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Resource investors are
always looking for the next untapped region and Richard Stanger thinks he has
found it. President and founder of the Cambodian Association of Mining and
Exploration Companies, Stanger has been working to get the word out about
Cambodia, a growing, stable country with the right geology for some big
discoveries. In this exclusive interview with The Gold Report, Stanger gives an
insider's view of the secrets to investing in Cambodia and explains why he's
expecting a land rush.
The Gold Report: Cambodia's gross
domestic product (GDP) is roughly $13.2 billion (B) annually, or around
$1,000 a person, according to the Association for Southeast Asian Nations.
It's clearly an impoverished nation, but until the last few years, the
country has done little to develop its mineral wealth. Why?
Richard Stanger: Mainly because there was almost no information
available about the geology of the country. Most of it was destroyed during
the civil war. The country is a bit of a secret. People don't know much about
Cambodia, or, in some cases, even where it is located. The infrastructure was
pretty poor until recently. Roads were very difficult to travel.
Telecommunications were really undeveloped. There was almost no
infrastructure available for exploration.
TGR: How did you find your way to Cambodia?
RS: I was looking for a country that had the right geological setting
and a good government with a legal system that is workable. Cambodia fit that
bill.
TGR: What is the country's current GDP growth rate?
RS: It's averaging about 6.5% at the moment. I believe that it will be
significantly higher this year. It may be double-digits.
TGR: What metals and minerals is Cambodia prospective for?
RS: It's one of those countries where there are not many outcrops.
It's not so easy to walk around in the rocks and find things, but they're
there. There's a lot of sediment covering the country. However, the country
is very prospective for gold, copper and base metals, iron ore and other
industrial metals such as zirconium, graphite and titanium. It covers a wide
range.
TGR: What would tempt junior mining companies to invest and explore
for metals there?
RS: The key to the country is that it's open for business and has a
stable, committed government that wants to develop the economy. There is an
economic and legal framework for companies and foreign investors to come and
work. The country has great financial controls. It's easy to move money in
and out of Cambodia.
The people are really excellent—honest, welcoming and hard working. I
can't say enough about them. It's a very safe country. The operating costs
are low. There is rapidly developing infrastructure, as well as
infrastructure specifically related to the mining exploration industry. There
are a number of drilling companies and geological services here.
TGR: Are there any assay labs?
RS: Two recently opened.
TGR: Going back 5 to 10 years, Cambodia is similar to what country?
RS: Some people keep saying Colombia, however
Mongolia is a really good comparison. I went to Mongolia fairly early.
Nothing actually happened there for five years and then it just started
booming.
TGR: After decades of civil war, Cambodia is slowly finding its feet
and has established democratic elections under a constitutional monarchy.
However, according to Transparency International, Cambodia is the fourth most
corrupt nation in the world. What are your thoughts on that?
RS: As an investor, I don't understand that rating at all. I'm kind of
perplexed about it, really. That rating is purely perceptual and it's
non-empirical. I actually think they just flat out got it wrong. And I'm not
the only person that would say that.
TGR: What are some risks associated with Cambodian investment?
RS: It's really difficult to find too many risks. Cambodia has
internationally recognizable laws, a very stable government that won by a
landslide in the last election, infrastructure development and an incredible
number of companies pouring into the country to invest. The development is
exponential. I know it sounds unrealistic, but there are very few reasons not
to invest in this country. It's just been a secret for a long time.
TGR: Foreign direct investment in Cambodia has almost doubled to $5B
within the last year. Where is that money going?
RS: That figure is likely to be a lot higher this year. A lot of that
money is going into manufacturing. There are some significant manufacturing
facilities being constructed here. It's also going into agriculture, banking
and finance, construction, infrastructure and development, tourism and food
processing. There really isn't a mining industry in Cambodia yet. It's really
an exploration industry at this point and therefore exploration expenditure
is not included in foreign direct investment.
TGR: When money starts pouring into a country that's never really seen
that kind of prosperity before, things can go wrong. Is the government that's
in place able to manage this newfound windfall and development?
RS: I really think so. There's been a lot of growth behind the scenes
over the last few years. This government is very aware of its position, not
only in Asia, but also globally. It's been careful to develop the economic
framework for investment. The government has well-educated and clever people
with international experience, particularly the prime minister, senior
government leaders and advisers. There are a lot of younger people coming
back to Cambodia after studying and working overseas to help develop their
own country.
TGR: Does Cambodia have any form of capital markets?
RS: The stock exchange, which has been in development over the last
three years, opened this month and has run an initial public offering of the
Phnom Penh Water Authority. Cambodia has proper securities laws, a regulator
and an exchange with one company trading so far.
TGR: Not surprisingly, the Chinese are already in Cambodia. Guangxi
Nonferrous Metals Group invested $22 million (M) into construction of a steel
processing plant there. Late last year, China's state-owned Xinhua news
agency reported that Chinese companies planned to invest as much as $500M in Preah Vihear province. Do the
Chinese plan to explore for gold in Cambodia?
RS: There are a couple of companies here looking for gold. However,
Chinese companies are generally not interested in exploration. They're more
interested in development.
TGR: What should investors know about Cambodia in your view?
