A subsidiary of Indian firm Mesco Steel has arrived in Cambodia to begin developing a gold mine in Ratanakkiri province, according to an investor involved in the deal.
Mesco Gold has paid a fee of $1.2 million to Canada-listed exploration firm Angkor Gold to develop a 600-hectare tract of the company’s 25,000-hectare mining exploration license in O’yadaw district, said Richard Stanger, a major shareholder in Angkor Gold.
Mesco’s staff began arriving in Cambodia last month and the company will apply for an extraction license this year from the Ministry of Industry, Mines and Energy, he said.
“They are doing all the planning and preliminary work for the mine proposal,” he said. “Their general manager has just arrived [this week].”
While hundreds of companies have obtained mining exploration licenses to look for gold, iron ore or bauxite, only a handful of extraction licenses have been issued to date in Cambodia, mostly to Chinese firms.
Mr. Stanger said the Mesco project would be a modest sized, international standard mine, and that Angkor Gold had already identified slightly less than 500,000 ounces of gold. “It could be more,” he said.
Mr. Stanger, who is also the president of the Cambodian Association for Mining and Exploration Companies, said that Angkor Gold would own 10 percent of the gold extracted from the mine.
“It’s a pretty good deal. The $1.2 million recovers quite a lot of the cost of exploration,” he said, adding that the plot was just one of 18 areas being explored by Angkor Gold in the license, he added.
According to an announcement released when the deal between the two companies was finalized last month, Mesco agreed to pay $700,000 in cash immediately. The remaining $500,000 would be paid once the government issues an extraction license for the mine, it said.
Mesco Steel, based in New Delhi, is owned by the Singh family—headed by Rita and J.K. Singh—which became embroiled in bribery allegations in India the late 1990s. Mr. Stanger said the allegations were politically motivated, as they coincided with an attempt by Ms. Singh to enter Indian politics.
“It’s very much in the past and nothing was ever pinned on them,” he said.