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Myanmar Metals makes history with new investment model for Bawdwin project

Myanmar Metals Ltd. shares rose nearly 7% in ASX trading on May 25 after entering two binding agreements to ensure its A$18.5 million share of the Bawdwin polymetallic project option exercise is fully funded, in what CEO John Lamb called a "new model" of foreign participation in Myanmar.

The company struck a binding agreement with fellow Perth-based company Perilya Ltd. for a cornerstone investment of up to A$14.9 million to emerge with a 19.9% shareholding, as part of Myanmar Metals' proposed share placement to raise up to A$35 million.

Veteran Western Australian prospector Mark Creasy, Myanmar Metals' largest shareholder, also made a binding commitment to invest a further A$4.2 million to hold a 12.6% stake once the A$35 million placement is completed.

Perilya, which will provide technical assistance along with procurement, processing and market support, also gave a non-binding letter of support for up to US$150 million to build Bawdwin in the future. Perilya is 100% owned by Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd., China's largest integrated zinc producer, while Bawdwin is a historic lead-zinc-silver deposit dating back centuries that also produced accessory nickel and cobalt.

Two local Myanmar entities private company WinMyint Mo Industries Co. Ltd., which holds the concessions, and East Asia Power (Mining) Co. Ltd. will each hold 24.5% of the project, with Myanmar Metals taking majority ownership to operate with 51%.

Lamb told S&P Global Market Intelligence that this was a deliberate strategy to ensure high local ownership by two "very, very capable" local companies which will provide their own expertise in what will be an "active partnership."

"It's a new model for foreign participation in Myanmar," Lamb said. "Looking at the existing stock of mines [in Myanmar], many of which have passed into foreign ownership over recent years, many are 100% ownership or close to it."

"From the government's perspective, the fact that we are listed means we're transparent, because the government is very interested in transparency of reporting. We're not a big steamroller."

Hong Kong-based Stan Wu, Vice President of Argonaut, which was lead manager on the deal, conceded that mainstream western media coverage on Myanmar had been "neutral-to-negative" due to the reported persecution of the Rohingya.

In March, CNN quoted senior United Nations official Yanghee Lee, the Special Rapporteur on human rights in Myanmar, as saying she was increasingly convinced the government's ongoing crackdown against the Rohingya may amount to "genocide."

"Like everyone else I had my reservations before going there, but I spent two weeks there on and off over the course of a month and I don't get the sense of my life being in any danger in Yangon," Wu told S&P Global Market Intelligence.

He said that Myanmar Metals being ASX-listed with a western management team made the deal a "landmark transaction, as the first Australian-listed company to exercise any option to take operatorship of a world-class asset in the country."

"The asset is without doubt one of the highest quality brownfields polymetallic assets in the world. We have a JORC-compliant 82-million-tonne resource at a zinc-equivalent grade of over 12%, situated in Myanmar's north-east, so strategically close to China's Yunnan Province," he said.

Perilya CEO Paul Arndt said his company believes that the Bawdwin primary resources ranks among the "world's best" undeveloped base metals projects.

"Given its long open pit and underground mining history, [Bawdwin] has the potential to be developed into a truly world-class long-life polymetallic mine," he said.