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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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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