Glittering promises still need to be kept

[PHNOM PENH POST]

ASTRA Mining’s claims of gold bonanzas in June were greeted with disbelief by Cambodia’s mining community. But a claim that the company will deliver gold for shareholders within a year has been met with even greater incredulity.

And rightly so. OZ Minerals, a tested if somewhat troubled international company, began its Cambodian operations in 2006 but has yet to extract an ounce of gold from its allegedly gold-rich concession in Mondulkiri province.

Astra, of course, is the Aust-ralian firm that first entered the Kingdom’s mining sector last spring, announcing the intention to buy a potentially significant gold concession in the O’Yadao district of Ratanakkiri province.

The company was unknown to Cambodian operat-ors, however, and a report in the Sydney Morning Herald dredged up Astra CEO Jaydeep Biswas’s allegedly questionable past.

So it was with great surprise that Astra this week did in fact announce the impending acquisition of that very O’Yadao concession – and predicted gold extraction within 12 months of the deal’s close.

As many as 350,000 ounces could be proven within a year, a company statement said, as soon as an environmental impact assessment was completed and an exploitation lic-ence granted by the Ministry of Industry, Mines and Energy.

Astra yesterday did not immediately reply to requests for comment, but insiders put the company’s claims in perspective.

A company must undergo an extensive process of research, exploration and study before extraction could take place, Cambodian Association of Mining and Exploration Companies president Richard Stanger said.

That includes everything from finding a prospective area to mapping the rock formations underneath.

Many drill-core samples are needed to generate data enough to prove a gold deposit is worth extracting.

Feasibility studies are therefore conducted with cost and ore-reserve calculations, and later environmental impact assessments.

Only after a company is certain that gold extraction is fin-ancially viable does it submit an exploitation application to MIME and the Council for the Development of Cambodia.

Then it still needs to build a plant, as well as hire and train staff to operate it.

Such an endeavour would require “nothing short of three years”, Stanger said, and only if the company in question had a proven resource of gold.

“I can’t imagine how you’d do it in a year, unless it was a small-scale operation.”

Stanger noted that OZ Minerals had been exploring in Cambodia for five years, most likely spending more than US$20 million in the process, yet so far boasted only a reported 605,000-ounce “inferred” resource of gold.

That deposit would need to reach “reserve” classification before OZ would be willing to apply for a licence to extract, and there’s still no deadline for when it plans to do the actual extraction.

Perhaps Astra is much further along in the process than is otherwise assumed.

Indeed, it’s not alone in expecting a quick turnaround on its Cambodian investment.

PIMA-D&D International Ltd, a joint venture by Cambodia-based D&D Pattnaik Group and Kuwaiti Pima International, announced last month that it would be ready to export gold from its mines in two years.

CEO and vice-chairman Debasish Pattnaik said yesterday there were reasons his company would meet its deadline, namely the expertise of chairman Dr K P R Raja.

Raja had extensive experience in Africa, and would leverage his time there to generate better-than-expected results in the Kingdom, he said.

Debasish Pattnaik also pointed to the type of mining method used to extract the gold, among other factors, as  well as saying some of the more established companies were merely using exploration as a means to boost their share value – hence their slow movement to extraction.

Still, it’s hard to negate the expertise of seasoned professionals who have been operating in the Kingdom for many years.

Gold extraction, when it fin-ally happens, will greatly benefit Cambodia, both through job creation and tax revenues.

But it remains to be seen whether these companies can deliver on their promises.