Catalist-listed CNMC Goldmine mines for more gold in proposed acquisition

An aerial view of one part of the CNMC goldmine in Kelantan.
An aerial view of one part of the CNMC goldmine in Kelantan.PHOTO: BUSINESS TIMES

SINGAPORE - Catalist-listed gold producer CNMC Goldmine Holdings has signed a non-binding letter of intent to acquire a majority stake in a Malaysian company authorised to mine for gold and other minerals in Kelantan.

The firm made the announcement in a filing to the Singapore Exchange.

It is proposing to take a 51 per cent stake in Pulai Mining, which has exploration and mining concession in Kelantan spanning 38.4 sq km, almost four times the size of CNMC's flagship Sokor gold field project, which is also in the same state.

Pulai Mining will issue new shares to CNMC for RM13.8 million (S$4.6 million). The acquisition will be funded through CNMC's internal resources, which includedUS$26.2 million (S$35.6 million) in cash as at March 31 this year.

Pulai Mining has 11 licences to explore and mine for gold, iron ore and feldspar, which is a raw material used for making glass and ceramics.

CNMC, which was the first gold producer to list on Catalist in October 2011, has seen its fortunes rise this year. Its gold output for the first three months this year rose 11.6 per cent compared with the same period last year.

The increase, along with lower prouct costs and foreign exchange gains, lifted the company's net profit for the quarter to US$5.6 million, up from US$2.5 million the previous year.

The proposed acquisition marks the company's latest effort to expand its mining footprint. Its chief executive officer Mr Chris Lim, had said earlier this year that the company needs to actively look for new concessions around the region, as "there will come a time when the resource will be drawn down."

The transaction is subject to due diligence by CNMC and other conditions being fulfilled. The companies will enter into an exclusivity period of two months to firm up a definitive agreement.