It may only have a sharemarket worth of around $50 million, but high-profile backers with deep pockets means Myanmar Metals is likely to face few problems in raising millions of dollars to gain control of what it reckons is a world-class base metals deposit in Myanmar.

After a busy 12 months of due diligence and gaining government approvals, Myanmar (ASX:MYL) will be going to shareholders over the next few weeks to raise another $16 million so it can exercise an option to gain control of an old base metals mine in Myanmar.

Myanmar believes the “Bawdwin” project — located north-west of Mandalay near the Chinese border — has the potential to emerge as a significant base metals producer.

Myanmar needs $35 million in total, although a large chunk of that — $19.1 million — is coming from two shareholders, leaving just the balance of $16 million to be funded through the sharemarket.

Optimism about the company’s prospects helped to push the shares ahead a handy 8 per cent to 6.7c Monday. The company wants to issue more shares at a minimum of 6c.

Bawdwin will primarily produce lead, zinc and silver but some copper, nickel and cobalt will also be produced.

The mine was a large producer under the British, when the country — then known as Burma — was part of the British Empire. But the mine was destroyed in World War 2, with only erratic production since.

Myanmar Metals is moving to buy the Bawdwin project in Myanmar.

Myanmar Metals, which boasts serial mine promoter Mark Creasy as a major shareholder, intends going to the market to raise funds at 6c a share, after placing 19.9 per cent of its capital to the China-backed Perilya late last week.

Mr Creasy will be tipping in $4.2 million to maintain his stake at 12.6 per cent once the fund raising is completed.

The money is needed so Myanmar Mining can exercise an option to gain a controlling 51 per cent stake in the Bawdwin project, with $US13.9 million due soon.

While Bawdwin deposit has an extensive mining history, there has been limited modern drilling to clarify the extent of the known reserves.

There is, for example, 8km of untested strike length of the ore with as many as 30 known outcrops of known mineralisation and 30 mine adits.

Mining entrepreneur and BRW rich-lister Mark Creasy has been a long term supporter of Helix.
Mining entrepreneur and BRW rich-lister Mark Creasy.

Argonaut Securities reckons the decision by Perilya to take a big stake in Myanmar Metals is similar to the decision by Guangdong Rising Assets management to take a cornerstone stake in PanAust in 2009, which eventually led to a $1.2 billion takeover.

GRAM is a major investor in the Chinese investor standing behind Perilya’s Chinese backer Zhongjin Lingnan.

As a result, Argonaut has a 25c a share target price on Myanmar Metals shares, arguing that the Bawdwin prospect is “arguably the best undeveloped polymetallic project globally”.

“In 30 years of mining, I’ve only seen one other comparable deposit,” executive chairman John Lamb said, “and that is Rosebery, which now now nearing the end of its life.”

The Rosebery mine, which is located in Tasmania, has been in production for 80 years.

At Bawdwin, the plan is to mine a low grade ‘halo’ resource which overlays the main body of the resource, using the funds generated to finance the development of an underground mine while generating a return for investors, Mr Lamb said.