Posted in | Gold | Mining Business

Angkor Gold Reports Latest Updates on Mesco Mine Site

An update regarding the progress recently observed at the Mesco mine site was provided by Angkor Gold Corp. President J.P. Dau.

Headframe at Mesco's Phum Syrarung Mine Site. (Image credit: Angkor Gold Corp.)


In 2013, Angkor sold a 12 km2 portion of its Oyadao South Exploration Licence, called Phum Syarung, to Mesco Gold (Cambodia) Co., Ltd. for $1.8 million US. Angkor retained a sliding scale Net Smelter Return interest (“NSR” or “the Royalty”) ranging from 2.0% to 7.5% on any gold production, in addition to 7.5% of the value all other metals mined. Angkor’s sole interest in Mesco’s Phum Syarung mine site is the NSR. On August 8, 2016, environmental approvals were granted to Mesco and on September 6, 2016, a mining license was issued to Mesco by the Cambodian Ministry of Mines.

Recent Developments

The Phum Syarung mine site was visited by Angkor staff last week to witness the progress underground and to the infrastructure.

Mesco was granted Cambodia’s first modern mining license in September 2016 and has since been building out their mining infrastructure. Last week, we had the opportunity to visit the site. Multiple administrative buildings have been completed and are occupied on site, as well as an on-site assay lab in full operation with the capability to quickly test not only gold, but also a full suite of other elements - including copper and silver.

J.P. Dau, Angkor President

The Angkor team also surveyed progress underground. Since early 2017, the headframe has been in place, together with a loading shaft and two inclines.  Incline 1 is presently approximately 213.0 m in length and has become the key entrance point for Mesco to stage the subsequent steps of underground development. Horizontal cross-cutting off of incline 1 on many levels is planned by Mesco to connect the loading shaft and Incline 2. The total distance between the loading shaft at the northernmost point and Incline 2 at the southernmost point is approximately 400 m.

Mesco informs us that it has purchased underground mining equipment which has started to arrive in Cambodia with the first of many containers currently waiting for delivery at customs. This represents a major investment by Mesco and is a very encouraging sign.

J.P. Dau, Angkor President

Net Smelter Return Linked to Gold Price

Angkor’s Net Smelter Return is related to the price of gold. Under the agreement with Mesco, the NSR is a minimum of 2.0% where the gold price is below US$1000 and increases by 0.25% for every US$50 that the gold price surpasses US$1000, to a maximum of 7.5%. For all other minerals, the NSR is a standard 7.5%.

We are especially encouraged by the recent progress which comes at a time when Thompson Reuters has predicted the average gold price for 2018 to be $1360/oz,” continued Dau. “With gold in 2018 at or near its highest annual price for 5 years and our royalty at Mesco on a sliding scale based on the price of gold, so this would be very good news for us,” he said. “As well, a strong gold price has also generated significant recent interest in our other properties where gold is the primary target.”

Dau also warned that “due to Mesco being owned and operated by Mesco Steels Limited and other entities based in India, their results and reporting as to grade and project economics are not governed by CIM definitions or North American NI 43-101 standards or requirements. They own the project and conduct any and all exploration and testing themselves. Our agreement with Mesco does not give us access to their data, assays, process or project economics for verification.”

Under Mesco’s agreement with Angkor, Mesco is not obligated to report such data for verification until and if any future production begins. Angkor’s sole interest in Mesco’s Phum Syraung project is as an NSR holder.

Cambodian Investment and Economy

Cambodia’s economy is forecast to grow in 2018 again at a rate of 7%. As a key member of the ASEAN group of nations and with its ‘One Belt, One Road’ policy, China has drawn a substantial amount of capital investment to Cambodia from foreign markets across several sectors.

The extractive sector, in particular, has experienced recent success,” said Dau. “Kris Energy has been granted a production license marking the first oil to be produced locally, and Angkor’s exploration partner Renaissance is in the final stages of approval for its open-pit gold Okvau mine south of our Koan Nheak property.”

“In the 12 years I have lived in Cambodia,” continued Dau, “I have witnessed the country develop at an astronomical pace with no signs of slowing down in the near future. It is not hard to understand why companies such as Manulife and National Bank of Canada have decided to establish their businesses’ presence in Cambodia. As a director of the Canadian Chamber of Commerce in Cambodia, I have the opportunity to meet the pioneers who are establishing their businesses here in hopes of capitalising on this tremendous opportunity.”

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