Fortuna Metals mining Services Myanmar FAQs

Fortuna Metals FAQs

Company

Who owns Fortuna Metals?
The ultimate shareholders of Fortuna Meals are Australian individual investors who have extensive experience in the mineral exploration and mining industry. The corporate structure includes Fortuna Metals Limited (Myanmar) which is wholly owned by a Singaporean company named Fortuna Metals Australia Pte Ltd.

What type of company is Fortuna registered as in Myanmar?
Fortuna Metals Limited is registered as a Private Company Limited by Shares, incorporated in Myanmar. This is the standard type of company registration for exploration companies in Myanmar.

Where is the Fortuna Metals office in Myanmar?
Fortuna office is in 9 Mile in Yangon, Myanmar. The address can be found on our website.

What experience does Fortuna Metals have in Kaunghlaphu?
Our geologists are experienced Australian and Myanmar geologists who are very familiar with the region. Our team has visited the region several times in the past decade and have specialized knowledge about the Kachin region.

 

Mineral Exploration

What is mineral exploration?
Mineral exploration is the process of searching for commercially viable concentrations of minerals or metals. The process has four key phases, namely:

  1. area selection
  2. regional reconnaissance
  3. prospecting and ground surveys
  4. verification of targets or anomalies

Area selection is the search for regions of geological interest that may contain mineral deposits. A study of historical records, satellite imagery and local knowledge usually assists with this process.

Regional reconnaissance involves defining prospective areas for further investigations which may include some broad field surveys combined with broad scale geophysical surveys.

Prospecting and ground surveys involves field work which includes studying the rock types, lots of mapping work, taking small samples and sometimes geophysical surveys. The aim of the prospecting is to identify mineral targets (or anomalies) which can be studied further. This is often done by the use of drilling machines.

Is there a difference between mineral exploration and mining?
Yes, the concepts are totally different. Mineral exploration is the systematic search for a mineral deposit. Mining is the extraction of a commercially viable mineral deposit. In most cases mineral exploration will not result in mining activity because a commercially viable mineral deposit will not be found. In fact, exploration has a low chance of success with only one in 10,000 mineral prospects leads to a mine. As such, it is a very risky business!

How long does mineral exploration take?
Generally mineral exploration takes between 5 to 10 years. If a mineral deposit is found, it will take additional years to plan and develop a mining operation.

What is a concession?
A concession, sometimes known also as an exploration permit, is the formal permission provided by the Government to an investor which will allow the investor to undertake exploration in the area defined in the concession.

Concessions are obtained by an application process which involves a review of the investors plans by every level of Government, including Township, State and Union level. Many different Government departments are involved, including the Department of Geological Survey and Exploration, the Environmental Conservation Department, the Forestry Department and many more.

How large are concession areas?
Concession areas are usually quite large. For example, between 500 to 1,000 square kilometers. The concession needs to be large to improve the chances of discovering a mineral deposit.

It is normal for villages, public infrastructure and even forests to be inside the concession area. This is possible because exploration is not the same as mining. Exploration is a very low impact activity that mainly involves geologists studying the rocks within the concession area.

The Government charges the investor a tax each year for the concession based on its size. Therefore, investors will aim to reduce the size of the concession as fast as possible.

If a mineral deposit is discovered and approval is obtained to mine the deposit, the area will be significantly smaller than the original concession size. It may be as small as 10 square kilometers, which would be a 99% size reduction from the original concession.

Does the concession application impact land ownership?
Fortuna recognizes the customary rights of the traditional landowners. In Fortuna’s interpretation of Myanmar law, exploration of the concession should not affect any existing land ownership and land titles. Exploration is the search for minerals below the ground and should not provide Fortuna with any surface land rights.

Is mineral exploration expensive?
Yes, exploration is risky and expensive. The exploration costs for a single project are around $1 to $2 million per year, and the exploration work generally lasts between 5 and 10 years.

 

Community

How do you engage with the local community?
Fortuna recognises that community engagement is critical to building positive relationships in its areas of operation.

To date, Fortuna has engaged with various community groups in its northern concessions. This engagement has primarily focused on explaining the process of exploration and answering questions form the community.

We are always looking for additional ways to engage with the local communities. We welcome any suggestions from the communities in this regard.

