TORONTO (miningweekly.com) – Breaking away from its troubled past, modern Cambodia is outward looking, vibrant and developing quickly.

Between 2010 and 2012, it recorded a yearly growth rate of more than 6%. However, the country still faces major hurdles, with education, poverty and infrastructure all requiring urgent attention.

As part of its development strategy, the Cambodian government is keen to foster a modern resource sector, with mining to play a critical role. It has carefully noted the positive economic impact that the Sepon openpit copper and gold mine has had in neighbouring Laos, TSX-V-listed project developer Angkor Gold CEO Mike Weeks told Mining Weekly Online in a recent interview.

“The Cambodian government is rapidly getting up to speed and has some excellent mining legislation in place, much of it based on Australian mining law,” he added.

The potential for first movers into the country is enormous. “Everyone knows there’s lots of mineralisation in Cambodia, but modern exploration has yet to have been really implemented. Before the mid-2000s, most of Cambodia’s mining was undertaken by artisan producers,” Weeks said.

Angkor is an exploration junior that holds five land tenements in eastern Cambodia for a total of just over 1 100 km². It uses a project generator economic model, exploring prospects to attract a buyer. Angkor then seeks to retain a stake, either as a net smelter return (NSR) royalty or by other means.

In January, it also completed its first outright sale. Privately-owned All Solutions (Cambodia), which works in partnership with Chinese gold miner Canxiang Mining, acquired a 78 km² subsection of Angkor’s Oyadao tenement, adjacent to Vietnam, for $2.4-million.

The remaining 222 km² Oyadao territory neighbours the licence, which contains the Phum Syarung prospect, which the company sold to Mesco Gold, a subsidiary of India-based Mesco Steel, in January for $1.2-million and a 10% NSR. The first tranche payment of $700 000 was made to Angkor on May 2.

Mesco Gold was quick to start a drill programme to test the deposit laterally and at depth. The outcome was an increase of the strike length to 400 m and it's still open laterally and at depth.

The company unveiled four drill results on May 23, including hole PS13-020D, which returned an intersect of 8.11 g/t gold, 6.49 g/t silver, 0.12% copper, 1.04% lead and 0.47% zinc from 89.25 m to 95.55 m.

Progress at Phum Syarung will be comparatively swift, according to Weeks. “Mesco isn’t required to obtain a National Instrument 43-101-compliant reserve to start mining, so there won’t be 100 holes or so drilled; instead, Mesco will likely drill further holes to extend the strike further,” he said.

“It’s likely Mesco will achieve an early-2015 start [at Phum Syarung],” Angkor Gold VP for corporate development Fletcher Morgan said in a separate interview. “Also, I believe the environmental-impact assessment is already under way.”

OTHER PROSPECTS
Angkor’s other focal points are its Otray and Okalla prospects. The company reported encouraging early-stage exploratory results at Otray on May 29. “[The results] are strongly suggestive of a high-sulphidation zone in a gold/copper epithermal environment,” the company said.

“With the visible gold we saw in the soil samples and with how everything else lines up … the indications are that there’s something massive there,” Weeks said. “We think this will be a company maker.”

Alongside usual early-stage exploration methods, samples were taken from around 11 400 termite mounds over a 15 km² area and analysed. "We’re confident the samples we're getting from the termite mounds are representative of more traditional techniques,” Morgan said.

"These little critters burrow down to the water table, even if it means going through a basalt layer or whatever else. They deposit material onto the mound when returning to the surface,” he explained. “They’re effective little miners, sometimes burrowing down to as much as 30 m or 40 m deep.”

Angkor will continue field work at Otray until July, when the rainy season starts. It will then compile and further analyse the results obtained, considering the options for potential drilling.

Meanwhile, at Okalla, a gold/copper/molybdenum prospect, Angkor has already drilled 33 holes for over 5 400 m. The company is hoping to pinpoint targets of greater opportunity during 2013.

“Last year, we did some drilling on the property but the results were lower-grade on both the copper and gold sides. This told us that we were in a root zone that appears to be structurally controlled, but not the pay zone,” Morgan said. “Eugenio Cayo, a porphyry specialist is now working on site … he is identifying our targets.”

“Our drill programme at Okalla could start soon,” he added. “We can drill through the rainy season at Okalla, because of the topography there, albeit somewhat more difficult than during the dry season.”

The company’s other Cambodian prospects will also command attention. “We have quite a few other systems similar to Phum Syarung, so we’re blessed with several other prospects,” Weeks said.

WORKING MODEL
Meanwhile, community and social relations are critically important for Angkor, according to Weeks. “A big part of what we do is based on social responsibility,” he said. “We follow World Bank guidelines, obtaining local consent before we go into an area.”

“Our relationship is about creating tangible work, while also helping out with medical supplies and assisting the local educational system,” he added.

“We’ve established a full-time social responsibility group that’s completely self-funded, which means our investors’ money goes straight into exploration; I don't think there are many other companies around doing that,” Weeks said.

For financing, the company has money in reserve and, by adhering to its project generator model, believes it has greater stability within current market conditions. “By being a project generator, we avoid having to return to the market, attempting to raise money at between $0.05 and $0.10 a share as many other juniors are forced to do,” Weeks said.

“It’s all about our overall goal: showing the potential of a site that enables us to attract an interested buyer – the larger the better, of course – and to reach an agreement,” Morgan added.

However, Otray might be beyond the company’s usual parameters. “Thinking about Otray right now; well, let’s just say I don't know if it would be up for sale,” Weeks quipped. “Still, if one of the big players really believed in Otray, we’d certainly be happy to see what comes through the pipeline.”