The Gold Report: Why should investors pay attention to Cambodia?
Ken Booth: Because of political forces, Cambodia was forgotten
and ignored. The French explored during its colonial period in Vietnam
and other parts of Southeast Asia. That information was lost. The
Australians explored Southeast Asia, but focused more on Indonesia,
closer to its backyard. The political strife that ended in the mid-1980s
further stopped foreign investment in Cambodia and it became a
forgotten place.
While things were quiet in Cambodia, the past 20 years have seen
significant exploration and development in Vietnam, Laos and Thailand.
As a result, Laos has a world-class copper mine and a producing gold
mine. Those countries share many geological similarities to Cambodia.
For now, there isn’t a big database of exploration results for Cambodia.
But the country should be on people’s maps for mining exploration. And
it is beginning to be.
TGR: What types of deposits are explorers searching for? Gold? Copper?
KB: From a commercially viable point of view, the targets are
copper, copper/gold systems and epithermal precious metal systems. That
is true of the east and central areas of the country. In the western
regions on the border with Thailand, small-scale miners have been
extracting precious and semi-precious stones for decades.
TGR: So what’s the situation with regard to exploration in Cambodia right now? Is it a greenfield?
KB: It would be considered greenfields, but some initial work
has been done. Some geological maps are available. Initial exploration
is not too difficult—it’s fairly easy to get around. We’re not talking
about difficult physiography. First-stage exploration can be done
rapidly through stream-sediment sampling and geophysics. Modern
exploration would be considered greenfield.
Interestingly, on the eastern border with Vietnam, there has been
significant small-scale and artisanal mining over the past 10 years.
That activity does not appear to be historical and seems to be on the
decline. Many of the miners cross the border illegally; it is a fairly
porous border. The miners mine the alluvial material down to hard rock.
TGR: In those areas, do companies follow the small-scale miners to the most prospective areas?
KB: Yes. There are many forces at work in this situation. The
border is tightening up. A lot of those small miners don’t use the best
environmental mining practices and many use mercury. The Cambodian
government is in the process of removing many of these people off the
properties, pushing them back into Vietnam. The good news is the miners
have exposed veins at surface, or they’ve excavated pits and you can get
to hard rock or regolith. Clearly, they are extracting gold out of the
alluvium and out of the veins, so the miners are also benefiting while
doing the prep work for the modern explorers.
TGR: Does this put the mining companies and the government in the path of conflict with the local population?
KB: The Cambodian government is encouraging economic
development on all fronts. It looks around the world and sees how mining
has benefited a lot of countries. The government is making positive
moves toward resource development. With mineral resources, the
government is proactive in making sure that illegal miners—especially
the ones who have crossed over the border—are moved off the land. That
places the government in a good position to work with companies. If a
company has a memorandum of understanding with the government on a
particular piece of ground, the government will support the
company in its endeavors. In those cases, the government will resolve
the issues with illegal mining. Most of the small-scale mining is
alluvial, which is very different from the mining exploration that
public companies are engaged in.
TGR: In the past, you have discussed Angkor Gold Corp. (ANK:TSX.V). What is new there?
KB: Angkor Gold is one of the most active companies in Cambodia. The other significant company is Renaissance Minerals Ltd. (RNS:ASX) from Australia, which recently purchased a 750,000 ounce (750 Koz) gold deposit from OZ Minerals Ltd. (OZL:ASX)
Those are the companies that are the most proactive explorers in
Cambodia. I’ve heard that there are Chinese-backed private entities
working within the country, but I don’t have any knowledge as to who
they are or what they’re looking for. Angkor Gold’s main focus is
exploration for gold, copper and copper-gold systems while Renaissance
Minerals’ main focus is developing its 750 Koz gold resource.
TGR: Angkor Gold is an early-stage exploration company. With so many projects, how do you value the company?
KB: Angkor Gold has a lot of projects. The beauty about going
into a country like Cambodia at this stage of the game is you get to be
the first mover. The best company to bet on is the first mover that gets
in and acquires the most prospective land. Angkor Gold has used its
in-country managers, who have had experience in Cambodia over the last
decade, to claim or apply for large tracts of land in order to ensure
that it is the first mover. Over time, as exploration companies explore
their land packages, less prospective areas will be dropped. While
Angkor Gold looks as if it has a lot of land, and it does, it’s only
from the point of view of saying, “I’ve got six or seven areas here I
really think are prospective, I want to make sure I have those.” And as
it works those properties, hopefully it will be successful on one or
more. But, that land position will change dynamically over time.
