Mandalay Mining and Metals founder Paul Lock speaks to Proactive Investors
Mandalay Mining and Metals founder Paul Lock, talks exclusively to
John Phillips, chief operating officer for Proactive Investors, about
the company’s foray into South East Asia.
Mandalay Mining will have a specific focus on exploration and development opportunities in Myanmar.
PROACTIVE INVESTORS:
South
East Asia certainly offers exploration and mining rewards, but not
without risk. With Mandalay to focus on Myanmar, is the country becoming
more ‘mining friendly’?
PAUL LOCK:
That’s
an interesting question John. With the election of Thein Sein in 2011
and his subsequent reform agenda we are seeing a country rapidly thawing
from an extended period of isolation.
The economic reform is
substantial, the Thein Sein Government has managed to address most key
issues in 2-3 years, many other countries started their reform processes
decades ago and still have a lot of work to do.
Aside the
changes which address political stability, which has resulted in the
dropping of just about all US and EU sanctions, we have a substantially
revised foreign investment law which reads like a good novel, it
addresses all the hard issues including the sale of investments,
guarantees against expropriation – which as a part of ASEAN has teeth –
employment regulations which address Myanmar’s needs as well as those of
the investor, remittance of profits and substantially all ownership
restrictions.
This is a win-win for Myanmar and for foreign investors.
PROACTIVE INVESTORS:
With
Myanmar becoming more open towards mining and exploration, how could a
company such as Mandalay benefit from the first-mover advantage?
PAUL LOCK:
With
all frontier investment – and although Myanmar is rapidly opening up
it’s still difficult terrain for the foreign investor – the activity is
generally led by the small to medium sized explorers and producers, the
early adopters in the mining community.
As I think we both
appreciate, once the political environment settles down and the
processes with government become better understood then it's easier for
the larger companies to start getting interested, as will a larger
portion of the investor community.
For Mandalay this will provide
opportunities for farm-ins, which we will clearly consider, but it will
also provide a larger pool of investors interested in the stronger
returns connected to exploration and development risk.
Our plan is to be a producer so we are really there for the longer term, not free carry.
PROACTIVE INVESTORS:
What
is Mandalay’s ‘footprint’ within Myanmar, and how have you assessed the
prospectivity of the areas you will look to explore?
PAUL LOCK:
Mandalay
has what we believe to be one of the largest private geological data
collections covering historical exploration and mining activities in
Myanmar.
In 2013 Mandalay’s Technical Director, David Hobby, and I spent a considerable amount of time researching this collection.
This
collection includes numerous stream sediment tests, historical mining
records, some drilling and air mag data and even written accounts from
over 50 years ago.
With this we have been able to identify several very interesting prospects for which we have started the application process.
We will have to overlay this historical data with new sampling but it’s a good start.
We
expect to be in the field later this month and in early March, in
addition to visiting the initial areas we have identified we will be
looking to verify some of the other data we have been considering.
PROACTIVE INVESTORS:
How
extensively have modern mining techniques been applied in Myanmar, and
have there been any geological comparisons made between potential
mineralized belts within the county – and compared to other belts
globally?
PAUL LOCK:
The majority of mining in Myanmar is labour intensive, hence it's all essentially shallow surface mining on small plots.
As
a result there is some environmental damage but this is generally quite
local. Myanmar is taking quite a strong stance on environmental
protection and with regard to mining the government will be looking to
the foreign mining companies to introduce technology and methodologies
to help bring practices to world best practice.
The one modern
mine is the Monywa Copper Mine, formerly owned by Ivanhoe but currently
owned and operated by a Chinese company. My understanding is that this
mine has since fallen behind with regard to its operational practices
but I haven’t been to site myself.
PROACTIVE INVESTORS:
With
these comparisons, what metals and minerals is Myanmar prospective for,
and where will the main target for Mandalay initially be?
PAUL LOCK:
We
are in discussions with the Ministry of Mines and the Department of
Geological Survey and Mineral Exploration over blocks covering Gold,
Copper, Lead/Zinc, Tin/Tungsten, Antimony and Nickel. Of all of these
Nickel will likely be the hardest to explore as it is remote, so we will
probably put this into a holding pattern.
Of the others all
have been identified on the basis of strong historical results and
therefore all are highly prospective. In essence the first phase of
exploration has been completed for several of our targets, we know there
is something there we now just need to give it some definition.
Given
the looming supply issues for Zinc and Tin this is where we will
probably concentrate our efforts but at this point it all looks good.
Myanmar also has heavy sands and I have seen some data on platinum and
rare earths, so this is something I would like to explore in the
background, but at this point it is a low priority.
PROACTIVE INVESTORS:
Your
background Paul is being an entrepreneur and merchant banker, how will
this assist in raising funds for Mandalay as it moves along the path to
an Initial Public Offering?
PAUL LOCK:
Well
I have a background in commodity trading and resource finance, with a
bit of stuff in between, so I have a bit of experience understanding
what works and what doesn’t from a mining perspective and I also
understand what’s going to work for the investor and the financier.
Complementing
my skill set is David Hobby’s extensive experience as an economic
geologist, which is a necessity in this game. So our objective is to
identify targets which we think, from the outset, will land us in the
bottom half of the cost curve – I think we can do this.
We have
also been doing a lot of work on investor segmentation, i.e. of the
7,000 odd listed resources entities out there we can identify which of
their investors like developing countries and exploration risk.
This
helps us focus in on relevant investors but is restricted to the larger
investors, i.e. those that fall into the top 20 on the register.
All
this said we still need to have something good to invest in, which I
think we have. We have several interested investors but we have been
focused on developing the certainty behind what we are doing before we
accept new funding.
We are nearly at that stage, if we have the
right seed investor or investors we will consider it but we will
probably wait until we can do something on market. We are all open ears
at the moment though, the interest is there as investors can see the
first mover advantage so we will see what the next few months brings us.
Thank-you Paul.
