Prime Meridians – Leaving For The Land Of Opportunity

This week in Pierce Points:

Venezuela militarized its oil sector. The country has created a new firm to take direct stakes in energy and mining projects.

DR Congo’s mining reform continued. Despite statements to the contrary, officials may introduce higher taxes.

Woodside made another Myanmar natgas find. The second-straight discovery well looks better than the first one.

Uruguay’s offshore scored another big deal. Statoil is making its second farm-in this year in the emerging play.  

India’s gold market went “dead”. Sellers are offering record discounts to spot prices, and no one is buying.

Leaving For The Land Of Opportunity

Just a short note today, as I’ll actually be en route to Asia by the time you’re reading this. 

I’m always excited to head across the Pacific. And this time is especially interesting — being my first visit to Myanmar since the country’s historic new government took power.

Although the official changeover in leaders hasn’t happened yet, Myanmar’s parliament has effectively been working for weeks now. With one of the big issues being a decision on whether Aung San Suu Kyi will be constitutionally allowed to become president of the country. 

There have been reports of some friction emerging over that issue. But other than reportedly-heated backroom discussions, everything has gone as well as could be hoped with the transition from a military government to a quasi-democratic rule. 

At the same time, Myanmar’s new mining code is advancing — which could open up some of the most exciting opportunities in the exploration and development space going anywhere on Earth. 

Projects like the Letpadaung copper mine — a development in central Myanmar owned by China’s Wanbao. Which this week said the mine is likely to start up in May, marking the culmination of decades of effort in bringing this rich deposit into production. 

In addition to being massive (Letpadaung and its surrounding deposits are over a billion tonnes of copper ore), the mineralization here is also extremely exotic in mineralogy — making it very low-cost to process. A big part of the reason that existing mining operations in the area have remained profitable even through some very challenging times in Myanmar over the past 20 years. 

A major question is: when will the big, international players from mining arrive on the scene? After all, this is a place with some of the highest mineral potential on the planet. And in the last exploration boom of the 1990s, attracted majors and juniors alike (I’ve personally walked a big swath of ground in the north staked by Newmont Mining during that period). 

But the majors have been notably absent in Myanmar recently. With most of the heavy lifting in the mining sector being done by Chinese firms — with Korean and Japanese companies recently becoming more active. 

That’s going to change. The potential here is simply too good to ignore, and you can bet that every major mining house on the planet has been quietly studying the recent reforms. 

On that front, it was interesting to see rising precious stones producer Gemfields say publicly this month it wants into Myanmar. With the firm’s CEO Ian Harebottle revealing at the Mining Indaba that Gemfields already has geologists on the ground in-country. 

This could signal a tipping point coming — with Western firms now gaining the comfort they need to make a move into this former pariah nation.

I’ll know more after this week’s trip. Dispatches may be sporadic when I’m in the field, beyond the Internet — but I’ll be back with all the findings as soon as I can. 

Here’s to going where the action is,

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Dave Forest

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