Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodia's gold closer than ever to being mined

Cambodia's gold closer than ever to being mined

Cambodia's gold closer than ever to being mined

THE recent spate of Cambodia-focused gold mining firms seeking capital via initial public offerings is no coincidence. It is a sign miners and investors have regained an appetite for exploration and risk after a difficult period prompted by the global downturn. And Cambodia looks set to benefit.

Last year global expenditure on mineral exploration plummeted a staggering 42 percent on 2008, a sign mining companies were playing a waiting game amid low commodity prices and reduced financing options.

Cambodia was also affected, as noted by the Japan International Cooperation Agency in its February appraisal of Cambodia’s mining sector. Several mining projects were suspended, it said.

However, mining firms are now investing in exploration again, and Cambodia is due a large injection of capital.

Indochine Mining has announced it could raise up to US$24.5 million on the Australian Stock Exchange to invest in exploration in the Kingdom. Meanwhile, Brighton Mining reached its $2.16 million target after it was oversubscribed, a sign of investor appetite. Both will be followed by Liberty Mining, which announced plans this week for an IPO in Sydney. This is all capital that will be invested in finding gold among Cambodia’s 19 confirmed deposits, according to the most recent geological surveys.

OZ Minerals, which operates in the northeast of the Kingdom, has significantly ramped up investment in exploration this year. The firm spent just $11.48 million on total exploration in 2008, a figure that was raised to $16.6 million in 2009 and jumped to $56.9 million for this year, $8.53 million of which will be spent in Cambodia.

Whether this increased investment will lead to a shorter timetable for gold production in the country remains to be seen, but the opportunities surely increase.

Liberty, for example, has stated it is five to 10 years away from a commercial resource, meaning OZ Minerals and Southern Gold remain the frontrunners – both have said this year they expect to produce within the next three to five years.

Greater investment by the likes of OZ Minerals can only aid exploration. The firm announced in mid-March that it had discovered an inferred gold resource of 600,000 ounces at its Okvau concession in Mondulkiri. To start production, OZ has said it would need to identify more than 2 million ounces, a process that has already started with further exploration. Although third-quarter drilling led to poor results on the first attempt, a further two drillings are planned for the fourth quarter at this site, and results from seven drillings just 16 kilometres from the main Okvau resource are due.

Had OZ not raised spending on investment this year, this activity would be a great deal slower.

The chance of finding a resource fit for commercial production is therefore rising significantly, even though the country’s low level of geological mapping makes the task more difficult.

After numerous false starts, the hope is this increasing investment in gold exploration will mean Cambodia can more quickly join the likes of neighbouring Laos and make the most of what appear to be abundant mineral resources.

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