RS: Cambodia is an investor friendly country with a stable democracy,
excellent investment laws, some incentives and a legal and fiscal system
constructed to encourage development. It has a world class banking system
with more than 50 banks, a number of large commercial banks and none were
impacted in the global financial crisis. There are a lot of places that
investors can put their money in this country. There are so many
opportunities here and it is still early days.
TGR: What are some of the mining companies currently operating in
Cambodia?
RS: The publicly listed companies are Angkor Gold Corp. (ANK:TSX.V), Brighton Mining Group Ltd.
(BTN:ASX), Southern
Gold Ltd. (SAU:ASX), Indochine Mining Ltd. (IDC:ASX) and Renaissance Minerals Ltd.
(RNS:ASX). There are also unlisted
companies, such as Liberty Mining International Ltd.
TGR: What are the primary commodities being sought by those companies?
RS: Gold, copper and base metals are the prime commodities being
sought. Gold is the highest priority at this stage because it's the easiest
to develop in a country that hasn't had a mining industry previously.
TGR: Since it's really about exploration at this point, what companies
have locked up a significant land package? Which have drills turning?
RS: The most active company at this stage is Angkor Gold. It has three
drill rigs operating, more than 10,000 meters (m) planned this year and
probably 150 people working in the field. It's working on multiple targets
and has a large land holding. It's run by the visionary CEO Mike Weeks, who
is also philanthropic in his outlook. He does a lot of social development
work, as well as the mining exploration.
TGR: He's originally an oil and gas guy. Does exploring for gold in
Cambodia seem like a bit of a stretch?
RS: He came from an oil and gas background, but I can tell you from
spending time with him that he's 100% focused on developing Angkor Gold.
TGR: Does Angkor plan to option some of those properties to other
companies?
RS: Not at this stage, I believe. However, it could be open to that
further down the track when some of the projects get closer to the resource
stage. I've spoken with management and they would be open to talking to other
companies about coming in to explore some of the other targets because the
company does have a large land package.
TGR: Has Angkor had any positive drilling results?
RS: Yes. The two main areas it's focusing on have quite different
geological settings. One of them is a more structurally related, epithermal
gold vein system with a potential of at least 0.5 million ounces in the first
stage. The other area is a copper-gold-moly porphyry system, which is being
actively drilled right now. Both of those areas—the second one in
particular—have huge potential and are getting good results.
TGR: Has the copper-gold system been explored before?
RS: The area with the copper-gold-moly system has been explored since
2005. This year, Angkor is getting close to the source of a very large
anomalous area.
TGR: Are there other companies on the ground trying to prove up some
ounces with the drill bit?
RS: Renaissance Minerals has a drilled up Indicated resource. It has
quite a land package and a growing resource of currently about 720,000 ounces
at the Okvau gold deposit. I am aware that the
company is planning a significant ongoing drilling program to commence almost
immediately. It has probably drilled about 50,000m and has a number of other
immediate targets in the area. Renaissance is a success here and will be one
of the early starters as far as mining is concerned.
TGR: Are any other companies that far along?
RS: There are other active companies, such as Indochine
Mining. It has a big land package and is actively exploring it. Indochine has carried out extensive field work and
drilling programs along with Southern Gold and Brighton Mining Group.
However, I believe those companies do not yet have anything like the advanced
projects of Angkor Gold. I think it's safe to say Angkor will be the next
company up and running with a resource inside of a year or so.
TGR: Are you getting more calls from your friends in Australia these
days?
RS: Interestingly, I've had one company after another up here in the
last six to eight months. It's remarkable how many
companies are interested in getting involved in existing projects, joint
venturing, picking up new areas or getting on the ground to learn about the
country. I'm expecting a little bit of a land rush in the near future. A lot
of people are trying to get involved in the business here now.
TGR: I guess Cambodia isn't a secret anymore?
RS: That's what we like to think. We had an international investment
conference here last year; it was well attended. That was one of the things
that was brought up at the conference: Cambodia is
no longer a secret. It's quite staggering. A number of airlines fly directly
into Cambodia now. The flights aren't just for tourists—they're filled
with investors. Investment and venture capital funds are setting up here. I
can't imagine what it will be like in five years.
TGR: Thanks for sharing your insights on Cambodia, Mr. Stanger.
Richard
Stanger is the founding and
present president of the CAMEC (Cambodian Association For Mining And
Exploration Companies) and has been actively involved in the development of
mining exploration in Cambodia since 2004. Stanger is an explorationist/businessman
with more than 20 years of involvement in mining and exploration. Previous
experience includes directorship of several Australian listed public
companies as well as numerous unlisted entities, direct mining experience and
a number of years in the management consulting industry primarily focused on
the mining industry.
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DISCLOSURE:
1) Brian Sylvester of The Gold Report conducted this interview. He
personally and/or his family own shares of the following companies mentioned
in this interview: None.
2) The following companies mentioned in the interview are sponsors of The
Gold Report: Angkor Gold Corp. Streetwise Reports does not accept stock
in exchange for services.
3) Richard Stanger: I personally and/or my family own shares of the following
companies mentioned in this interview: Angkor Gold Corp., Liberty Mining
International Ltd. I personally and/or my family am
paid by the following companies mentioned in this interview: None. I was not
paid by Streetwise Reports for participating in this story.
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