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.
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’?
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.
With Myanmar becoming more open towards mining and exploration, how could a company such as Mandalay benefit from the first-mover advantage?
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.
What is Mandalay’s ‘footprint’ within Myanmar, and how have you assessed the prospectivity of the areas you will look to explore?
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.
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?
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.
With these comparisons, what metals and minerals is Myanmar prospective for, and where will the main target for Mandalay initially be?
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.
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?
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.
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