After an unexpectedly lengthy review, the Ministry of Environment has approved the environmental and social impact study of Indian mining firm Mesco Gold, clearing the last major hurdle for the company to receive a licence to operate the Kingdom’s first royalty-generating mine.

“The Ministry of Environment has given its approval for underground mining over a 12 square kilometre area,” Rajeev Moudgil, director of Mesco Gold (Cambodia) Ltd, said yesterday.

The ministry’s nod comes after officials spent 18 months poring over the company’s environmental and social impact assessment (ESIA), a comprehensive document that outlines Mesco’s plans for its Phum Syarung gold mine in Ratanakkiri province.

The 750-page study identifies and assesses the potential impacts of the proposed underground mine, and sets out a support and development plan for affected communities.

Meng Saktheara, secretary of state at the Ministry of Mines and Energy (MME), said he received a copy of the ESIA approval, and the company’s only remaining step in licensing was to obtain in-principle approval from the Council for the Development of Cambodia (CDC).

“Once they get that approval they can get an extraction licence,” he said, adding that the procedures were relatively straightforward and could proceed quickly.

Mesco should receive its extraction licence “within this month”, he assured.

Mesco Gold, a subsidiary of Indian steelmaker Mesco Steel Ltd, purchased the rights to develop and mine the Phum Syarung prospect from Canadian mineral exploration firm Angkor Gold Corp in 2013. As part of the $1.2 million sale agreement to Mesco, Angkor Gold negotiated a net smelter royalty agreement that would see it receive a share of any gold extracted.

Angkor Gold estimates that an underground mine built at Phum Syarung could produce 10,000 ounces of gold a year over a 10-year mine life. Mesco has not made its own feasibility study of the project available to the public.

Saktheara said the relatively small-scale gold project stands to be a good model for future mining operations.

“It is not a big mine site, but it is the first one to go through the complete [official] process – with proper study, addressing environmental and social concerns, etc,” he said.

Mesco’s ESIA covers a total of 12 square kilometres, but the mining licence will only cover production on a 1 square kilometre tract, Saktheara said.

If more mineral discoveries are made outside this core area, Mesco must file another ESIA to expand its production area, though its approval should come quickly with the first document already approved.

Surface infrastructure is already in place at the Phum Syarung site, and Mesco has built two inclines and a vertical mine shaft. Ore extraction could begin quickly once a licence is approved, though it could be more than a year before the company produces its first ounce of gold.

“After the granting of a mining licence, Mesco would start mine development and the commissioning of the gold recovery plant,” said Moudgil.

“It is scheduled to be completed in 18 months from the start date, which would depend on all approvals being in place.”

The earliest estimated production is toward the end of 2017, “if there are no surprises as the project is executed”, he added.