TGR: What would be the timeline to get a resource estimate in this situation?
KB: Faster than you might think. Cambodia has four drilling
companies and three assay labs. I believe two of those assay labs are
accredited for reporting under the Australian reporting system as well
as under Canadian NI 43-101 policies. Drillers and labs are busy, but
they exist. The large labor force is not a problem; people are available
and ready to work. Infrastructure is good and improving.
Getting to a resource is no worse than in a first-tier mining
jurisdiction like the U.S., Canada, Mexico or Peru. In fact, you could
be slightly ahead just by virtue of not having to compete for labor and
potentially less bureaucratic red tape than in more developed countries.
If a company is looking at a small vein-style deposit, it can probably
develop the resource in fairly short time. If it is trying to drill off a
resource in a large copper-porphyry system, that will take a lot
longer, just by virtue of it being a much larger target.
TGR: Many sources state that Cambodia has a stable legal and
regulatory framework. The mining law was written about 10 years ago, so
it is still young. Can you comment?
KB: The legal system was developed with external advisers to
ensure that it could be used by foreigners who wanted to invest within
the country to protect property and individual rights. For a country
that has a fairly new legal system, it appears to be good. The same
applies to the mining law.
In creating legal systems, many developing countries rely on the
expertise of people and legal systems from other jurisdictions. It seems
to work well. It is an open system with clear rules spelled out in the
memorandum of understanding. Companies can apply for small acreage or
large acreage. But either way, exactly how to make the application and
then what companies have to do to keep their tenure are well defined. It
is an open and transparent legal system and mining law.
TGR: What are your thoughts on how an investor should participate in Cambodia?
KB: Investors should align themselves with managers that
understand resource development in emerging jurisdictions. Investors
need to realize that if they are in early, they have the potential for
outsized rewards—if they pick the right managers. Early investment in a
country like Cambodia needs to be managed by people who understand the
initial foray into the country by companies like Angkor Gold, Oz
Minerals and now Renaissance Minerals. Those initial prospects may
generate gains when sold to developers.
In all these countries, people have their views on where they’ve come
from and how bad the situation was. But the most important thing is to
understand where they are today. Resource investors who get in early
should do well. But they need an appetite for risk.
I consider Cambodia to be in its infancy, and it has not been
explored to any great degree. There are similar stories of ignored
countries in Africa including Somalia, Sierra Leone and the Democratic
Republic of the Congo. We’ve got an example close by in Colombia.
Fifteen years ago, exploring for gold in the Colombian jungle would have
been considered crazy. Now Colombia is a major destination for
exploration.
TGR: At this point, do you have an idea of what fraction of Cambodia has been explored?
KB: Oh, I would put it down to less than 5%.
TGR: There’s a lot of room for exploration still.
KB: A lot of room for exploration. Here is how I think
it will play out. Somewhere, there will be a success or a discovery. You
will see additional modern techniques applied on a large scale
countrywide. How much has been explored? Well, a relatively small
percentage, because it’s all being done using tried-and-true
methods—feet on the ground, mapping and sampling. When larger surveys,
such as airborne geophysics, start to highlight prospective areas,
things could really open up.
TGR: What thoughts would you like to leave with the readers?
KB: If investors are looking for a company that’s early stage
and prospective, they should look at Angkor Gold. If investors are
looking for a country that is early stage and prospective, they should
look at Cambodia. It is a mining-friendly jurisdiction. Investment is
coming to the country and infrastructure is improving. As an investor or
a company, the “first mover” gets the pick of the litter. And I think
Angkor Gold has definitely done a good job on that. Investors should pay
attention to both Cambodia and Angkor Gold.
TGR: Thanks for taking the time to talk to us.
Ken Booth has more than 30 years of experience in
exploration, mining corporate finance and public company administration.
In mining corporate finance, he has worked for two of Canada’s largest
investment banks executing numerous equity financings for both junior
and senior companies and was involved in a variety of significant
mergers and acquisitions. While working for resource companies, Booth
has held several positions including CEO and vice president of corporate
development. He is currently providing financial advice to the junior
mining sector and is a director of four exploration companies.
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Disclosure:
1) Alec Gimurtu of The Gold Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Gold Report: Angkor Gold Corp. Streetwise Reports does not accept stock in exchange for services. Interviews are edited for clarity.
3) Ken Booth: I personally and/or my family own shares of the following companies mentioned in this interview: Angkor Gold Corp. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this story.
( Companies Mentioned: ANK:TSX.V,
OZL:ASX,
RNS:ASX,)
OZL:ASX,
RNS:ASX,)
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