Miners press on despite poor gold market conditions
KUALA LUMPUR: While pundits turn bearish on gold, Malaysian and foreign miners are undeterred, pushing ahead with exploration and production.
The industry is drawing renewed interest from investors after languishing for years. Money poured into exploration has yielded the country’s biggest gold find in recent times in Jugan Hill, Bau, Sarawak with a deposit of 3.3 million ounces by Toronto-listed Besra Gold Inc.
“Total resources in Bau are currently at 3.3 million ounces of gold (measured, indicated and inferred),” Steve Wilson, Besra’s corporate communication director, tells FocusM in a reply to questions via email.
Asked whether 3.3 million ounces will make it the largest deposit in Malaysia, Wilson said “yes”.
Regionally, it is estimated to come in at 11th place. “We don’t have absolute figures available, but we think 11th in all of Asia,” says Wilson.
According to Lorax Environmental Services Ltd, Bau’s 3.3-million-ounce deposit is “mid-sized” in global terms.
“The largest mines are in excess of 10 million ounces and small ones are 0.5-0.2 million ounces,” said Ali Sahami, co-founder of Lorax, an environmental consulting company.
Besra, formerly Olympus Pacific Minerals Inc, is an international mining company engaged in the exploration, development and production of mineral properties in Southeast Asia.
Besra obtained an exploration licence in 2009 on 1,400 sq km of mining tenement spread across various regions in East Malaysia, with Central Bau, a 17,000-acre zone, as its main focus.
Gold production is expected to start by late 2015, subject to project financing being in place.
“We have resolved metallurgy, recovery, process, plant and licences and subject to project finance being in place, we expect to be producing by late 2015. Yes, production will be possible and viable and we are progressing with those plans,” Wilson adds.
Besra believes there is much more to be discovered at Bau, with significant expansion of the resource after further exploration.
“Bau will be a long-term, multi-mine project that could be in operation for more than 20 years, if conditions remain favourable,” says Wilson.
Unlike Indonesia and the Philippines, there is not much large-scale metal mining in Malaysia to date, says Lorax’s Sahami.
Indonesia is home to the Grasberg Mine, the world’s largest, with an estimated consolidated, recoverable proven and probable reserves of 32.5 million ounces in Papua province. The mine is owned by Arizona-based Freeport McMoRan Copper and Gold Inc.
“Undoubtedly there is mineral potential in that country (Malaysia), but mining investment always depends more on clear laws and regulations and sanctity of contracts,” says Sahami.
“This is because mining involves large investments and a long period between exploration and production (typically 10 years or more for metal mining). So whether large-scale metal mining will be a significant part of the economy will depend more on the government’s attitude to mining than the actual geological potential,” Sahami adds.
Besra finds the current laws and regulations in Sarawak “encouraging” for gold mining and supports the industry’s growth and investment from foreigners.
“When international investors make decisions on where to invest, local laws and regulations are critical deciding factors and East Malaysia is certainly competitive compared to other countries in the region,” says Besra’s Wilson.
Apart from Bau, he says there is mining potential elsewhere in the country.
“There are certainly some promising areas in northwestern central [Peninsula] Malaysia, some prospects in Sabah and some areas where we hold interests in Sarawak near the Indonesian border,” adds Wilson.
Besra holds an 85.61% controlling interest in Bau Goldfield with an agreement to increase this to 93.55% by September 2015. Its local partner is Gladioli Enterprises Sdn Bhd.
One of Malaysia’s leading gold miners, Peninsular Gold Ltd, believes there has been fresh interest in the country’s gold mining industry in recent years.
“I would say that the state of the gold mining industry in Malaysia is getting more active as new players are now emerging … the level of interest has increased,” Peninsular Gold’s chairman and chief executive Andrew Kam tells FocusM.
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