What are the benefits for the local communities?
When our field reconnaissance activities commence, we will be seeking the support of the communities in carrying out the programs. This will involve offering jobs to the community members and engaging local businesses. Over 90% of our local team will be sourced from local communities.

As the exploration process evolves, a Corporate Social Responsibility (CSR) fund will be established. A process of systematic evaluation of community needs will be undertaken and the CSR fund will assist with addressing these needs. The budget for the CSR fund will be small at first but will grow as the project develops.

 

Environment

Have you conducted any environmental works?
Fortuna’s environmental team visited the region in September 2019 and January 2020 to complete baseline air quality, water, soil and noise measurements and sampling. These measurements will be used to develop an Environmental Management Plan (EMP). The EMP will then be submitted to the Government’s Environmental Conservative Department (ECD) to review. Approval of the EMP will be required from ECD before the concessions are granted to Fortuna.

Is an ESIA required?
As the project is only exploration, environmental impacts are minimal, which is why only an Environmental Management Plan is required. If a mineral deposit is discovered, a full Environmental and Social Impact Assessment (ESIA) will be required to be prepared and approved by the Myanmar Government.

 

Laws and Taxes

Is mineral exploration subject to any laws?
A legal and regulatory framework governs all mineral exploration in Myanmar.

The most relevant laws include:

  • The Law amending the Myanmar Mines Law (ML) (2015)
  • Mining Rules (2018) (MRule)
  • Environmental Conservation Law (ECL) (2012)
  • Environmental Conservation Rules (ECR) (2014)
  • EIA Procedure (2015)
  • National Environmental Quality (Emissions) Guidelines (2015)
  • Forest Law (1992)
  • The Conservation of Water Resources and Rivers Law 8/2006 Amended 2017
  • Freshwater Fisheries law (1991)
  • Prevention of Hazard from Chemicals and Related Substances Law (2013)
  • Draft Occupational Health and Safety Law
  • Explosives Substance Act (1908) (Amended in 2001)
  • Boiler Law (2015)
  • Farm Land Law (2012)
  • Vacant, Fallow and Virgin Lands Management Law (2012)
  • Land Acquisition Act (1894)
  • Myanmar Investment Law (MIL) (2016)
  • Myanmar Investment Rules (MIRule)  (2017)
  • Minimum Wages Law (2013)
  • Labour Organization Law (2011)
  • Settlement of Labour Disputes Law (2012)
  • Employment and Skills Development Law (2013)
  • Social Security Law (2012)
  • Protection of the Rights of Ethnic Nationalities (2015)
  • Protection and Preservation of Cultural Heritage Regions Law (1998)
  • Protection and Preservation of Ancient Monuments Law (2015)
  • Rights of Persons with Disabilities Law (2015) and Byelaws (2017)
  • Child Law (1993)

Fortuna commits to abiding by Myanmar laws and rules.

What policies does Fortuna have in place to ensure compliance with laws?
In addition to abiding by Myanmar’s laws, Fortuna has its own policies and procedures that it follows to ensure a high standard of environmental compliance, safety and community interaction. Some of these policies and plans include:

  • Code of Conduct
  • Land Access Management Plan
  • Biodiversity Management Plan
  • Cultural Heritage Management Plan
  • Occupational Health and Safety Plan
  • Grievance Mechanism

Fortuna will also follow Myanmar’s Ethnic Rights Protection Law 2015 as well as the IFC Performance Standard 7 which seeks to ensure that business activities minimize negative impacts, foster respect for human rights, dignity and culture of indigenous populations, and promote development benefits in culturally appropriate ways.

Informed consultation throughout the project is a core requirement and aims to achieve free, prior and informed consent.

What taxes are paid during exploration to the government?
Fortuna Metals will be required to pay a rental fee to the Myanmar Government on an annual basis. These fees are based on the size of the concession and increase each year. A bank guarantee and signing fee is also paid to the government. All fees, taxes, royalties and government payments will be paid in accordance with Myanmar’s mining law and regulations.

What happens if there is a mineral deposit discovery, will it be mined?
Before a mine is developed, there are several key stages. Importantly, the geological potential needs to be economic for mining. A detailed feasibility study will be conducted before moving to the mining stage. This will include an Environmental and Social Impact Assessment. A separate license to mine will also need to be obtained from the Myanmar Government.