Gold and copper plant in Laos

Gold and copper plant in Laos

LOCATED at the heart of the fast-growing Asian economies, and well endowed with undeveloped natural resources, Laos is particularly well placed in the region to supply commodities to its neighbours. The government of Laos has identified mining as a priority sector for the country’s economic development and has continued to promote local and foreign investment. The management and regulation of the industry has been strengthened further, and a Ministry of Energy and Mining has been formed to oversee the promising mining and hydropower sectors.

The largest mining venture in Laos at present is the very successful Sepon gold and copper operation of Australian mining company, Oxiana Ltd. Apart from a small-scale quarrying industry, the only other operating mine in Laos is Pan Australian Resources Ltd’s Phu Bia gold operation. However, a number of Chinese, Vietnamese, Australian and other junior exploration companies are beginning to explore for metals in Laos.

Laos, which has a population of around 6.3 million and is similar in size to the UK, lies at the centre of the rapidly-growing Mekong region, bordered by southern China, Thailand, Vietnam, Cambodia and Myanmar (Burma). Agriculture remains the largest sector, but industry is currently growing at an annual rate of 13%.

Laos has a single party socialist system of government, which moved to a market economy in 1996. Structural reforms have been successful in the encouragement of foreign direct investment (FDI), and this has attracted mining firms to the country such as Oxiana, Rio Tinto and AngloGold Ashanti.

In recent years the Lao economy has been growing at a relatively high rate, with real GDP growth averaging around 6.5% since 2002 and reaching around 7.3% in 2006. Much of the gain in GDP growth is attributed to the mining sector, and in 2006 increased exports of copper from Oxiana’s operation, coupled with higher commodity prices, were responsible for a 51% increase in the nation’s exports.

Despite strong GDP growth, however, Laos is still recognised as one of the poorest countries in the world. The government has set a target of moving beyond ‘least developed country’ status by 2020. This requires achieving annual income per capita of US$900, and according to the multi-lateral organisations that monitor Laos, this once daunting goal now looks possible, given the continued growth in the mining and hydropower sectors.

In the mining sector, Oxiana has been the pioneer in Laos, and its Sepon operation, which includes the most modern and technologically advanced hydrometallurgical copper plant in Asia, is now producing copper cathodes and gold.

Originally discovered by RioTinto in the early 1990s, Sepon was acquired by Oxiana in 2000. The company then financed and constructed a gold mine and oxide gold processing plant, which was commissioned in late 2002, and a larger copper mine and solvent extraction and electrowinning (SX-EW) facility, which was commissioned in 2005. In 2006, Sepon produced 173,500oz of gold from its gold operation and 60,300t of cathode copper from its copper operation. The copper cathodes are exported to the nearby markets of Thailand, Vietnam, Malaysia and China.

Oxiana is currently working on expansion studies for each of the operations, with a new primary goldprocessing plant and an expansion to the existing copper plant both under consideration. Located in southern Laos, the prospectivity of the Sepon District has been highlighted by the recent discovery of the Thengkham North and South copper-gold systems approximately 7km from the Sepon plants. Studies into potential expansions to the gold and copper operations at Sepon are underway.

Oxiana sees great potential for new discoveries in the remainder of the 400km2 Sepon minerals district, and exploration there is continuous. South Africa-based AngloGold Ashanti Ltd has identified Laos as a highly prospective nation as part of its world-wide exploration review, and has entered into a 50:50 exploration JV with Oxiana.

Generative work has commenced and prospective areas have been identified for follow-up.

Pan Australian Resources became Laos’ second miner when its Phu Bia gold operation commenced production in 2005. Phu Bia is located some 100km north of Vientiane. There are two distinct styles of mineralisation: an oxide gold cap and beneath this transitional/primary copper-gold. Phu Bia is an open-pit mine exploiting an oxide gold cap containing reserves of some 300,000 oz of gold, and employs heap leaching to extract the gold.

The heaps are leached during the dry months from October to April, and produce approximately 3,000oz/mth of gold.

In 2006, Pan Australian commenced construction at its US$241 million Phu Kham copper-gold mine. Mineral resources amount to 192Mt at 0.62% Cu and 0.24g/t Au (0.3% Cu cut-off grade), and reserves total 144Mt at 0.56% Cu and 0.25g/t Au. Phu Kham is expected to produce approximately 50,000t/y of copper and 50,000oz/y of gold in concentrate, with first production scheduled for mid-2008. However, following positive drilling results, the company announced in September 2007 that it plans to expand the processing plant from 12Mt to 16Mt/y by mid 2010 at an additional cost of US$40 million.

About 180 km north of Vientiane, Canadian junior, Rox Resources Ltd is in a JV with local partner, First Pacific Mining Lao Co to explore the Pha Luang zinc-lead-silver deposit. Rox holds a 60% interest in the JV. Drilling in 2005 and 2006 was followed up with IP geophysical surveys in 2007, anomalies from which will be tested by deeper drilling.

Elsewhere, Australian junior Argonaut Resources NL is exploring 50km northwest of Vientiane in the Century area, and in southeast Laos in the Sekong area. At Century, the Ang Noi area, where gold is hosted in mesothermal quartz veins, is the priority for future resource drilling.

In southern Laos, Australian junior Ord River Resources Ltd is in a JV with China Nonferrous Metals International Mining to explore the Bolaven Plateau bauxite deposits.

Other Australian juniors, including Hill End Gold Ltd and Alloy Resources Ltd, have applied for exploration licences, and investors from China and Vietnam are exploring for iron ore in northern and southern Laos.

According to the Ministry of Energy and Mines, a copper-mining operation has been initiated by Lao-China Oriental Minerals Development Co (a JV between the governments of Laos and China) in Luangnamtha Province.

Also during 2006, small-scale gold mining was undertaken by Lao-China Mining Industry Corp Ltd in Bolikhamxay Province, and by Phialat Gold Mining Co. Tin was produced by Lao-Korean Tin Mines (a government JV) and zinc was produced by a JV between the Lao Government and Thai Padaeng Industry Public Co Ltd in Vientaine Province.

The Ministry of Energy and Mines reports that there are now more than 100 investment projects in the mining sector, involving investors from Australia, Canada, China, the Republic of Korea, Russia and Thailand.

During 2006, there were small-scale operations producing coal, gemstones, gold, silver, tin and zinc, as well as industrial minerals such as barite, limestone, clay, gypsum, and sand and gravel.

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