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A prospect Angkor Gold (TSX: ANK) picked up in northeastern Cambodia in 2012 may become the Southeast Asian nation’s first producing gold mine, president and chief executive Mike Weeks says.
The project generator sold the 12 sq.-km Phum Syarung prospect on its 300 sq.-km Oyadao South Concession to Mesco Gold, a subsidiary of Indian steel maker Mesco, for US$1.2 million in March 2013.
Angkorretains a 7.5% net smelter return royalty on all production from Phum Syarung if the monthly average price of gold is between US$1,300-$1,700 per oz. If the gold price dips below US$1,300 per oz., the royalty slides by 0.5% for each US$50 in the gold price and rises 0.5% for each $50 price above $1,700.
Mesco Gold submitted its mining application for Phum Syarung to Cambodia’s Ministry of Mining and Energy in January 2014, and Weeks says he expects the Indian mining company will have the permit approved before the end of June.
“They are already in the development phase and hope to be processing ore in late 2015,” Weeks says, adding that in India, mining companies do not require proven and probable reserves to start building a mine.
“They’re going to start mining it and then be ready to expand because they believe, like we do, that it’s a big resource,” Weeks explains. “At the very least the resource is big enough for them and us to be profitable, and they think it’s a lot bigger. They’ve found three veins down to about 100 metres and believe there is a lot more below that.”
Weeks estimates that an underground mine built at Phum Syarung initially could produce about 10,000 ounces of gold a year over a ten-year mine life, and estimates that capex should fall in the $8 million ballpark.
“This will be the first legally operated mine inCambodiaand it will be the first of many,” he says.
“There are no North American companies operating inCambodiayet, but there are a number of Australian companies such as Renaissance Minerals, which has a 1.2 million oz. gold resource. We think mining companies are going to start looking atCambodiathe way they started looking atColombiaseveral years ago.”
The sale of Phum Syarung to Mesco Gold followed the sale in January 2013 of an 80-km prospect on its Oyadao South Concession to private Chinese company Canxiang Mining for US$2.4 million.Angkordid not retain a royalty on the deal.
Currently Angkor Gold has seven licences in the country covering about 1,450 sq.-km — most of them on the eastern side of Cambodia close to the border with Vietnam — and continues to sign new strategic agreements on some of them.
In April it signed a $10.5 million definitive agreement with a Chinese equity fund based in the city ofChengduand incorporated inHong Kongunder Tohui Beishan Property Group Holding.
Tohui brings with it a consortium of associates including Beijing Explo-Tech Engineering Company (BETEC) and the China Chemical Geology and Mine Bureau Shandong Geological Prospecting Institute (SGI).
Weeks notes that altogether BETEC and SGI bring with them specialized equipment and a team of about twenty highly skilled Chinese geophysicists and five Chinese geologists.
“This agreement will help us cut our exploration time down by years,” Weeks says, adding that the Chinese equity fund found Angkor Gold and the transaction took about eight months of due diligence, much of it in China.
Weeks says the expanded exploration program is carrying out a geophysical survey program over an area of about 25 sq.-km and is focused on two prime areas—Wild Boar and China Wall.
Soon after Angkor acquired the property in April 2012, three scout diamond drill holes totaling 521 metres on the China Wall prospect returned intercepts of 6.13 grams silver per tonne over 18.7 metres; 15.98 grams silver per tonne over 20.4 metres; and 14.52 grams silver per tonne over 7.5 metres.
At the Wild Boar prospect, IP and geochemical work is targeting several polymetallic quartz-carbonate veins on which there are extensive artisanal workings and from which grab samples assayed 3.22 grams gold per tonne up to 13.58 grams gold per tonne.
In addition, BETEC and SGI will send a team of six earth scientists to extend IP and geological work to the east of where work was previously completed on Angkor Gold’s Okalla prospect in the Banlung exploration licence area. The team will cover about 15 sq.-km. looking for drill targets for later this year.
Drilling should start in June, or after the rainy season, which runs July-October.
Comments
Rao
gold having sulphide rich ores can be processed using flotation. can you kindly describe or give more details on m,ineralogy of gold ores available with you for extraction.