Mining in Cambodia
Michael Schwartz takes a look at mining in Cambodia – a fast-growing sector popular with companies.
Cambodia is without doubt an exciting and growing mining administration. It has made tremendous steps in its first decade of modern exploration, which did not start until 2004. As proof of Cambodia's growing importance, it featured for the first time in the 2014 Fraser Institute survey of mining investment attractiveness. While its rank is 81st, this is exactly in the middle of the 10 Asian countries in the survey. In terms of the perception of its policies by mining companies, Cambodia ranks higher, at 62nd.
As this review shows, however, the experience of companies actually involved in the Cambodian mining sector is one of support and encouragement, in contrast to earlier, unsuccessful attempts.
Cambodia attracted investment projects with a total capital of US$3.3bln in the first half of 2015, according to figures from the Council for the Development of Cambodia. Domestic investors led the way with US$2.92bln of investment, followed by China (US$254m), Vietnam (US$28m) and Japan (US$25m).
Broken down further, the US$3.3bln total revealed US$2.53bln invested in infrastructure, $360m in industry, US$352m in agriculture and US74m in tourism. Mining still has some way to go, even if, in 2013, 91 exploration companies were awarded 139 exploration licences (figures from the General Department of Mineral Resources).
Cambodia hosted its first-ever Austrade mission in 2015, with the promotional material highlighting prevalence of gold, bauxite, titanium and copper ores, as well as in oil and gas reserves. It is fair to say that Cambodian mining has recovered from a patchy initial period when well-known companies such as BHP Billiton and Mitsubishi both withdrew from projects
in the country.
The role of CAMEC
Investors are encouraged to contact the Cambodian Association for Mining and Exploration Companies (CAMEC), which is committed to working with the Cambodian Government to help develop an exploration and, latterly, a mining sector that recognises and respects all stakeholders.
Richard Stanger, CAMEC's President, said to Materials World, ‘Cambodia's key metals are gold, copper and base metals, and iron ore and bauxite. The government is very industry friendly. Indeed, we have currently worked closely with the Ministry of Mines and Energy to assist in developing new mining legislation, which is based on the Western Australian mining act.
‘The individual mining regions of Cambodia are the northeastern, northern and eastern regions, which are rich in gold, copper and base metals, although they are currently only at development stage.
‘Looking ahead towards actual mining, Cambodia does not have its own mining equipment sector. There are, however, assay laboratories and other infrastructure such as drilling companies for the exploration industry.'
One company warmly welcoming cooperation with CAMEC is exploration company Angkor Gold Corporation. Angkor holds seven licences in Cambodia, covering more than 1,400km2, with more than 30 prospects currently identified. Angkor’s three flagship prospects include Halo (a copper-molybdenum porphyry system), Canada Wall (gold-copper-molybdenum porphyry system) and Okalla Prospect (gold-molybdenum porphyry intrusive).
Angkor also boasts a first for Cambodia – having identified, proven out, and sold the Phum Syarung gold mining project to MESCO Gold Limited. This will soon become the first operating gold mine in the country, beginning as early as mid-2016 and boasting a 7.5% sliding Net Smelter Royalty (NSR).
CEO and chairman Mike Weeks identifies particular advantages to operating in Cambodia, ‘The planning procedure for mining in Cambodia is still developing and Angkor has been a leading voice in working with both CAMEC and the government on mining laws, taxation, environmental stewardship and the key role that community engagement should play in these projects.
‘Cambodia has undergone a significant change since we began our operations. The Government has upgraded infrastructure and undertaken improvements to many of the fundamental country laws and policies to further attract serious industry and foreign direct investment. As a result, they have increased the viability of making Cambodia a very mineable and appealing destination for developing natural resource projects of all types.’
Cambodia's sympathetic attitude to mining is endorsed by Renaissance Minerals (ASX:RNS), an Australian company involved with developing its approximately 800km2 Okvau gold project in eastern Cambodia.
Julian Tremain, Managing Director of Renaissance Minerals, spoke to Materials World, saying, ‘We have found the Government to be very supportive in seeing the development of a sustainable mining industry in Cambodia that will generate significant socio-economic benefits for the country. The exploration and mining industry is still in its infancy and the regulatory framework is still evolving. However, we have found the Government to be receptive to input and feedback from the private sector to ensure the regulatory framework remains attractive to foreign investment.’
Tremain also confirmed his company's progress to date, explaining that Rennaisance has drilled out a JORC resource of 15.8Mt grading 2.2g/t gold for 1.13Moz from surface at the 100% owned Okvau Gold Deposit. The potential for additional shallow mineralisation is indicated by anomalous gold-in-soils and geophysics, the deposit remaining open along strike.
A recently completed feasibility study on the Okvau Deposit demonstrated the project to be robust. Renaissance based this study on a gold price of US$1,250/oz. Highlights include:
A single open pit mine with 11.6Mt of ore grading 2.2g/t gold for 830,000 ounces providing an initial mine life of at least eight year.
Average annual gold production of 91,500 ounces based on a throughput rate of 1.5Mt/y.
All-in-sustaining capital costs of US$753/oz over the life of mine.
Capital development costs of US$120 million.
NPV (5%) of US$174 million at gold price of US$1,250/oz.
In addition, Renaissance has undertaken significant regional reconnaissance exploration across its 400km2 project area, with large scale geochemical and geophysical surveys completed. This regional work has defined numerous exploration targets that provide significant discovery potential. Renaissance has successfully delineated a JORC resource of more than one million ounces of gold from a single target at the Okvau Deposit – the company is confident of the resource, 'given the deposit is at the surface with more than 70% of the resource coming into an open pit mine design.’
Tremain cast his eye over the next 12 months, saying ‘The focus will first of all be a shallow resource infill drilling programme to upgrade overall resource categories. Next will be the completion of the full ESIA to allow for environmental permitting and the granting of a mining licence. We will also prioritise and test numerous exploration targets within close proximity to the Okvau Deposit, as well as completing further confirmatory metallurgical test work, hydrogeological modelling, tailings and waste characterisation studies.’
Looking even further ahead, Renaissance envisages the final product from the mine as gold ore produced on site, which has a readily available market. It describes Okvau as uncomplicated, ‘with excellent grade of 2.2g/t gold resulting in 'low all-in sustaining costs' of US$735/oz, and, importantly, US$611/oz in the initial five years.’
Widening the net
Cambodian mining is not confined to the companies already mentioned. The northern central region hosts the Kou Sa gold project, a JV between Geopacific Resources Ltd (headquartered in Perth, Western Australia and holding 85%) and The Royal Group (15%). The latter is the premier investment and development company in Cambodia, having operated alongside ANZ Bank, Mobitel, Samsung, Motorola, Siemens and PTT Thailand (the latter involving coal assets for three years). Kou Sa is a large copper-gold polymetallic geological system. More specifically, there are northwest trending andesitic volcanics with strong argillic and magnetite alteration. Geopacific's present aim is to produce float concentrate of copper, gold and silver from rougher test work. The gold and silver are largely hosted in tellurides, while chalcopyrite is the dominant copper ore. Five tests have shown copper recovery rates of up to 98.6% for copper, 94.1% for gold and 92.3% for silver.
There can be no question that, while the current legal framework governing mining in Cambodia is still underdeveloped, exploration companies are supported and encouraged by Cambodia's administrative authorities and by CAMEC. Coupled with the country's liberal political and trading policies, Cambodia's mining environment is highly sympathetic