AS POST-SANCTION Burma opens for business, Australian companies are eyeing investment opportunities in the country's unexploited mineral reserves.
The sector is receiving a gold rush of interest from Australian miners wanting to unlock the country's rich mineral wealth.
While the impoverished south-east Asian nation of Burma, also known as Myanmar, has a long history of gemstone mining, its rich reserves of precious and base metals have remained virtually untouched, due to the lack of capital, data, technology and essential infrastructure required to transform these virgin mineral resources into functional operations.
Enter Australia's junior exploration companies.
''Australian entrepreneurial junior companies are often the first movers going into remote areas,'' said Stephen Everett, chairman of Global Resources Corporation, one of many Australian miners that recently attended the Myanmar Mining Summit, held in the economic capital of Rangoon.
Decades of economic mismanagement and restrictive international sanctions during its years of military rule have crippled Burma's economy.
But since its transition to a quasi-civilian government and the easing of various sanctions, the country has been seeing a flood of interest from Western investors. Nicholas Powrie, general manager (legal regulatory) of Mineral Commodities, a project of mining entrepreneur Mark Caruso, former chairman of Allied Gold, which recently merged with St Barbara to create the largest mid-tier gold producer in Australia, said his company was ready to take the plunge.
''We've looked at the geology of the region and we're very excited about it,'' he said. ''We think it's the right time to come here, and the sooner the better.''
Mining veteran Owen Hegarty, of former Rio Tinto and Oxiana stock, said his company, Tigers Realm Group, was already looking at potential copper and gold deposits.
''Tigers is taking a preliminary look at opportunities in Myanmar,'' he said. ''We know the region well, we've had a look at some properties and prospects previously and we think the prospectivity for copper and gold is attractive.''
The current lack of large multinational mining companies also makes it an ideal playground for small mining companies to flourish.
Gold is just what many juniors are looking for in Burma. One Canadian company is hoping to lead the way once it is granted an exploration permit.
''There have been no big gold discoveries in this country, ever,'' said Jon North, chief executive and president of Canadian mining exploration company Northquest.
He pointed out that the country lacked any form of geophysical data, and the last geological surveys were completed about 50 years ago.
But while Burma at first glance may seem like the land of golden opportunities, new investors will have to negotiate a restrictive regulatory framework, an untested judicial system and layers of bureaucratic red tape.
''Many investors are surprised by how difficult it is to do business in Myanmar, and limited infrastructure and restrictive legal and economic conditions are the main hindrances to international investment,'' said Jared Bissinger, a PhD candidate at Macquarie University studying Burma's economy.
He said that despite rapid reforms, Transparency International ranked the country as one of the world's most corrupt.
The biggest barrier to investment in the mining industry was an inhibitive production sharing contract, with a 30-70 per cent profit-sharing ratio between the mining company and the Burma government, investors said. The government did not act as an equity partner, but took a hefty percentage of the total resource extracted, on top of royalties and tax.
''That means you risk all the money, you risk all the development, then you give the government a share of the production free of charge, on top of royalty,'' Mr Everett said. ''People will not invest on that basis - not large-scale, anyway.''
Burma also has an export ban on raw ores, and certain commodities such as gold and coal, and the country's lucrative gemstone sector, famous for its ruby, sapphire and jade production, is closed to foreign investment.
These barriers, combined with a lack of legal and physical infrastructure, means many interested companies will be adopting a wait-and-see approach.