fiji Trade and Investment Board (FTIB).
This was established specifically to assist investors with their enquiries about investment and
business opportunities in Fiji. With the full support of Government, FTIB is working towards
operating as a one-stop-shop for prospective investors to assist them in establishing their
businesses. Government is in the process of improving the One-Stop-Shop concept. The new
project approval process will only require the investor to submit a project proposal to FTIB, the
FTIB will then liase with the various Government agencies on behalf of the investor.

The FTIB can be reached by telephone on (679) 315 988, or by fax on (679) 301 783. They are
located on the 3rd Floor, Civic House, Town Hall Road, Suva. For information, please write to:
The Chief Executive, FTIB, P O Box 2033, Government Buildings, Suva, Fiji Islands.

Alternatively the Ministry of Commerce, Industry, Trade & Public Enterprise could be contacted.
The Ministry is able to offer general advice and information on investing in Fiji. They are

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located at Naibati House, 9 Goodenough St., Suva, and can be reached by telephone on (679) 305
411, or by fax on (679) 302 617. The mailing address is: The Permanent Secretary, Ministry of
Commerce, Industry, Trade & Public Enterprise, P.O. Box 2118, Government Buildings, Suva,
Fiji Islands.

Private Sector Groups

The Mining and Quarrying Council was established in February 1996. The Council is one of
five councils which come under the umbrella of the Fiji Employers Federation. Each council
looks after its own industry's interests, and provides a forum for discussion of issues which may
affect the industry. The Chair is elected annually, but that person can be contacted through the
Fiji Employers Federation (FEF), which is located at 42 Gorrie St., Suva. The telephone contact
for the FEF is (679) 313 188, the fax number is (679) 302 183, the e-mail address is:
employer@is.com.fj. Alternatively they can be contacted at Fiji Employers Federation, P.O. Box
575, GPO, Suva, Fiji Islands.

Research Establishments

The South Pacific Applied Geoscience Commission (SOPAC), originally CCOP, is a small,
independent, inter-governmental, regional organisation established by several South Pacific
nations in 1972. It aims to assist its members with the management and sustainable development
of their physical environments through the application of geoscience. Its Secretariat is located
next to Mineral Resources Department on Mead Road, Nabua, Suva. For more information
about the work of SOPAC call (679) 381 377, or 381 139, or fax (679) 370 040. The mailing
address is South Pacific Applied Geoscience Commission (SOPAC), Private Mail Bag, GPO,
Suva, Fiji Islands.

The Geological Society of Fiji was created in July 1994 to encourage the advancement of
geological sciences, to facilitate communication and cooperation among members, to investigate
and report on matters of general interest to its members, to organise conferences and other
scientific meetings, to seek preservation of important geological sites and to encourage the
highest standards of technical competence and ethical conduct in the practice of geology in Fiji
For more information about forthcoming events at the GSF, contact the Secretary of the
Geological Society of Fiji at, SOPAC, Private Mail Bag, GPO, Suva, Fiji Islands.

Geological research is undertaken at the University of the South Pacific within the Institute of
Applied Sciences. IAS focuses on analytical laboratory work, and undertakes chemical analysis
of rock and water samples for mining and exploration companies in Fiji. For more information
about the work of this department at USP, contact The Director, Institute of Applied Sciences,
University of the South Pacific, P.O. Box 1168, Suva, Fiji Islands, or telephone (679) 212 339, or
fax (679) 300 373.

Exploration and Mining Companies Currently Active in Fiji


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Emperor Mines Limited's Australian address is Suite 605, Cliveden, 4 Bridge St., Sydney,
NSW 2000, AUSTRALIA. The phone and fax contacts are telephone: (02) 251 2960, fax: (02)
251 2273.

Mr. Chris Adsett, the Managing Director of PIGNL can be reached c/o: Pacific Islands Gold NL
 P.O. Box 553, Edgecliff, NSW 2027, AUSTRALIA. Their telephone and fax contacts are;
telephone: 61 (2) 326-2133, and fax: 61 (2) 328-1607.

The locally registered (wholly-owned) subsidiary company, Placer Pacific Fiji Limited has the
following registered address: Placer Pacific Fiji Limited, P.O. Box 16161, Suva. The Fiji
telephone contact is: (679) 322 800, and fax is: (679) 322 827.



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