Two potential investors of LionGold Corp back out, citing probe

Two of six potential investors of LionGold Corp have gotten cold feet over a probe on the company by Singapore's white collar crimebuster.

The gold miner said in a statement late Friday that it had agreed to terminate a share subscription agreement with Mr Teo Kek Yeng and Mr Toh Soon Huat.

It said they decided to withdraw from the deal to subscribe for 3.7 million new LionGold shares for $500,000 each due to the ongoing investigation by the Commercial Affairs Department (CAD) into an offence under the Securities and Futures Act.

The board reiterated its stance that it is not aware if any offence has been committed.

Four other investors - Mr Ong King Kok, Ms Yap Sooi Kuan, Mr Lee Yee Pin and Mr Poh Chong Peng - will each subscribe for 7.5 million shares for $1 million.

LionGold was asked last week to provide accounting records and minutes of meetings and resolutions from April 1, 2010 to March 31. The CAD also sought directors' e-mails and those of the adviser to the chairman and e-mail of certain key management personnel.

Documents relating to LionGold's proposed acquisition of Minera IRL were also requested.

Both parties agreed on Oct 10 last year to abort negotiations due to the volatility in LionGold's share price.