SINGAPORE (Reuters) - A year ago Myanmar was the hot new destination for resources investors looking to make a fast buck in a country opening up to the outside world, but a new mining law is still not passed, the hot-money crowd has filed out and reality has set in.
Yet while funding options may have slimmed, opportunity is still knocking, industry participants at a conference in Singapore said this week.
"A year ago everyone was going to Myanmar. You couldn't get on a flight there because every flight was booked," said Edward Rochette, chief executive of Canadian explorer East Asia Minerals Corporation (EAS.V), which has applied for an exploration permit in the country.
"Investors were thinking: 'It's wide open, it's the Wild West, we'll just sign and be done'. Unfortunately, it's going to take time," he added.
Explorers have banged up against processing times for prospecting permits stretching out several years while commodity prices have fizzled and debt and equity funding markets have dried up. The country has to fight harder to attract capital.
"In up markets they (explorers) can sell the blue sky, greenfield projects. In a down market these companies are on the edge and just cannot attract capital. Most of the people here are at the small end of town," said a source from a commodities trading house who was attending the conference.
This is dampening government efforts to raise foreign capital in the mining sector and has pushed out processing times for local-foreign joint ventures to gain the right to explore, participants said.
"There's disappointments in local parties not coming through, there's disappointments in foreign parties not being able to raise money once they promised it," said Ma Cherry Trivedi of Myanmar-based Two Palms Mining Company, whose company has several permits in the application stage.
Myanmar is rich in minerals including gold, copper, lead, zinc, nickel, tin, antimony and chromite. It passed foreign investment legislation almost a year ago, but its mining law is still at least six months away.
"The government worries about fluctuations of commodity prices as well as the waiting time," said Aung Thuyein Win, a director at Myanmar's mining ministry, on the sidelines of the conference.
But if the government had rushed to pass legislation to capture better prices, it would have risked selling itself short, he said.
"The government is still waiting for foreign investors, but they have to protect locals," he added.
Opportunities still exist for investors with longer-term horizons such as commodity trade houses and specialized private equity. The new mining investment law could spark a flurry of interest in companies that have obtained exploration permits.
"We are doing our homework on Myanmar right now," said one private equity investor based in Singapore, noting there was ample investment choice in existing projects elsewhere in Asia, given lower commodity prices.
"Myanmar projects are all pretty much greenfield projects ... but if we found a management team with experience and expertise we believed in, then we'd invest," he added.
Among the companies in the queue for prospecting rights is Indonesian state-backed tin producer PT Timah (TINS.JK), which applied for an exploration permit in Myanmar last year, primarily looking for tin and tungsten.
"Timah is expanding to become a regional player," said an official from the producer, who declined to be named. "We are optimistic but need some more time."
Myanmar has approved more foreign direct investment in the past five months than all of last year, but the receding tide of mining-focused capital has left greater scope for the patient.
"I have better opportunity now without the crowds than with the crowds because I'll have actual time with the ministry," said Rochette of East Asia Minerals Corporation.
Editing by Alan Raybould