PERTH (miningweekly.com) – The Cambodian Council of Ministers has approved the execution of a mineral investment agreement (MIA) with ASX-listed Emerald Resources over the Okvau gold project.

The MIA provides clarity and stability of the fiscal regime for the development and operation of the gold project, Emerald said on Tuesday, and is a significant milestone providing a level of shareholder and stakeholder assurance.

“The approval of a direct agreement with the Cambodian government for the development of the Okvau project is a significant milestone for Emerald and the people of Cambodia as it is the first time this has been implemented for a large-scale mining project,” said Emerald MD Morgan Hart.

While Emerald would retain full ownership of the project, a 3% royalty would be payable to the Cambodian government on the gross sales from the project.

In turn, Emerald would benefit from an income tax rate of 25% a year for five years from the date of the MIA, with the tax rate increasing to 30% a year thereafter. The company would also have a withholding tax rate of 0% of payments of dividends paid to foreign affiliates for a period of five years, after which the tax rate would be adjusted according to applicable laws at the time.

Emerald would also be granted an exemption from any import tax and duties on equipment, machinery, mining trucks, earth moving equipment and other mine facilities that will be used for the Okvau project, if the import is done before the end of December 2022.

Meanwhile, Hart on Tuesday said that following the approval of the MIA, the company had now reviewed the key assumptions from the definitive feasibility study (DFS) for the Okvau project, based on a prevailing gold price of $1 450/oz.

This review, at the higher gold price, has increased the projected net present value from $217-million to $337-million and the internal rate of return from 48%, to 69%, compared with the original DFS, which was based on a spot price of $1 250/oz.

Life-of-mine revenues at the higher gold price have also increased from $906-million to $1.05-billion, while operating cash flows have increased from $408-million to $554-million.

The Okvau project is expected to require a capital investment of $98-million to develop a two-million-tonne-a-year operation delivering about 106 000 oz of gold, over an initial mine life of seven years.